By John Ellsworth
This has been a trying time in the dairy industry. As I write this column, no one is cash flowing. How can they, with $10/cwt. milk, record-high feed, fuel, labor and insurance costs and the recent difficulty in acquiring financing? Thus far, most banks seem to understand. But there is, at best, the possibility of delays on renewals.
In the entire scenario of finance and the world economy, my biggest concern is over paralysis – that is, the inability to make a decision.
What can I do now, you ask? Here is what I have been doing with clients in 2009 in an attempt to free up any paralysis in their thinking. The concept was developed by Dan Sullivan, president and founder of The Strategic Coach organization in Chicago. As you go through this process, please keep in mind of what Sullivan has often reminded his clients: “All progress begins with telling the truth.”
Here’s how it works:
1.) On a sheet of paper, draw lines to divide it into four sections.
2.) In the top left quarter, write “DANGERS.” List the items that are possible sources of loss for you, such as low milk prices, high feed costs, reproductive problems in your herd, etc.
3.) In the top right quarter, write “OBSTACLES.” List items where you are stuck, that is, you can’t seem to move forward. Possibilities are your present cash flow, the need to plan for the next generation or other areas.
4.) In the bottom left quarter, write “WEAKNESSES.” Make a list of items where you are lacking a resource. Some examples might include new financing, a feed loan that is presently greater than the value of your feed inventory or the lack of CPA-prepared financial statements.
5.) Finally, in the bottom right quarter of your sheet, write “SETBACKS.” Make a list of all items that you have actually lost in the current downturn. These might include your profitability, lending relationship with your bank, some of your former suppliers or other items.
After you have made a list for each category, review them and ask yourself if all the items on the lists are equal to each other. Circle the item on each of the four lists that is most critical. Which of them is most important to your business? What can you do about each of these four top items?
Remember, our objective here is only to “unparalyze” your thinking. In my experience, this exercise frees up clients’ thought processes and then accomplishes two other tasks. First, it identifies specific problems. Additionally, it helps to identify potential solutions. That is ultimate goal of the exercise.
As Victor Frankl said of his experience at Auschwitz, the vilest of Nazi concentration camps, his survival depended upon the realization that his old life was over. His new life and future would be vastly different.
The same holds true for us in the dairy industry. The old game is over. We are in a new game now. Even when we start to see the next upturn – and I hope we do before you even read this article – we will all need to update our thinking and processes. The scrutiny to which we will be subjected is going to be intense.
Is this a bad thing? Not necessarily. However, each of us must decide if we truly wish to operate in this environment and, if so, be prepared to change our thinking. How will you deal with this and move forward in your dairy business? I hope this process will assist you to accomplish that task. Give it a try. I think you’ll be glad you did.
• John Ellsworth of Modesto, Calif., is a consultant with the financial and strategic consulting firm Success Strategies. He can be reached at 209-988-8960, or by e-mail: email@example.com.