Archive for Business Planning

Are you a hobby farmer or a dairy business?

I have heard it said many times that farming is a way of life.  I get that.  Nevertheless,  I don’t think enough dairy farmers understand  that dairy farming is also a business NOT A HOBBY FARM.

There is no question that dairy farming is all about passion.  Why else would they tie up all the equity they have in the world on an investment that provides what many would consider limited returns.  Think about it, if you’re in dairy farming for the money, you would be better to purchase a McDonald’s franchise.  The return on investment would be higher and the work hours shorter.

This past weekend the dairy industry lost a great member, Ken Rose of Rosayre Ayrshires (Read more: Ken Rose – Rosayre Ayrshires – Passed Away) at the age of 50.  Ken was one of the most passionate breeders I have ever met in my life.  He was also a great cattleman, exhibiting many prize winning Ayrshires.  Yes, I said Ayrshires. That breed that for many are  considered to be for “Hobbyists.”  That got me thinking, “Is it a hobby or is it a business?”

The Difference between Dairy Breeders and Dairy Businesses

Over the years I have met countless passionate dairy breeders but I have met far fewer great businessmen.  Many times there is a big difference between the two.  Just because you have a Master Breeder herd does not mean that you run a great business.  Also just because you milk 1,000 head,  does not mean you have  rivers of cash.  Passion doesn’t make payroll and profits.

The difference between those who are good breeders and those who are great business people starts with a mindset.  While there is no question most will work hard, it’s those that think hard about their business that are the ones who get ahead.  They are willing to take personal responsibility for the success of their business.  They don’t blame it on the weather,  milk price or the dog. They think things through ahead of time and have a plan (Read more: What’s the plan?) about exactly  how they are going to make a good margin.

Do You Have A Sound Financial Plan?

No I am not asking how  you think you are going to make money.  I am asking do you have a detailed budget plan about  how you are going to grow sales and cut costs?  In my work with many technology start ups, this is what makes the difference between those that thrive and those that dive.  It’s not who has the best idea or who is the most charismatic leader.  It’s those that have a well thought out plan.  Sounds simple and  it’s true.  The same is goes for many dairy breeders.  Those that thrive are not the ones that get the most publicity, spend the most money, or breed the best cows. It’s the ones the have a sound plan that thrive the most.  Sure all of those other things can help, but they are just part of the plan not the whole plan itself.

The Importance of a Plan

As a dairy breeder it is very tempting to neglect planning altogether, especially if you are the only person in the business. After all, planning can be a time consuming process, when there is so much work to be done.  But there is no question that the benefits of  good planning will far outweigh any of the work that you are currently doing.

The great thing about a business plan is that it can provide a reference point for you to return to at any point.  Just looking at a plan and seeing how far you have come is a great motivational tool. It can help you determine whether you have drifted too far away from your original vision and whether you need to get back on track  again.  It’s also important to review the plan from time to time. As circumstances change,  your plan needs to change with it.

Writing a business plan will also help you to think more analytically.  It will help you to see correlations between the different parts of your business.  Perhaps decreasing the cost of a particular process will affect your overall profit margin.  Maybe it will reveal that increasing  your investment in your breeding program can actually decrease your cost of production.

The value of a business plan  cannot be overstated. Putting ideas and concepts down on paper is invaluable and the act of researching and compiling data about your dairy business (notice I did not say farm) and the current market you operate in, will prove to be very useful in the years to come.

The 10 Steps to Working Smarter Not Harder

  1. Assess everything that needs to be done.
    Before you plunge into something headfirst, remember that enthusiasm needs to be tempered with wisdom. Look over every aspect of the job and allow yourself ample “pondering time” so that you can be sure that every detail is accomplished on time and accurately.
  2. Make an outline.
    Whether it’s in your head or on paper, you should have a checklist in mind and follow it in order. You don’t want to repeat steps, duplicate the efforts of others, make mistakes or forget anything.
  3. Learn to say no.
    Avoid over-scheduling yourself and be realistic about what you can accomplish in a single day. Sometimes you just have to cut yourself off because there is almost always something that could be done.
  4. Limit your goals.
    Try to avoid multi-tasking because you often get less done since your brain is switching back and forth between tasks. Pick one thing to work on and put your best effort into that until it is accomplished.
  5. Consider your materials.
    Don’t take shortcuts on the quality of your materials. Cheap materials or tools are harder to work with because they aren’t as sturdy or nice. Trying to save a few bucks, but spending an extra hour or two because those cheap things didn’t install properly doesn’t make any sense.
  6. Evaluate your methods.
    You want them to be as efficient as possible. Do your work when you have no distractions surrounding you. Try to do things in  batches rather than one at a time. You want your efficiency to be maximized as much as possible.
  7. Delegate to the right people at the right times.
    Often  the difference between a hobby farm and a dairy business comes down to the team.  Make sure your team is well-ordered. If one person is faster, put him or her on the part of your task that will take longest. If one person is more skilled and accurate, put him or her on the part of the task that is most critical.
  8. Be flexible.
    Your day will not always go as planned. Be open to trying new methods and doing new things.
  9. Rest.
    You should ideally be getting eight hours of sleep every night. You can certainly pull continuous 12 hour farm days, but it’s not sustainable. After a certain point, your body becomes tired and your mind wears down, leading to more frequent lapses in concentration and careless mistakes.
  10. Recognize the point of ‘diminishing returns.’
    The above steps do not imply that you should work yourself to the point of exhaustion. You need to protect your health and the integrity of your business. Constantly working yourself to a frazzle  makes you prone to mistakes. When you’re so tired that you realize it’s taking you twice or three times longer to do a job than normal, you need to call it a day. Rest at least a few hours and come back fresher, so that you can be strong at the end of the job. Learn how to power nap.

The Bullvine Bottom Line

Being a great dairy business is not about who works harder it’s about who works smarter.  The difference between being a hobby farmer and a dairy business, is not who has thought of a better strategy, it’s  who has a sound business plan to implement  that strategy.

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