By John Ellsworth
“The difficulty lies not so much in developing new ideas as in escaping from the old ones.”
~John Maynard Keynes, Economist
Think about the title of this article for just a moment. I imagine that you are wondering where I am going with this line of thought… Well, I recently saw a quote from the star musician Madonna that said, “I spot a trend and then I get ahead of it.” Whether you are a huge fan of Madonna or not, you have to admit that she has done a fantastic job of re-creating her image over the last 20 years to continually stay on the leading edge of her industry. Have you?
Pursuing positive projects?
When your banker comes to your dairy operation once or twice a year, is he or she impressed with some of the new projects in which you are involved. Speaking from my prior experience as a lender, I was always excited to hear about the positive items that my customers were pursuing. After all, the bank likely plays a key role in ensuring your growth and success. So, how do we get to the point of being able to stay on the leading edge of change in our industry?
Initially, I believe the process requires that you attempt to identify the changes that are occurring around us. What are these top five variables that are moving in new directions? Please remember that they can be somewhat different for each dairy operation, but it is more likely that they really are only different in the actual impact they have.
For example, a drop in milk prices will certainly impact an operation that is highly leveraged more than one with little or no debt. However, these changes are still occurring for all of us. They are just like the law of gravity. You can jump off the 10th story of a building and exclaim, “I don’t believe in gravity,” all the way to the ground, but it won’t change the final outcome, or the impact of gravitational forces!
What are the most important trends and how do they impact your dairy?
Here are a few to consider:
1.) Feed Prices in the future – Where will they be headed over the next 3, 6 and 12 months? How about over the next five years? Most important, what will the impact of this be on your operation and how do you plan for a more successful outcome?
2.) Short Term Milk Prices – They are clearly trending upward as I write this article, but how do you take advantage of this trend? Should you lock prices in now or at some date in the near future?
3.) Long Term Milk Prices – How do you ensure that the consumer gets a great product at a reasonable price, but not while watching you go broke? Given those two factors, which are somewhat in conflict with each other, should you join a coalition of dairy producers such as the National Dairy Producers Organization? Yes!
4.) Future Financing – This is an area of great concern to me. Will lenders be there for producers in the future? Following the financial fallout of 2008, they have been overburdened with the “great government fix,” characterized by excessive regulation and bank auditors who believe the entire world revolves around them… Regardless, what will these trends in financing mean to your business? Now is the time to think about it, not three years from now when you and entire industry may have their backs “against the wall” financially.
5.) Interest Rates – In the event that you are able to borrow money in the future, and I do believe that you will be able to, what are the trends and the factors that affect interest rates? How can you capitalize on these?
6.) Environmental Issues – What is the next set of regulations that could surface? Are you prepared for them? Can you afford them? Ignore them at your own peril. Doesn’t it make sense to be thinking about what they might be?
As you move forward in your business, think back to some of the trends in the past that you have taken advantage of. What were they and how do you capitalize on them? For you to continue to succeed, what new trends do you need to recognize? How can you stay “ahead of the curve” with them? What are your most successful colleagues or neighbors doing? Remember, you don’t have to have all of the answers to these questions. You just need to take the time to think about them and if you cannot figure one of them out, talk to others who can or who already have.
If I can help you as you think about developing a better future, please let me know or visit my website at www.success-strategies.com and look at our free Success Tips and Videos sections. Either way, please set aside some time to consider these trends. What’s next? It’s your move.
■ 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: firstname.lastname@example.org.