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doit

Getting It Done

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Alan Weiss is my mentor’s mentor, so naturally I subscribe to Alan’s work. One of Alan’s recent
newsletters contained a short piece about The Human Condition: Procrastinating.

Let’s be honest, we’re all guilty of it at some point. Alan writes, “We procrastinate out of sloth (I don’t
want to get up); out of fear (what if it’s not good enough); out of lack of consequences (they won’t do
anything about it); out of ignorance (I didn’t know there was a financial penalty after that date). We all
do it, it’s not a matter of obliterating the habit, it’s a matter of priority.”

While all of the farmers I speak with (be they clients or not) have never procrastinated at getting
equipment ready for the field, many admit to procrastinating when it comes to management of their
business data, analyzing information, and pretty much anything to do with bookwork.

Is procrastination a matter of priority and not habit? No argument that doing books isn’t a lot of fun;
shuffling paper in an office (or at the kitchen table) isn’t a task that everyone is fighting to do. Yet it is
clear to all of us that there is significant, sometimes immeasurable benefit to keeping our business
information current and up to date.

I am very proud of one of my clients this week. He was facing a very uncomfortable situation that will
lead to further discomfort as time goes on. We had discussed an idea or two to possibly defer the
immediate pain, but in the end, he chose not to procrastinate. He faced this situation head on and took
what was coming his way. We’re working hard to deal with it even though seeding is ready to start on
his farm. He realizes that while getting the crop in the ground is highest priority, there is no benefit to
allowing this unpleasant situation to fall lower on the priority ranks. His approach to handling these
issues is an example for everyone.

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Direct Questions

Do you give yourself permission to let unpleasant tasks slide down the priority list?

Are you aware of the potential gains missed, or losses realized, from not giving financial matters greater
priority?

Are you allowing your conflicting priorities to pull you left when you need to go right?

From the Home Quarter

I make it my business to ensure you are keeping your financial management data up to date, current,
and usable in real time. Six-month old information is not valuable when making business decisions
today. Would you write a cheque today based on your November bank statement? I help farm
businesses realize the priority that needs to be placed on financial management practices and help them
understand the financial ramifications of improved or decreased efforts in doing this critical
management function. Alan Weiss writes, “I’ve never procrastinated about eating the lobster that I
ordered. We ought to treat our priorities in life the same way, as a great meal that can spoil if you just
let it sit.” Managing your farm’s information is certainly not akin to a lobster supper, but both will spoil if
you let them sit.

Keeping your information managed and up to date is a lot less painful that what my client faced this
week. He made it a priority when he didn’t have to. What’s your priority?

If you need help in prioritizing your financial management functions, determining your
True Cost of Production, identifying opportunities to reduce operating & overhead costs, or applying
analysis to your management data, then email or call me.

sustainability

Sustainability

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I very briefly got into a Twitter discussion on Sunday with a few farmers when the question was posed
about sustainability, specifically if the ag industry in western Canada is actually advocating for
sustainability or just preserving the status quo. I waded in because “what is sustainability?”

My tweet was a question: How do you define sustainability? Is it agronomic, environmental, financial,
family? There are many factors to consider on the farm.

Sustainability means different things to different people. Kind of like the term “organic.” Neither are
clearly defined anywhere in a way that is unanimously accepted. Both then are open to individual
interpretation. I’m not treading into the organic/conventional battle here; I’m talking about
sustainability.

The responses to my tweeted question were all about soil and how if soil health is the primary focus,
everything else *should* fall in line. I respectfully disagreed. Good soil stewardship + poor financial
management ≠ sustainability. I was not trying to discount soil health, just hoping to expand their line of
thinking. I left the conversation at that point. The parties continued to banter about tillage, irrigation,
crop rotations, etc. I just wish we could see that there is more to farming than production.

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Agronomic Sustainability

If you don’t know what Cation Exchange Capacity is, what your C:N ratio means, or how to calculate
SBU, then hire an agronomist (of which I am not one.) Agronomic sustainability is as much an art as it is
a science, and if you’re not well versed in the art, or the science, of agronomy then being sustainable
might be a stretch.

Environmental Sustainability

This is a slippery slope with a whole lot of noise out there. Who should you listen to? I’m not touching it
with a 12’ pole. But all farmers know that the environment is critical to our success. ‘Nuff said.

Financial Sustainability

I could write a book on this. From cash management to proper use of leverage; from strategy to
operational efficiency; from knowing your numbers to management process, the pages would flow!
Same can be said here as for agronomy: if you’re not well versed, hire an expert!

Family Sustainability

This hits me directly right now. Since I made the decision to retire from active farming to focus 100% on
my consultancy business, the family dynamic has changed drastically. Looking back I can identify things I
should have done differently, but those choices were not apparent at the time. One choice that was
apparent was to set expectations very clearly on Day 1. It is safe to surmise that didn’t happen. Whoever
said “It’s never a problem until it’s a problem” is very correct in their vagueness. We all took for granted
that the family will work together and get along, a gross miscalculation as it turns out.

Direct Questions

When you hear the word “sustainability,” do you cringe expecting an environmental sermon?
How many distinct ways can you identify opportunities to improve or incorporate sustainability in your
business?

Are you putting in adequate effort to prepare for the unexpected so as to remain sustainable in all
aspects of your business?

From the Home Quarter

I fear for those who don’t recognize that their farm is about more than just production. I’m not
suggesting that production take a back seat because is it critical to success, but we must expand our
perspectives beyond the crop and the field to the markets, to the balance sheet, to macro-economic
forces, to family dynamics and HR issues, etc. This list could be endless, and everything on it must be
“sustainable.”

None of this is new news; we all know that we must be sustainable in all facets of our business to
survive. But I ask if we are all able to recognize the opportunities and threats to our sustainability in a
way, or in time, to do something proactive about it.

If you’d like help planning your farm for business and personal success, then call me or send an email.

Nurturing Your Business

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In Issue #1 of Growing Farm Profits Weekly, we introduced how nurturing your business was one of
many critical factors that can affect your business success. This week, we’ll look deeper at nurturing
your business and how to leverage this often overlooked aspect of owning and operating a successful
enterprise.

Increasing wealth is the goal of any business, and only a healthy business can deliver accordingly. And
how you view wealth can be as unique as you are. The obvious answer is “profit at the bottom line,” or
“strong equity,” but some will argue that wealth is “discretionary time.” How do you define “wealth?”
Give it some thought; it will provide clarity in how you run your business.

There is a healthy ratio of nurturing that applies to 3 key aspects of your business:

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Crop

As discussed in the previous issue of Growing Farm Profits Weekly, your crop gets substantial amounts
of your attention because you know that investing significantly in your crop will grow you a better crop.
And a better crop leads to better marketing opportunities, which lead to stronger cash flow and higher
margins, which lead to profit. Simple as that? If only…

Assets

Yes, this means the tractors and combines, the trucks and trailers, the sprayers and swathers…the equipment on the farm needs to receive adequate nurture; these are the tools of your trade, and they need to perform when you need them. This is why you service regularly, send equipment into the shop for a certified tech to go through it in the off-season, and consistently use recommended operating procedures to ensure you minimize the risk of downtime.

But how much time do you spend nurturing your “other” assets?

Your HUMAN ASSETS (ie. your family and hired staff) require nurturing too. Unlike a piece of equipment
that runs the same whether you yell at it & operate with great disregard or if you treat it like a treasure,
your human assets often require a specialized approach. Just like you can relate and react better or
worse with certain people and their approach, your HUMAN ASSETS will also respond better or worse to
your approach. And if you view your human assets with the same regard you view your equipment, or
with less esteem than you give your equipment, then you’d better take a long hard look at your business
because it will be vastly different in a year or two.

If we consider the cost of owning/leasing and operating your farm equipment, it’s a safe bet you’d be in
the range of $40-$90/ac. Yes, that’s a big range, but there are big differences in each farm’s expense
management (we’ll tackle this in a future issue.) Please note this does not include capital outlay for the
purchase price. The cost of ownership/lease and operation looks at operating costs (fuel, oil, repairs,
etc.) lease costs, and “real” depreciation (not necessarily what CRA allows you to claim as a non-cash
expense.) We also consider custom work when calculating machinery cost per acre. Now that we’ve
established that your iron has a significant cost, why would anyone consider putting a $15/hr operator
in it? In one hour, you’ve paid an operator $15 to run equipment across upwards of 25ac or so that can
carry a machinery cost of $500-$1,000. Again, if you view your human assets as dispensable, this isn’t a
surprise in your line of thinking. But then it also shouldn’t be a surprise when that same operator isn’t

too concerned about stopping to rectify those plugged hoses on the air-drill.

If you’ve spent time building specific processes around HR management, you already recognize the need
to nurture your human assets. Congratulations, you’re on your way to ensuring the future success of
your business. Some processes you will want to implement are:

  • Recruiting, interviewing and selection
  • Performance management
  • Wages and incentives

There are many more items for this list, but we’ll save that for a future issue.

Relationships

While grain farming in North America is a commodity based industry, successful operation of your
business requires your adeptness at managing several key relationships. These relationships cover the spectrum from your professional advisors all the way to the part-time weekend counter staff at the equipment dealer.

I’ve seen some who give their least regard to the relationship with their accountant. True story; they see
the accountant as a “necessary expense” in order to file the “necessary tax forms.” Sadly, there are
many farmers out there who share that view. They do not recognize the importance of evaluating
business results against expectations or projections. I suppose these are also the businesses which do
not make business plans or projections.

How about service relationships? It’s easy to commoditize the grain buyer, the inputs retailer, or the fuel
supplier because there is always competition vying for your business. But if you don’t nurture the
relationship with your fuel supplier, what are the odds you’ll get that urgent May long-weekend
delivery?

Do service relationships extend to your staff? Do you pay them to provide you and your business with a
service, or are they integral members of your farm team? What do they need? What motivates them?
Why are they working for you and not somewhere else? If you don’t know the answers to these
questions, you’ve got 4 more days this week to find out…get on it!

Direct Questions

How do YOU define “wealth?”

Are you getting the most out of your crop? By that I mean “are you maximizing the most efficient
processes” available to produce your crops? It’s not about the highest yield at the coffee-shop; it’s about
gross margin (yet another future issue.)

Have you calculated the ROI on nurturing your human assets relative to the ROI on your iron assets?
What processes and procedures have you implemented to support your efforts to nurture your human
assets?

Ask yourself how you value the relationship you have with the following:

  • Agronomist
  • Business Advisor
  • Accountant
  • Banker
  • Lawyer
  • Commodity Markets Advisor
  • Equipment Dealer
  • Inputs Retailer
  • Fuel Supplier
  • Family
  • Staff

Is there one way you can strengthen each relationship this month?

Are you nurturing one aspect of your farm to the detriment of another? Why? Have you calculated the
net cost of this practice?

From the Home Quarter

We invest our resources in a manner that we expect to provide us with a return. And no matter if that return is tangible or intangible, it all creates the net benefit to our business: positive or negative.

You’ll notice I will rarely refer to the weather in this writing because we cannot control the weather. As a
business advisor, I focus on what we can control. For example, how do we invest and allocate our
resources: financial, intellectual, human, equipment, and most importantly, time. I believe in Alan
Weiss’ theory that “wealth is discretionary time.”

For any business owner to achieve maximum discretionary time, he/she must recognize what they do
best, and get help with the rest. Business owners must nurture their business in such a manner that
maximizes ROI, because as Alan Weiss says, “real wealth is discretionary time, but money is the fuel for
that wealth.”

Don’t get so caught up in earning money that you have no wealth.

Profit is not a swear word.

Time is the most precious, non-renewable, intangible resource we could ever spend. Treat it as such.
Growing Farm Profits™ provides topical and pragmatic business management tips and tools for primary
producers in Canadian agriculture.