I hear so many in agriculture say, “This is how my daddy did it and how his daddy did it and this is how we are going to keep doing it…” I heard that a lot growing up at several farms in my area. As I’ve gotten older, however, I’ve come to learn that it takes a lot more than simple hard work and “better sameness”.
Like any multi-million dollar business, farming is no different, you have to be throwing money at R&D (Research and Development). You have to have someone on your team or inside the operation that is constantly looking and searching for new innovations and ways you can become more competitive or ways to pivot and add ancillary revenue streams to your model.
You have to know what race you have your dog in… are you capable of being the low-cost producer in your area? If so, you have to believe you can have the cheapest breakevens or in other words, belive you can produce the crop cheaper than your neighbors. Do you have the least amount of debt vs. your nearby competition? If so, then you are comfortable cheering for higher yields and lower prices and you are doing everything in your power to leverage and increase yields in a profitable ratio-to-expense.
On the flip side, if you worry that you can’t compete and win as a “low-cost producer” you need to be allocating more time and energy to finding alternatives and ancillary revenue streams.
I’m not telling anybody anything they don’t already know, I am just wanting to provide a reminder that we must look at our farming businesses just like Wall Street and others look at traditional businesses. How much time, money, and energy are we allocating to the future of our business?
We not only have to know where we are currently, but we have to know where we will be able best to compete moving forward, and what tools will our kids need and be able to afford without getting over-leveraged.
Let me add a very important point I think some miss when we talk about “pivoting”. I am not talking about a decision to make a wholesale change to everything we do on the farm all at once. In fact, I’m simply talking about looking for new ideas and new ways to generate income. Somewhat like the farmer I wrote about last week, Samuel leeds Adams, who invested the “Flexible Flyer” sled to supplement his families income during the winter.
For many reasons “pivoting” a business often takes much longer than you think and can be very difficult. For that reason you have to constantly be looking and searching for new ideas. Unfortunatley, for those that are not in the process of throwing resources at new ideas, you could end up really struggling when change comes knocking on your doorstep.
The one thing we know that is certain in life is “change”. I had a good buddy who once said to me, “It’s best to pick your change, before change picks you.”
Be sure you are working with your lenders and accountants to create a team that understands your goals and willingness to be open to new ideas and can help you build out a fresh and updated roadmap or set of blueprints.
I’m a huge traditionalist and love the history of our past, but I also know and understand that in order for a business to survive for multiple generations it has to be flexible and willing to allocate time, resources, and man-power to “change”.
As I get older, I find myself struggling and fighting the battle daily. The only thing I can say is to hang in there… and let some of these youngsters take on some responsibility and be your beacon for change. FYI… The definition of a beacon is a person or thing that warns, guides, or offers support. It’s our job to find that beacon and let them help.
