6 must-have components in your ranch's 10-year plan

6 must-have components in your ranch's 10-year plan

Do you have a plan for where you think your ranch should be in 10 years? If not, now is a good time to start thinking about putting one together.

As a cattle producer, keeping up with daily and seasonal tasks can leave limited time for special projects. So, when someone asks if you have made time in your schedule to develop a plan for what your business will look like in 10 years, you may chuckle and say, “That’s on the other to-do list — the one I haven’t made yet.”

Whether the next generation may be ready to take over the reins, or you are still in the prime of being active in your agricultural enterprise, Mike Gustafson, agricultural consultant with Tygus Partners LLC, says you need to answer this very important question: What should my business look like in 10 years?

“Aligning all stakeholders toward a mutually agreed-to business plan is an untapped power within farms and ranches. Too often, decisions are based upon the current commodity prices of cattle and inputs. There may be several family generations working together, and the answer to the 10-year plan provides the decision-making compass for everyone involved,” says Gustafson, who specializes in strategic planning for farms, ranches and agricultural businesses across the Midwest and is based at Sioux Falls, S.D.

Gustafson has developed steps cattle producers should take, along with important questions they need to ask and answer, as they work toward the development of a vision and core values for their business in the next 10 years.

Plan-building components

There are several factors that help determine how you will fare implementing your 10-year plan.

Employees/family members. Farms of the past often included only family members; but today, with increased size and scope, many farms have nonfamily employee members or extended family members with a significant role in the operation. Gustafson explains that when you study your business, study who you are hiring, how they are being trained and if they fit your culture. Pay particular attention to the next generation of family members. Do they share the passion and commitment to be that next generation?

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Many successful cattle producers will talk about how their businesses are always improving because the employees are capable and the business culture allows for them to provide input to new improvements. “When an employee sees that the owner[s] listens and then implements their new ideas, the trust and commitment for all employees can be a great motivator.”

Communication.Once you have determined what your 10-year plan will look like — live it and feel it, communicate the plan to your entire team.” Farmers and ranchers have a passion for agriculture; that’s why you do what you do. As the leader of the business, lead by example. “Make sure your employees know you appreciate their contribution, keep them engaged in the business and communicate often with them. This demonstrates your dedication, and they will work above and beyond for you,” Gustafson says.

Standard operating procedures and checklists. “First, every person and business has their own individual way of how they want things done. There is nothing wrong with that,” Gustafson says. “But your preferences of work style must be documented, so you can communicate it to key people who influence your business: employees, veterinarians, nutritionists, etc.”

For example, if these individuals worked with other operations in the past, you want them applying your standard operating procedures when they come to your ranch, not those of the neighbors or past employers.

Secondly, part of standard operating procedures are checklists and how your team views them. Airlines have checklists they comply with before a flight can take off — critical steps to ensure safety and security. Your business should have checklists, too.

The question is, how do your employees react to these checklists? If your employees think following checklists is a nuisance, rather than a critical task, you have an issue. Will these employees help you reach your goals? “You need complete buy-in from employees. In fact, you want your employees to say, ‘Mr. Supervisor, can you come see if I am doing this right?’ ”

Technology. “Technology should change the way you do business and the way you view your business. If not, how will you succeed in 10 years?” Gustafson explains that if you are too busy with day-to-day tasks, are not open to trying new technologies or flat-out neglect them, you will fundamentally be in a different place 10 years from now than your competitors will.

One example is the technology of mapping the bovine genome. Originally, it cost hundreds of thousands of dollars and was not available to most cattle producers. Today, the cost is as low as $50. With new technologies available, be aware and educated on these advancements, then select those that support your 10-year plan. Overall in your 10-year plan, you are applying the right people with the right standard operating procedures and the right technologies to deliver the results.

Customers. You stay in business because you deliver value and/or products needed by customers. For beef producers, customers include everyone from the packer to the consumer. The standard operating procedures and adoption of technologies for your farm will be influenced by your customer. As you go forward, it is critical to think about each of these steps in relation to your customer.

“Current consumers want to know more and more about food production, so don’t fight it,” Gustafson says. “Implement steps to provide them with information about your product; be transparent; and open your business up for consumers to come see what you produce and how your business impacts them, the community and feeds the world.”

Finances. Don’t fixate on the totals in your profit-and-loss or balance sheet. Those totals are a result of all of the decisions you have made in your business.

If you want to improve your P&L or balance sheet, look back into your operation and change the decisions that produced those financial results. “Go through the steps identified in your plan, make the needed changes, and your outcomes will reflect the improvements.”

Gustafson explains the financial enemy lurking in your operation is profit leaks: those processes that allow a persistent drain of revenue and resources, but are extremely hard to find by just looking in your accounting system because they typically don’t show up in your ledger. When you analyze each step in your business and determine where these profit leaks are occurring, you may be able to add significant dollars to your bottom line just by making some simple adjustments.

When you carve out time to answer the question “What should my business look like in 10 years?” you place your business on the road to the future. If you haven’t done this yet, it should be on the top of your to-do list — the one you have already written. During the planning process, your decisions will map out a future and create a vision you can then identify, document and communicate to all who influence your business. But most importantly, you’ll have a road map all shareholders can support.

B. Lynn Gordon. Ph.D., is a freelance writer from Brookings, S.D.

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