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Country Guide’s plan for your farm to thrive in 2015

Hitting any of these 10 targets can make 2015 a year to remember. So get inspired. Pick goals that fit your farm and your vision. The whole year is waiting

A winter wheat leaf pokes through the snow. In the frozen white, that hardy leaf means hope and even optimism. It is a promise that winter will turn to spring, and that spring will make way for summer, and that then will come the harvest.

The plant thrives in spite of, and because of, weather that is too tough for other plants to take.

It’s a great symbol of the farmer.

Nor did that wheat plant get there on its own. It took planning, skills, time and equipment, topped up with a good dose of science and the latest technology, all because the farmer had two amazing capabilities — the ability to dream, and the ability to make it happen.

Thriving means more than being profitable. The Merriam-Webster dictionary defines thriving as growing vigorously or gaining in wealth or possessions, and to progress toward or realize a goal despite or because of circumstances.

On the farm, that’s a definition of success. All the dictionary would need to add is that although you sometimes can’t choose your circumstances, you can choose how you react to them.

Today, building a thriving farm requires more than long hours and hard numbers. Successful farm businesses need smart, healthy, happy farmers. Think of it as building strength from the inside out.

So with the help of Len Davies of Davies Legacy Planning Group in southwestern Ontario, farm family coach Elaine Froese, of Boissevain, Man., and a whole lot of others, Country Guide identified 10 traits that will help you and your farm thrive in 2015.

Country Guide’s 10 ways to thrive include some number crunching and planning, but they also include ideas for personal development and wellness. This list is about creating positive habits, and managing numbers and people toward improvement.

So take a deep breath. Ask yourself, which goals are best aligned with where you want to go. Then check out our followup articles, because we took the whole process a step further and asked our writers to really dig into what this advice will mean for your farms. In other words, how can you turn the dream into an actionable strategy?

Then plunge into 2015 with resilience and intelligence.

Thrive in your life’s work.

1. Learn something new

Davies and Froese are big promoters of continual learning. Over the years, they’ve taught thousands of farmers about on-farm financial and family business issues at conferences, and through webinars, articles and online videos.

Froese consumes books like other people drink their coffee, insatiably with big gulps and a smile on her face. Most of her articles have recommended reading lists attached on the end.

When Davies helps create a business plan, he makes his clients add some goals for personal development for the year. Going further, he gets his clients to write down at least one way they’re going to improve their own skill set. “By writing it down, there’s a bigger chance of it happening,” says Davies.

It’s all about proactively deciding the focus of your learning. Then systematically blend learning opportunities with practising what you’ve learned at home or on your farm.

Consciously moving through a series of selected learning activities in order to meet specific goals will help you master skills. Besides, you’ll find that by layering your skills from various sources over time, you will retain more than sporadically watching random webinars or attending a blitz of random workshops.

This is especially important for learning leadership, supervisory, interpersonal and problem-solving skills. Successful learning on these topics usually requires time for reflection and may involve changing your behaviour, which takes thought and commitment.

2. Review 2014: Beyond the P&L

Davies calls it a post-mortem. Review your last year. As a habit, he does this with many of his successful clients and usually it involves the whole business plan and then drilling down into the year’s financial statements. “You cannot manage what you cannot measure,” says Davies. “Completing your plan is great, but farmers should measure their progress from one period to the next.”

It’s not as morbid as it sounds and in fact, can be very affirming. Davies starts by looking at the positives. “Seeing all that you’ve done — and done well — helps you get motivated to really look at the 20 per cent that didn’t go so well, things that can be improved on,” he says.

Then he goes through the financial statements to identify trends in previous years’ statements. That’s when the red flags are raised. By using accrual accounting you’ll have a clearer picture of what’s going on. Having a qualified third party involved in the process tends to keep goals and explanations honest and realistic.

Davies brings along a big-screen laptop or a projector to use while filling in the blanks for financial analysis, and he suggests partners, farming children and spouses join this meeting. He wants his clients to understand how these ratios are calculated, instead of just outsourcing it. When everyone understands the plan, it helps stop procrastination. He has also found sharing financial statements and plans with your accountant and lender solidifies the commitment to action.

The process is like looking for leaks in gas lines by first seeing if you used more diesel. Then you figure out where it’s leaking, followed by learning why it happened so you can fix it.

Once problems are identified, changes can be made to improve. Something should be learned from each failure, and a new process implemented quickly, using worst-case scenarios for the projections.

Comprehensive, usable data enables you to lead rather than be forced to make reactionary decisions.

At this post-mortem session, Davies also insists that farmers write down three or four specific things that should be done to meet their goals. Then they need to assign a person to each action, and back it up with a deadline. “Farmers tend to start with production goals and then link them to financial goals,” says Davies.

3. Get away from the farm

Whether it’s a weekend at a relative’s or a week at an all-inclusive, a little break can make all the difference, says Elaine Froese.

Taking time for a break can be difficult, but it isn’t impossible and the payoffs can be huge. Time management is about priorities, not time. It doesn’t have to be costly or involve hopping on a plane to some sunshine.

If the budget allows, book a nice hotel for your family or your partners and turn it into a team-building or strategic-planning exercise.

Froese suggests you stretch yourself by doing something you’ve never done before or going to a new place. It seems that transplanting yourself, even for a little while, stimulates your brain. Neuroscientist Greg Berns summarizes in his book Iconoclasts that insight and discovery are more accessible to us when we seek out environments that we haven’t had experience with.

Maybe it’s time to check out a farmers’ market in a nearby city, or take in a local park you’ve never been to, or try a new sport or restaurant. Or it can be as simple as choosing to take a course that you may have to travel to get to instead of just going to the local AGM or crop production meeting. Try selecting a meeting that is taught by people you don’t ordinarily see, or hear a new perspective on an unfamiliar topic. It might be full of new insights and ideas. Potentially, it may even change how you think about your farm, friends and family.

4. Plan a new strategy

How long has it been since you thought about your farm’s overall strategy? Many businesses do this annually, and this year’s big changes in prices mean it’s a great time to do this on the farm too. “Planning should be a habit,” says Davies. “There’s always something to improve.”

Most farmers tackle the feasibility of their plans only if they are making big purchases or if it’s demanded by the banks, says Davies. Doing it annually instead will take the emotions out of the planning process and help you with your decision-making.

If you plan to expand, take some time ahead to think about the implications. Does it change how you will market? How much human resources are you going to need to manage the expansion? How does it affect your farm’s cash flow this year and into the future? How efficiently are you using assets like machinery? “Cash flow these changes,” says Davies.

But be careful to ensure your plan isn’t a reaction to this year’s challenges or last year’s successes. Most people just look back or default to what they know to create their strategic plan. A better question to ask yourself might be, where could you go off track next year? Take note if market demographics are changing, or if new technology is entering the industry, or if new legislation is threatened. Then consider what those changes could mean to your business and how you will accommodate or take advantage of them. Now that’s strategic.

Understanding your current position and doing projections can take the fear out of change and debt. It’s not all about commodity prices or interest rates. Moreover, you do not want to aggressively pay down debt at the expense of expansion. “Good debt is good,” says Davies.

If you consider purchases ahead of time as part of your strategy, you are more likely to be realistic, Davies says. “If a piece of land comes up for sale next door and the question is should I buy that farm, often we tend to not be realistic enough in our number crunching.”

You can have buckets of great ideas but they won’t come to fruition if there’s no action plan.

5. Review your Mission and Vision Statements

If your farm doesn’t have mission and vision statements written down, do it when there’s a lull in the production cycle. If your farm already has these statements, take a moment to read them. Do they still talk to you? Do they make you more focused?

Mission statements capture what you do and why you farm. Vision statements set out what your business aspires to become. They are the big picture of where you are going.

When making or redoing a mission and vision statement, Davies gathers everyone who’s involved in the farm and asks each to write down their goals and prioritize them from high to low. Next he takes the top five and shares them with the group. He is amazed by how often they align.

The process of writing vision and mission statements is worthwhile as it opens up thinking and communication. Your team needs to reach consensus about goals and what the farm is striving to be in the future.

Think of it like stating what folks at your funeral will talk about when discussing why you were successful. Did you adopt technology, treat employees well, or take care of the environment? It might even talk about how much you loved your family, or produced a fantastic product or consistently improved yields. It’ll likely make you feel good, and remind you of how far you’ve come and how great it will be to get where you are headed.

6. Update your Marketing Plan: Pre-price 1/3

2015 is going to be different — maybe much different — than the last seven years. In this new reality, planning your marketing can be the difference between surviving, thriving and keeping the farm alive.

Market analyst Errol Anderson on page 22 says it’s time to sit down and take stock. Start by writing out your total production, grades and quality, and then revisit the cost-of-production estimates you did at the start of the season. Now you are ready to watch for market opportunities and changes, so you can modify your marketing plan as needed. Importantly, it will also help you keep emotions out of your marketing.

One of the biggest errors farmers make is playing the game of market outlook and then trying to be “right” on the market. By knowing a realistic cost of production, and following market trends, you can be prepared to jump on profit opportunities.

Knowing ahead what your monthly cash flow needs are going to look like will help you meet cash obligations and not oversell. Also, add in your storage costs. Then consider your level of risk tolerance, and the balance sheet’s ability to withstand a setback, like having to buy out a contract the farm can’t fill. Anderson suggests considering some paper sales instead of storage, and he says paper can help motivate you to pay attention to the markets. But mostly he says we need discipline, so write down your marketing plan and be prepared to sell incrementally at a profit, instead of waiting for spikes like we’ve enjoyed over the last few years.

7. Give thanks

Being grateful is a powerful attitude for family and business, says Froese. It’s so powerful and so simple, yet so few people do it.

Like other ways to thrive, to fully enjoy the benefits of gratitude, it needs to become a habit. In researching her article on page 18, Helen Lammers-Helps found thankfulness was most effective if it was done regularly, at least once a week.

The article is full of ways to fit gratefulness into your days, with concrete recommendations from writing letters and doing the Facebook gratitude challenge, to saying five things you are thankful for every night before bed. It doesn’t have to take a lot of time or effort, but it does have to be sincere.

The challenge, says Froese, is to make being grateful a part of your workplace culture, which on most Canadian farms means making it a part of family culture.

For families, it’s sometimes more difficult to express gratitude. Family business adviser John Fast says a lack of appreciation is the biggest problem on family farms. Most people just want Dad’s and Mom’s blessing. Fast says family members come to every interaction with three core questions reverberating in their minds: Am I worthy? Am I competent? Can I influence events in my life?

“Everyone,” says Fast, “wants to be lovable, competent, and feel in control of one’s life.”

8. Self-care: Follow the 10 Commandments for Health

To be your best, you need to sleep, eat well and exercise. “Self-care is so important,” says Elaine Froese.

Self-care doesn’t mean not working; it means taking care of yourself while you do work so you can keep working at your best. It includes emotional and physical care. Burnout can destroy a family farm, says Froese.

Staying fit and healthy is imperative, so it’s time to start integrating it into your routine. The article on page 25 describes all sorts of ways to combat unhealthiness, including a list of the 10 Commandments for Health. It doesn’t have to be complicated or expensive.

Then make it a way of living. Get a flu shot, drink more water, join an exercise program, add a vegetable or fruit serving to a meal, book a physical, cut back on coffee, go to the dentist before you have a toothache, consume desserts or alcoholic drinks on the weekends only.

The reality is that farmers are not as fit as we used to be. As our farms become more automated we no longer have a built-in exercise program in our jobs. Like the rest of North Americans we can suffer from “sitting disease” which can lead to all sorts of physical problems. So get up from the desk and out of that cab for a few minutes every hour and walk around.

9. Control costs: Be part of the 44 per cent of farmers who do break-even analysis

Farmers who take a very sharp pencil to the expense part of the balance sheet can thrive even when the income part of the balance sheet looks a bit bleak. Ask any old-timer at the coffee shop: when commodity prices are low, costs can make or break you.

Having detailed information on hand will help you better manage input purchases and set marketing targets. It will also let you drill down into your costs per unit and to compare production units within your own operation. This cost knowledge is also the base of comparing year-over-year performance and for benchmarking.

Farmers tend to track direct costs, wincing at seed and pesticides price increases. But what about how much the operational expenses of fuel and general labour have increased over the last decade?

Anecdotally, farmers who know where they spend their money are in better cash flow positions. So 2015 should be a great year to take detailed stock of your expenses. Be realistic and take a good hard look in the rear-view mirror of your new pickup. Understanding up front where you can and can’t cut back will help make the tough decisions easier.

10. Communicating means you’re 3x more likely to innovate

Farms today are dealing with multiple family members, plus staff, outside contractors and a business environment that changes as quickly as Clark Kent. And yet, as Helen Lammers-Helps finds out in her interviews on page 44, poor communication is like farm-family kryptonite

Even though today we can communicate in ways we could never have imagined 20 years ago, the gap in how we communicate has never been bigger. (I say this with my 14-year-old telling me that I’m texting incorrectly and my 77-year-old mother unable to figure out email).

It’s time to ask everyone involved in your farm the way they each prefer to communicate. From setting up family meetings, to texting, to twittering, to taking a public speaking course, to hiring a third party to help you through some tough conversations, there are many ways you can improve communication, and it’s never been more important.

Thriving is more that surviving, it’s about growth and evolution. Even though your farm is probably ripe for innovation, to make effective change you have to give the people you are working with permission to share their perspectives. A 2013 study in the Harvard Business Review found employees in a “speak up” culture were 3.5 times as likely to contribute their full innovative potential.

About the author

Senior Business Editor

Maggie Van Camp

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