Business schools teach a useful rule. Whether you’re CEO of Ford or if you run a Mom and Pop restaurant, they say, you should spend 80 per cent of your time working on the nuts and bolts of how you make the right quality product at the right price.
That seems about right for the farm too.
One of the predictions we can pretty safely make based on the 2016 ag census is that cost management is going to be an even more important success factor in the next five years.
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In many ways, the playing field is more level than it was just a couple of years ago. Key strategies are being exploited by a larger and larger share of our farms. More farms, for instance, are incorporated. More are getting professional accounting and financial advice, and more have sufficient reserves to avoid being pushed into decisions they don’t want to make.
Today’s farms also share the same hurdles, including the high cost of expansion, and their return on assets is an obvious target for differentiating their performance.
But it isn’t the only way.
When you’re at the farm shows, tell the company people you meet that you want to learn more about their company, not just about their product and how they service it.
What makes them so sure, for instance, that they’ve got the right attitude, the right skills and the right strategy to succeed.
In other words, turn the tables on the companies, because those are exactly the questions that they are asking about you.
Every company worth its salt is assessing the farmers in its geography on a more or less continuous basis. They know the customers they want to protect, the farms that don’t really matter, and the farms they desperately want to acquire.
Increasingly, they aren’t defining those categories based solely on current acreage or equipment line-up. Instead, they’re making deep decisions about whether you’re likely to be a winner.
It’s a test they know they must win. Competition among farm supply businesses is intense already, and is about to become a blood sport.
Of course they want to know if you’re on top of the 80 per cent, i.e. the production side of your business. But increasingly, they’re looking to see if you respect the other 20 per cent too, since it will disproportionately affect your long-term outlook.
Are you organizing family meetings? Do you have defined roles for family members? Are you smart about HR? Do you have vision? And can you articulate it?
And, most important of all, do you enjoy talking business strategy?
If you start asking your own questions when you size up suppliers, you’ll be impressed by the amount of thinking they’ve done.
And you’ll notice that they’re noticing that you’re asking these questions. So be forward about it.
The more penetrating your questions, the more points you’ll earn.
Are we getting it right? Let me know at [email protected].
