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Lessons learned

From The Progressive Farmer

  1. The definition of strategic management: anticipating, adapting to, driving, and capitalizing on change.
  2. Peter Drucker’s statement that 60% of all management problems are communications problems.
  3. Relish change. It’s ongoing whether you like it or not, and it presents opportunities for those who embrace it. We need to learn from the past, but it’s behind us. Tomorrow, today will be the past. What did you learn from it?
  4. You need to use accrual adjusted income in order to analyze actual business performance. Cash accounting is easy and great for tax management, but it lags two years or more in terms of knowing what’s happening, whether it’s getting better or worse.
  5. The 5% rule. A 5% increase in price received, a 5% decrease in costs, and a 5% increase in yield will often produce more than a 100% increase in net returns. The effect is cumulative, multiplicative and compounding.
  6. The management of your business has to continuously improve at the rate set by the leading edge of your competition, otherwise you’ll be falling behind, even if you’re moving ahead.
  7. The future will always belong to those who see and act on the possibilities before they become obvious to the average producer.
  8. Ongoing monitoring throughout the year of budget versus actual and year-over-year will allow you to be proactive in addressing problems and capitalizing on opportunities in a more timely manner. Remember, the main difference between the top 5% of producers and the rest of the top 25% is timing.
  9. You need to use cost/managerial accounting in order to know your costs and returns down to the unit level for every enterprise on every farm. This is for marketing purposes, as well as to know where you’re making or losing money. Too many farmers keep doing something simply because they’ve always done it that way, or because they’re in love with an enterprise.
  10. Use the DuPont model to analyze the relationship between your key financial ratios and in order to do “what if” analysis in order to identify where you need to make changes, as well as where you’ll get the biggest bang for your buck.
  11. People are your most important asset, so delegate, require accountability, reward the high performers, provide the opportunity for development training, and get rid of the problems. They’re contagious.
  12. Use “what if” scenarios and sensitivity analysis to analyze the possibilities of what could happen and develop strategies ahead of time for dealing with situations before they arise.
  13. Spend time determining the traits you need in a successor and create a plan to test and develop them. Don’t just assume the oldest son or a child has the right skills, talents, or vision to lead the business into the future.
  14. Join a peer advisory group made up of top people who will give you honest feedback, offer alternatives, and challenge your thinking. When you go into a peer group meeting, leave your ego at the door, and don’t assume there aren’t a lot of things you need to improve on.
  15. Don’t assume you’re doing things as well as you can. Remember, Tom Peters said “if it’s not broken, you haven’t looked hard enough.”
  16. Look for ways to collaborate in order to spread overhead costs, acquire the technology you need, or employ specialized management or technical skills you don’t possess or can’t afford on your own.