Brad Oelmann is president of Farrell Growth Group, a leading agribusiness consulting firm.
There is an unprecedented amount of change taking place in agriculture today. Your suppliers, competitors and customers are all modifying their operations, and new business models continue to develop. Market volatility and supply chain disruptions are difficult to navigate. Regulatory changes are upon us. The skill sets your employees need to be successful in this new environment are changing. Technology is changing so fast that it is hard to know where to invest time and money that will ultimately bring value to your business and your customers. How are the 20% of your growers doing 80% or more of your business feeling about your current value proposition? Do you really know why your customers are buying from you? What about the “growers of tomorrow”?
Because so many things are changing, it is difficult to believe that you shouldn’t change. Taking the time to prepare and execute an annual business plan will bring your business many benefits including the three discussed here.
1 Thoughtfully Setting Priorities
Time is your most limited resource. How do you make sure you and your team are spending it in the best way to impact the business?
Setting priorities through planning will help everyone get on the same page. And the process creates accountability. It amazes me how many important things don’t get done because there is not clear accountability or distractions get in the way.
2 Setting Metrics and Milestones
Once you have selected your key initiatives, it is important to set the metrics and milestones you’ll use to determine how well you are doing. Reviewing your monthly P&L is one potential metric. I would recommend developing a more detailed customer metric. How are you doing with the top 20% of your customers? Are you growing, retaining or losing business with that group, and do you know why? Are you cross-selling existing customers in other categories? Do you have a mechanism that allows you to pivot based on the feedback you receive from your customers?
The recent price increases for many inputs you sell can mask what is happening if you only look at top-line sales. Finally, how do you prioritize a prospect list, and what will be your approach? Is the approach different for each prospect?
3 Managing Finances
The volatility in all markets has created less predictability and more risk.
Will you need to purchase inventory sooner based on some of the supply disruptions? This can have a big impact on how you manage cash. How are you managing the risk associated with elevated inventory levels? Do you offer financing programs for your customers? What impact does the change in input prices have on your cash flow? How are you managing the risk with finance programs?
Annual business planning will help you navigate many of the aforementioned questions and create accountability within your organization to lead to greater success for your company.
