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What do top producers have in common? [How you can implement similar practices]

Posted by Sarah Dixon

Sep 21, 2016 2:03:39 PM


What do top producers have in common?

Everyone wants to be the best, do their best.  You do not farm with hopes to fail.  Unfortunately, some do fail, operations go under and are sold all of the time.  Many of those owners are left wondering what they could have done differently to keep their operation afloat.  Not all of those operations were salvageable, but some could have probably been helped along by just implementing a few of the same practices that the top ag producers of today have implemented in their own operations.  Having a strategy, having contingency plans, having the tools to make quick decisions, the courage to say “no it is not working,” the drive to keep learning and the humbleness to say “I don’t know but there is someone out there who does.”  Those are a few of the things top producers have in common that make them successful.

Here are some great videos that may be helpful in understanding these practices better:


1.  Strategy is Keyplanning.jpg

Strategy is key.  In any business you have to have a strategy.   Farming is a business and so it  should have a strategy laid out.  Treat your farm like the business it is and have it on paper-not just in your head.  In farming you might have a crop strategy, a livestock strategy and a financial strategy that ties it all together.  Another term for a strategy would be budget.  Budget for inputs, budget for expected harvest (crops or livestock), budget for expansion and have contingency budgets if things don’t go as planned.  These strategies or budgets help you anticipate what is ahead for your operation.  They also allow you to adapt to changes: financial, weather, market.  Most importantly they allow you to capitalize on these changes in a quick and concise manner.  Those who are able to adapt quickly, make decisions quickly, are more likely to see greater returns on their decision.    To be a top producer you need to be willing to take risk.  If you have your strategy and contingency strategy lined out you are taking some of the riskiness out of taking that risk.

 

2. Knowledge is Key

 Once key.jpgyou have a plan you need to be able to implement it.  Implementing something may mean getting out of your comfort zone.  It might mean learning something new-never quit learning.  Invest in yourself.  There are several ways to do this.  You can attend conferences, training, classes.  Talk to peers who are doing what you want to be doing, learn from them, be a sponge soaking in their knowledge.  Don’t be afraid to admit it is beyond your ability.  Your specialty might be the grain side of the operation, and the financial side makes your head spin!  Learn as much as you can about the financials but realize your limitations.  There are experts in the areas in which you need help.  They can be accountants, nutritionist, crop advisor's, CPAs, CFOs, data entry-  you don’t have to be an expert in that area to hire the expert to help you. 

3. Financial Statements

So now you have your strategy, you have the people in place to implement the strategy. Now you need to monitor the results.  Top producers are able to have real time data at their fingertips to monitor progress and results.  They have accrual financial statements to show them what their costs (margin) are and what their managerial costs are.  You must be able to monitor your actual against your budget and adjust accordingly.  Having this information allows you to say, "well things aren’t going as planned, so now is the time to cut losses," allowing you to move in a different direction.  The ability to look at financial statements  in real time to see where you stand in time to change strategies and the willingness to make that decision to stop what you are doing and go in a different direction is key. The verse “Pride goes before destruction, and haughtiness before a fall” (Proverbs 16:18) says it all.  Sometimes you have to take your pride out of the equation and admit something is not going to work to keep your operation from destruction.  Having the ability to pull the plug on your idea when it is not going as planned is hard but essential.  When you have the numbers that don't lie in front of you they make the decision for you.

 



CONCLUSION:

There are tools that can help.  Software like FBS Systems integrated managerial accounting software will get you the accrual financial statements you need.  The FBS Systems Life Cycle Budget is a great tool to use for budgeting/strategizing allowing you to have multiple budgets for different possible circumstances.  FBS also offers Virtual Controller agreements if wearing the controller hat isn’t something you have the ability or time to do.  But the biggest tool you can possess is you.  Your attitude, willingness to try, your willingness to learn and not give up is key. 

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Topics: accrual accounting, Danny Klinefelter, Farm CFO, Life Cycle Budget

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