Tag Archive for: Success

Unnecessary Roughness?

Wow! My Client was irate, possibly just plain hurt, by the negative commentary. As you know, the years of 2015-2018 were tough years for profitability in the dairy industry and some other agricultural sectors as well… He had met with his loan officer, and despite being profitable in both 2019 & 2020, this is the message he caught: “You are a problem loan!”

What? Problem loan customers don’t show profits for two years in a row, reduce their Accounts Payable by over $200,000 and also service their debt structure as agreed. Oh, and did I mention that the Client’s Loan to Value was 60% on his herd loan and 80% on his feed line, along with an excellent diversification plan in place?

The point is this. If we had been playing football, the loan officer would have been flagged for unnecessary roughness! I understand that being a loan officer is not an easy task, but being one also doesn’t give him or her a license to be a butt-head either… The job isn’t that difficult. I know, because I did it successfully for eight years. My message for this loan officer is one that comes from former President Teddy Roosevelt, who said:

“Complaining about a problem without proposing a solution is called whining.”

Now, more significantly, what can you do, as a borrower, to avoid being the recipient of such “unnecessary roughness?” I’d suggest the following items, which this borrower had already put in place:

  1. Monthly tracking & reporting of Inventories & Accounts Payable.
  2. Monthly Cash Flow Analysis of your operations. Remember, if you measure it, you can understand it. If you can understand it, you can control it, and if you can control it, you definitely can improve it!
  3. Regular CPA Prepared Financial Statements, at least 2X per year.
  4. Positive goals that seek to boost profits long term.
  5. A Diversification Plan in place to survive the downturns.
  6. A Plan that includes opportunities to evaluate, adjust course and implement the process.

Following these steps doesn’t guarantee that you won’t become a target of “Unnecessary Roughness,” but I assure you it will prepare you for greater levels of success and the ability to stave off any success comments.

I urge you to please join me in making the changes we need to in order to succeed and prosper! As we move forward with my Next Level Thinking™ blogs, I’ll start my focus on the benefits of “Upstream” thinking from Author Dan Heath. If I can assist you in any way prior to that, please reach out at john@success-strategies.com or at 209-988-8960.

Would You Meet Me Upstream?

I recently completed an outstanding book entitled Upstream, which was written by Dan Heath. He is a Senior Fellow at Duke University’s CASE Center and has co-authored a number of excellent books with his brother Chip. You may even recognize some of them: Made to Stick, Switch, Decisive, and The Power of Moments. I’d highly recommend that you read this book in the near future.

See if you can relate to his opening story in Chapter 1.

“You and a friend are having a picnic by the side of a river. Suddenly you hear a shout from the direction of the water – a child is drowning. Without thinking, you both dive in, grab the child, and swim to shore. Before you can recover, you hear another child cry for help. You and your friend jump back in the river to rescue her as well. Then another struggling child drifts into sight… and another… and another. The two of you can barely keep up. Suddenly, you see your friend wading out of the water, seeming to leave you alone. ‘Where are you going?’ you demand. Your friend answers, ‘I’m going upstream to tackle the guy who’s throwing all these kids in the water.’”

A public health parable (adapted from the original, which is commonly attributed to Irving Zola)

This is a great example of “Upstream Thinking.” Have you ever noticed that we seem to spend a lot of time and money “fixing” problems, essentially those challenges that we are seeing “downstream” in our business? As you’ve heard me state many times, I firmly believe the following:

  1. If you measure some item in your business (e.g. Cash Flow), you can indeed understand it. It equips you to catch severe cost increases quickly before they get out of hand. Since these changes directly impact your break-even levels, they flow directly toward the “bottom line.” As I’ve said before, you can also use these cash flow measures to set your milk price floor within the Dairy Revenue Protection program.
  2. If you understand your cash flow, you can control it. You’ll know exactly what steps to take to positively impact it. Looking at your break-even levels, you can determine just exactly what changes you need to make in order to achieve improved profitability.
  3. Finally, if you can control it, you can improve your cash flow results. Isn’t that the objective of every business operation?

Well, whenever we identify a measurement that appears out of control, we should consider if we can go one step beyond this “downstream” measurement. Can we move more “upstream” and determine what is actually causing our problem? Here’s a simple example. Recently, one of my Clients was faced with higher than normal calf losses. These higher losses were the “downstream” measurement. At first, we thought that it may be due to changes at the calf ranch. However, as we moved “Upstream,” we determined that the machine used to pasteurize the colostrum being fed was only functioning at 60% efficiency. In other words, 2 out of every 5 days, it was not working correctly. This may shock you, but the employee that ran the faulty equipment noticed that it seemed to be failing. Unfortunately, he never bothered to tell anyone else. Hence, the challenges that arose “downstream.”

I’m sure you can think of other possible areas in your business that seem “off” in some respects, whether it’s a higher than normal “Cost/cwt” or another “Efficiency” measure. I would invite you to join me as I start to continually move my Clients “Upstream” in the next 12 months. Until then, what items in your operation are seemingly “out of kilter?”

Going back to the original question, “Would You Meet Me Upstream?” please give some consideration to this new type of thinking. It definitely will make a huge difference. If I can assist you with this process, please contact me at john@success-strategies.com or 209-988-8960. Best Wishes for a joyous Holiday Season and continued prosperity in the coming year!

Why Don’t You Just Go Away?

Hopefully, I caught your attention with this question. Please allow me to explain. Read on & see 3.a. below. Cal Newport in his fantastic book Deep Work defines “Deep Work” as:

 “…the ability to focus without distraction on a cognitively demanding task. It’s a skill that allows you to quickly master complicated information and produce better results in less time. Deep work will make you better at what you do and provide the sense of true fulfillment that comes from craftsmanship. In short, deep work is like a super power in our increasingly competitive twenty-first century economy.”

As you attempt to wrap up 2020 which has, at times, been very challenging, this focus on “Deep Work” becomes very crucial. Here are a couple of questions for you to consider as you strive to finish strong this year:

  1. What items went right this year? We probably all tend to dwell on what items went “sideways,” but think about and write down what went well. Was your production per cow better this year? Could it be, going forward? What’s your profitability look like, especially in light of the CFAP money from USDA? Are your 2020 costs in line? How about Labor costs? Did your 2019 investments pay off? What else would boost efficiencies?
  2. What needs to change? Are there better cost controls you need to put in place? For more on that specific topic, please see my October 14th NLT blog entitled “Why Bother?” Do you need to maximize Labor Efficiency, i.e. become more productive, especially in light of rising labor costs? How about your debt per cow, especially as we consider the strong possibility that, at some point in the future, we will see lower milk prices…? Do we need to decrease your debt levels?
  3. Most important, ask yourself, What’s Next? Treat this like “Deep Work,” because that is precisely what it is. My recommendation includes the following:
    1. Go Away! No, I’m not telling you to get lost. Just simply get away from your everyday distractions and do some “Deep Work” on your business, using the information above as a guideline.
    1. Focus on what, specifically, you want to see next year! Yes, I know it’s only late October or early November as you are reading this, but soon the Holidays will be upon us, and will you find time then? Not likely…
    1. While you are in solitude & focused: What specifically do you want to accomplish next year? Who is involved? What steps do you need to take? By when? Do your proposed changes require some financial analysis? If so, please contact me if I can assist you.
  4. Take the time to focus on this “Deep Work” now. Your future success depends upon it!

If I can assist you with any steps of this process, please contact me at john@success-strategies.com or 209-988-8960.

Why Bother?

Ouch! That is the question I was asked by a producer in December 2018. Please allow me to put his question into perspective. He had suffered through four consecutive years of low milk prices, continually growing expenses (despite our supposedly have only “minimal inflation”), and no profits. These factors were the basis of his question, “Why bother?”

My response was fairly straightforward. If you measure Cash Flow, you can understand it. If you can understand it, you can control it, and if you can control it, then you can improve it! His reply? “Yeah, right…”

However, in my consulting during the past 22 years, I have experienced the difference that measuring items such as your cash flow regularly can make:

  1. If you measure it, you can indeed understand it. It allows you to catch severe cost increases quickly before they get out of hand. Since these changes directly impact your break-even levels, they flow directly toward the “bottom line.” You can also use these cash flow measures to set your milk price floor within the Dairy Revenue Protection program.
  2. If you understand your cash flow, you can control it. You’ll know exactly what steps to take to positively impact it. Looking at your break-even levels, you can determine just exactly what changes you need to make in order to achieve improved profitability.
  3. Finally, if you can control it, you can improve your cash flow results. Isn’t that the objective of every business operation?

I can’t emphasize the significance of this formula enough. The example I used above was just for cash flow, but it can also be applied to any number of other operational measurements. Here are a few examples:

  1. Financing – This type of CF Analysis has impacted a large number of my Clients during these past 22 years. Frankly, it has impacted every one of them to be more profitable. If there are any exceptions, that producer wasn’t very serious about making any changes. They were hoping for a miracle, getting better without changing anything…
  2. Nutrition – I believe that most Nutritionists do a great job. Given the dairy producer’s Revenue & Expense levels can equip them to do an even better job of helping you become more profitable. The resulting break-even levels of your cash flow analysis will tell them exactly what you can spend on feed and still make money. The days of just maximizing milk production “at any cost” are over. This tool of cash flow analysis can assist you & your Nutritionist to be even more successful!
  3. Advisors – Whether we are talking about labor efficiency or any number of managerial items, cash flow & break-even analysis will provide you with the tools you need to make smarter decisions. For example, what is the impact of adding one more employee in the milk barn on your CF or break-even levels? With this information at your fingertips, you will know. Considering that milk prices haven’t really increased anywhere near the proportion that your expenses have during the past 40 years, improved efficiencies are absolutely crucial!

Going back to the original question, “Why bother?” your very survival depends upon it. Based upon my experiences of the past 22 years, it will make a huge difference. If I can assist you with this analysis process, please contact me at john@success-strategies.com or 209-988-8960.

From a Distance, it looks like…

I recently read an interesting article in Inc. magazine by Bill Murphy. It talked about the value or cost of “Social Distancing,” which seems to be a hot topic these days. Yes, these are trying times with the rules put in place to offset COVID-19’s impact, but as we go through our regular routines, perhaps there are some valuable points for consideration.

He referred to recent research led by Dr. Barbara Lee Fredrickson, the head of the Positive Emotions & Psychophysiology Lab at UNC. She and her team surveyed 600 Americans to ask about their daily activities to see if there was any correlation with their overall emotions.

Interestingly, they found that survey participants who had spent time in the prior 24 hours “passively scrolling through social media or interacting with others purely through chat or texts,” reported feeling negative emotions. Those surveyed who felt positive emotions included people who had exercised, relaxed (e.g. with a hobby), engaged in spiritual activities (contrary to the limitations imposed by some politicians…), interacted with others face-to-face, or went out of their way to assist others!

The overall message of Dr. Fredrickson is this: Instead of “Social Distancing,” let’s implement a program of “Physical Distancing & Social Solidarity.” How can you implement this in your business? Here are a few suggestions:

  1. Encourage your employees to exercise, even if it means going for a daily walk.
  2. Help them to connect with others, with caution, of course.
  3. Let them engage in “self-care” & “spirituality” activities.
  4. Show them, by example, how to help others, even when it’s less than convenient.

Granted, you and I cannot necessarily change the whole world, but we can absolutely have a positive effect upon the people we lead. It’s certainly worth a try. Why not start today? I wish you the best of success!

If I can assist you in any way, please let me know at john@success-strategies.com or 209-988-8960.