THREE NUMBERS TO KNOW
I. Working Capital: The capital available for the business to do its work
[CURRENT ASSETS - CURRENT LIABILITIES] gives you a dollar amount, but t only means something if you put it into perspective with a ratio. So we divide that number by our GROSS REVENUE. Let’s plug in a couple of examples with $1M working capital as an example. A Main Street boutique has a gross sales of $500K. Then 500,000 divided by 1,000,000 gives them 200% working capital to gross sales! On the other hand, General Motors did about $150B last year, so if they only had a million in working capital it give us so small a ratio you’d hardly even be able to measure it.
Most farms are going to be comfortable keeping their working capital above the 30% mark, so that if a farm raises a million in crop sales, that’s having about $300K of liquid assets.

II. Debt Service Ratio: Operating revenue compared to how much is going to be spent paying debt in a given year
This speaks to the business’s ability to take on and cover debt. If I have a .8 ratio, my business is only generating enough income to pay 80% of its debts. It’s like a household that brings in $100,000 dollars but is spending $125,000. That extra $25k has to come from somewhere—maybe it’s a credit card at a high interest rate, or taking out a second mortgage against equity they have in their home. Essentially, the household can only do this until its assets run out.
The flip side is if our number is a 2.0. That means we are bringing in twice the income as the debt we are paying out. We’re in a comfortable spot, and if we need to take on more debt we have some flexibility.

III. True Breakeven: It’s about getting to a per-unit of production cost—not just our inputs—but a real picture.
If I own several factories that produce paperclips, I’m not looking at my cost per building as much as I am looking at my cost per clip. But if I’m wasting money in my building, then my cost per unit will go up. But simply looking at cutting costs at the building level could increase my per-clip cost. Maybe I have a high-priced plant manager—the bean counters see that salary as a great way to cut cost. The plant manager goes, wage cost per building goes down, but so does productivity. My cost per clip just went from 1 penny to 1.2 pennies because we were too focused on saving on building costs.
For the farm, one of the elements that creates a true breakeven is adding in the non-cash cost of machinery use. Every crop I raise is requiring the use of the equipment I own—whether I’ve bought equipment this year or not. So we want to reflect that in our cost per unit. What our advisors do is take the total equipment value owned by the farm, divide by 10 and add that onto our annual input costs. This ensures that each crop is contributing in a way the replaces the machinery it has used.
The one caveat in break-even forecasts is you are going to have to estimate yields. This uncertainty for some can lead them to not even want to think about break-evens until they know how many bushels they have in the bin. But this is where history can help. We start from looking at our last five year of yields, then throw out the high one and the low one. This at least gives us a start—then we can begin looking at what 5% better yield looks like… 5% worse… and so on.

THREE DOCUMENTS TO MASTER
I. Balance Sheet
This is an annual tradition for anyone who owns a business. In fact it’s something households should do, even if they aren’t a business. It’s a statement that gives you a snapshot in time of the assets of the business, the liabilities of the business and the resulting equity of the owners. It’s what you own minus what you owe. Typically this is done at the end of the fiscal year of the business—the consistent time of year allows for year-over-year comparisons of the operation.
The balance sheet is a foundational document that every business needs to be on top of, but the challenge with it is that it is rear-looking. It gives you a picture of what has happened, where we’ve been and what the trends look like—as well as insight into risk-bearing ability for the operation—but doesn’t give you a picture of the future.

II. Projected Cash Flows
This is a forward-looking schedule of when major costs are going to be incurred—like land payments or input purchases—as well likely revenue from things like crop sales. This helps us to plan for the biggest demands on our operating line and be more proactive in our management of the lifeblood of our business: cash.

III. Accrual Income Statement
When I use the term “accrual” in the farm context, I’m thinking in terms of the crop year for farming. If we use the same information we create for tax purposes, which is typically calendar-year based, we will struggle to make effective management decisions. When using a crop-year approach, I’m pulling in all of the expenses that go into the crop and all of the revenues that come out of it. That could easily cover three calendar years in the process.
This is important because if I’m going to make sound management decisions, I need to correctly value what is going into and coming out of each production batch—in this case, the crop. To go back to the manufacturing example, if a batch of hats takes me a week to make, I can’t just look at what materials I happen to buy that week and what revenue happened to come in that week; I need to tie the inputs for those hats, even if they happened many weeks earlier, along with revenue of those hats, even if they happen many weeks later.
Farming is manufacturing—it simply takes us a lot longer for each batch we’re making. Utilize the forecast to make adjustments and run “what-if” scenarios so you make more effective management decisions along the way.

Poor communication → Unmet expectations → Frustration & Disappointment

“Everyone hears only what he understands” - Johann Wolfgang von Goethe (scientist & author, 1749-1832)

Two big challenges we face in effective communication:

Assumptions: Experiences in my head I’m not adding in to the information I’m sharing because I believe you will already know it as I do.

• “Take the truck west and turn left where the barn was.” I’m assuming you know where the barn use to stand (because I know).
• “Take the tractor and work that field.” I’m assuming you know how fast to drive, what angle to go and how deep to till.
• What’s happening around us informs out assumptions as well. Are we in a hurry? Are we tired and emotions are high?
• Our environment can have a significant impact on what we process and how we take information in. Maybe it’s harvest and I say, “Give the combine a cleaning tonight before you put it away. What I’m not expecting is a that the employee does a full power wash with soap and then waxes the entire machine. It’s harvest—we aren’t going to do that. To me a “cleaning” during harvest is to blow the dust out of the air filter, get the garbage out of the cab and clean the windows—that’s it!

Definitions: Simple words can carry wildly different definitions, which can get us in trouble. Here’s a humorous example that happened to a friend a few years ago. He was at a farm auction. He called up his father and said “Hey, they have a couple bins they’re going to be selling. Do you want me to bid on them?” The father said, “Sure, just don’t pay too much,” and that was the end of the conversation. As it turns out, that simple conversation was loaded with miscommunication. My friend—not knowing what “too much” meant because his father wouldn’t give him a number—bid what he thought was a reasonable price and won the two bins. He called his dad to let him know that he had bought both bins for just a couple thousand dollars. Flabbergasted, the father asked what kind of bins he had bought.“Well, they are 5,000 bushel grain bins,” said my friend. “Oh no!” the dad exclaimed, “I thought you were buying bins to hold nuts & bolts in the shop!”So when I say, “Go fast,” what does that mean? How about “slow”? “Carefully”? “Stay late”? “Show up early”?  That could mean 5am or 7am...I know some people who would think 9am is early.

Better communication results on the farm

• Know the audience: Understand who you are talking to and be able to dial in the message. Some people will require more detail in the message than others. This flex we do with different people is well-presented in the model known as Situational Leadership. It presents our approach in stages, depending on the development of the other person:
          •  Very low competence = Very directive guidance—very clear, very straightforward and focused on the basics. 
          •  More experienced = Coaching communication—less directing the actions and more providing support and guidance.
          •  Very competent = Supportive relationship—more offering our support than our direction.
          •  Expert level competency and confidence = All they need is delegation
• Communication routines build rhythms on how we communicate with others based who they are and what they need. Lay out when to check in with your landlords—just put it on your calendar (and then do it.) Decide right now when you’re going to have banker meetings. Use a calendar on your phone; send invites. If your banker says he want to meet three times over the year, pick a day/time and send him an invite. Calendar team meetings however they serve the group the best. What’s on the calendar gets done, so schedule it and do it.
• The medium refers to all of the different tools we have to let us communicate. Never in history have we had more ways to communicate than we have today, and never has it been cheaper! We have face-to-face, phone calls, text messages, emails, instant messaging, Face Time, Twitter, et al. Here’s where wisdom comes to the plate. Which medium will give the best results in any given situation? Choose wisely which way you will communicate with others based on each situation. Texting is always quick & easy, but sometimes too much detail is required so you should opt for a phone call instead.
• Speak simply, avoiding jargon and technical talk. Nobody has ever complained because someone was too easy to understand.
• Assume nothing. Of course that’s impossible, but I challenge you to be diligently aware for when you are adding assumptions. When in doubt, ask for clarification
• Ask for understanding. Ask others to repeat back to you what they heard or what they are now going to go do. You can say, “Hey, I gave you a lot of information there on what I want you to do this afternoon. Just to make sure I didn’t miss anything, what is your plan on the project?”

“Seek first to understand and then to be understood.” - Steven R. Covey (author, The 7 Habits of Highly Effective People)

I hope you’ve found some things that can help develop your leadership skills today. If you are looking to grow your business effectiveness, give Water Street Solutions a call at 866.249.2528. 

EMOTIONS ARE REAL: MANAGING THE EMOTIONAL REALITY OF TRADING
The market is an auction. The purpose of an auction is twofold: to provide an environment where buyers and sellers can come together; and to provide price discovery. If a farmer retires and you go to the estate auction, there is one seller—and the more people who show up, the more potential buyers you have. Every buyer has a number and the ability to bid what they are willing to pay. The auctioneer facilitates the discovery of price for each good. The auctioneer is operating as an agent on behalf of the seller—they are trying to get as much out of each item as possible. Good auctioneers get lots of people to show up and they also get people bidding.

This is an important analogy to be able to apply to the world of commodity and equity trading. If you’ve ever been the person at the auction to pay way too much for something, you know that emotions can get the best of you in the moment. But the fact is that over time, an auction is the most effective and most efficient way to discover the value of something. That being said, in the short-term auctions can be overrun with emotion. You may see something selling way too cheap—which indicates there is a lack of buyers or more likely too many sellers. The flip side is when you see someone paying more for an item on auction than they would have paid to buy a new one at retail! Auctions are the best price discovery over time, but emotion will get them out of whack in the short-term.

Just like an auction, the market is made up of the emotion of its participants

• Regret: Quite paralyzing. The price of the commodity gets to a level that isn’t quite what we were hoping for and then it suddenly falls. At that moment we now know what we COULD have had for our commodity if we had acted...but we didn’t. Now suddenly our brain shifts into what we think the product should be worth or what we would be willing to accept. But in reality, the commodity is worth what it is trading for today. The best antidote is drafting a script for our future actions: “What will I do when price starts falling?”
• Greed: This usually plays out in the market as a case of “Perpetual Price Dissatisfaction.” If corn is $3.60, it’s wanting $3.80. When corn gets to $3.80, I now will only accept $4.00. It’s a failure pattern of saying to ourselves that UNTIL I get a higher price, I won’t be happy. The failure of this is that it’s never a high enough price for us to be satisfied. We end up kicking the can down the road until we’ve run out of time on the calendar and we now have to act. How can we counteract greed? One way is to make smaller decisions, more frequently instead. The other tool can be using targets. If I have a good handle on either my projected profitability or, after harvest, my actual profitability—I can reduce my greed factor by using price targets and placing orders at the elevator or in my commodity account. It takes out the risk of wanting to wait until tomorrow to see how price acts and get just a little bit more.
• Fear: Can be a significant motivator for people. There’s a concept that has grown with social media and contributed to a lot of people’s anxiety—“FOMO” or Fear Of Missing Out. In marketing, fear manifests itself in many different ways: Fear that price is going to collapse further, so I end up selling out on the lows. Fear that I’m not going to grow a crop so I don’t sell ahead. Fear that if I sell, the price will rally later so I freeze. Fear that price can never rally so I sell everything on the first 10-cent rally I get. The key to managing fear is first and foremost to know yourself. Fear is a good thing and it’s a survival mechanism, but taken too far it can keep us from really being able to thrive.
• Envy: We stop at the coffee shop and someone’s talking about how they sold the high in the market. We hear our neighbor talk about how high one of their fields yielded. Here’s the problem with all of these scenarios: none of them shares all the information you need. The guy in the coffee shop sold one percent of his crop on the high and at the end of the year, ended up getting a worse price on his crop than you. The neighbor with the big yield isn’t talking about his break-even levels or the profitability per bushel. We feel envious of the actions or lives of others, but much of what is presented to the world is far from the whole story. So what can we do? Tend to your own garden first. The farmers who focus on the basics (doing everything you can to lower your cost per bushel) are best equipped to compete in the long run. This gets the focus on a scorecard that fits the game. If I go to the gym and see the guy bench pressing 400 pounds, I’m not envious—we’re playing a different game. Focus on good financials and a fanatical approach to building your own ability to improve your cost per bushel. That doesn’t mean you shouldn’t try to learn from these others—you can ask the guy at the coffee shop what led him to price it; maybe there is some insight there. The neighbor with the big yield, maybe he has a production practice that you can learn from. But stopping at envy will always be a roadblock to progress.

Thanks for listening! Email me any questions or comments at [email protected].

USE THESE KEYS FOR CORRECTING WITH EASE

Avoid looking at correctable behavior situationally. “Bill is consistently late for work. How do I correct it?” This is focusing on what we don’t want and not focusing on the goals of the organization...which means we can end up missing the opportunity to really create what we do want. Do you want Bill to show up an exact time each day? Or do you want him to communicate better about his schedule? Are you worried about the impact of his behavior on the other employees? Or do you simply find it disrespectful? If we only try to eliminate what we don’t want, we probably are going to find ourselves creating frustration in the relationship and not getting what we really do want.

Leaders have a responsibility to do some work before we should expect a relationship where correction flows freely and openly. One of the fastest ways for feedback to be rejected is when it comes from someone who does know who they are themselves. They berate others for being sloppy, but you can’t even see the top of their desk. They expect their staff to do everything perfectly the first time, but they continually make mistakes in their responsibilities. Without knowing their own strengths and weaknesses, working on themselves and being humble enough to share their awareness, other employees will question any correction from that person.

Clear vision is required for a relationship that embraces correction. As leaders we must clarify what we have for expectations: What we are working create? What behaviors should get rewarded? Give the team the expectations and knowledge to complete the job satisfactorily up front. This sets the team up for success rather than just handing it off and wishing them luck only to berate them later for not doing it correctly or efficiently.

Leaders have a responsibility to model the way. It holds us to a higher standard. If we expect our employees to clean the windows, we not only need to show them how but to keep our own windows spotless. If we expect people to be punctual, we can’t be late. We also have to model a willingness to seek and accept feedback. Effective teams have information flowing up and down. We need to have the humility to show how to take correction ourselves.

WORK ON YOURSELF BEFORE YOU WORK ON OTHERS.

What makes for effective correction?

1. Focus on the behavior, not the person. Focusing on the person can damage the relationship and create resistance. Say, “We want to have all of the parts organized by machine. In looking through storage room, it’s better...but I need you to take another run through, ensuring everything is in the right bin.” Avoid saying things like, “You call that clean? Where did you learn to organize? I’d hate to see what your house looks like.”
2. Learn how to use good questions. It’s easy to jump to conclusions and prematurely offer advice or guidance when we don’t have all the information. However, be very careful using questions that begin with “why.” Why, you ask? Think about it: “Why are you organizing the room like this?” If someone asks you like that you are now in a position to defend yourself. But try it as, “What issues could we run into with this system?” or “How do you see getting everybody on-board with this?” This opens up dialogue and discussion.
3. Ask permission. This gives the other person choice and control. Comments like, “Hey, I’ve got a lot of experience in projects like this; how much coaching would you like from me along the way?” or, “I’ve noticed a few things about your approach—would you want any feedback?” or even, “There are a couple of concerns I have...My question for you is: How honest you want me to be?” make for a far more receptive audience than simply launching into offering unsolicited corrections. It becomes a conversation rather than a one-way judgment session.

I hope you’ve found some things that can help develop your leadership skills today. If you are looking to grow your business effectiveness, give Water Street Solutions a call at 866.249.2528.

DRIVING THE RELATIONSHIP ENGINE OF BUSINESS

What’s made relationships so important in today’s business?
They’ve always been important. Settling the prairie, the most important currency we had was building trusting relationships to help us purchase cattle, get credit from the feed store, lean on a neighbor for help when necessary...Over time, though, we became less reliant on neighbors and other relationships. Equipment and buyers for our grain were plentiful, and we were busy enough that we lost our neighborly connections.

But today’s technological advances open up many more opportunities for community engagement, and also in ways we’ve not been able to engage before. This means bringing different thinking and habits than we had before.

Which five relationships have been instrumental in getting you to where you are today?
Think about this: was it a parent? A coach? A teacher? A neighbor, your spouse or a good friend? We like to think of ourselves as self-made, but in reality other people often have a hand in providing opportunities, directing our path, sharing honest feedback or helping us when we’re in need--and the odds of our success are closely linked to the size and strength of our relationships.

Four behaviors to help us move forward in our relationships: G.A.I.T.

1. Give freely. Some of the most affluent people I know also happen to be the most generous. They give freely of their time, money, wisdom, or whatever can help someone else out. They don’t keep score; they know that right is right, and we are all social creatures charged with supporting and caring for one another. But there’s a danger of taking it too far and leaving no time for ourselves. To give well, one must keep one’s own house in order first.
2. Ask humbly. In our self-sufficient world it can be tough to ask for help. We don’t like to inconvenience others & we don’t like to look like we can’t handle our own situation. But Ben Franklin noted that one of the best ways to build a relationship with someone was to ask them for a favor. It might seem a counterintuitive thing to do, but Franklin had a very poor relationship with a particular gentleman, so Franklin asked him if he could borrow a book he knew the man owned. This endeared him to the man; he was flattered that Ben Franklin wanted something he owned. Asking for help demonstrates humility & opens the door to a different kind of relationship. A caveat: If you borrow something, bring it back as good or better than when you got it.
3. Invest deliberately. Look at your life and business, and assess where your relationships are lacking. Find ways to rekindle those relationships. Author Harvey Mackay wrote: “Dig your well before you’re thirsty.” Reconnect with others now by taking action, because you might need to rely on those relationships at a later date.
4. Thank generously. Appreciation costs nothing, but it can be the first thing we forget as we hurry to get on to the next thing. Remember, though, that a sincere thank-you can go a long way. Show others that they are important, what they did matters, and that they are genuinely appreciated. Use the Power Thank-You: a) Tell them what they did; b) Acknowledge their effort; and c) Tell them the impact. Example: “Thank you for helping with installing my new window, I know you had other projects that needed your attention on Saturday but because of your expertise we were able to enjoy our family get together the next day. Thank you!”

So there you have GAIT for tending to your relationships: Give freely. Ask humbly. Invest deliberately. Thank generously. Our most important role as leaders is to build strong, trusting relationships. I hope there are some insights in today’s episode that will help you do just that!

Thanks for listening! Email me any questions or comments at [email protected]. See you next week!

NEW SOLUTIONS! INNOVATIVE APPROACHES! EXCITING POSSIBILITIES!

It’s exciting to invent or discover new ways of doing things, or to go to a meeting and leave motivated with someone’s unique approach to business. But one of many hurdles that can challenge us is called the Planning Fallacy—we are generally quite inaccurate when it comes to predicting how long something is going to take to do and how hard it will be to accomplish. But this bias isn’t all bad; many times we can get halfway through an undertaking and think to ourselves, If I had known it was going to be this hard, I wouldn’t have started. The hope is that the thing we are doing is valuable, and that our optimism got us started on something that we may not have otherwise done. It’s good to have this built-in optimism because it gets us going. But there is another element that is much more dangerous—the assumption that introducing the idea equates to implementing it.
It happens to the best of us: we decide to make a change, and dedicate ourselves to that change. We probably stick to it for a while, but before long it’s back to our old habits. When these things happen, we might feel discouraged. We spent the money on the new accounting system and we still haven’t switched to it as our $1,000 treadmill sits in the basement with less than a mile on it. Today we’re getting into the key elements of what makes some changes easy and others seemingly impossible—and as leaders how we can approach change differently.

FIVE PRINCIPLES FOR SUCCESS IN CHANGE

1. Sometimes we can buy a solution, while other times the solution is a process. Know the difference. If we realize that we are having a problem getting fieldwork done because we are short a tractor, then all we have to do is buy a tractor. If we see that we’d be able to speed up repairs with a cordless impact wrench, the all we have to do is buy the wrench and voilà! Problem solved. Unfortunately, many of our biggest results come from a change in process or behavior instead. Leaders need to be able to distinguish between when buying something solves the problem and when it is just part of an overall process change.
2. Clarify the issue and the benefit of the solution. It’s really easy to fall in love with cool solutions. Maybe it’s some new way of doing things you heard a speaker relay, or a really neat piece of equipment you saw at a trade show—but before you write the check, get clear on what the problem really is: How big is the problem? Is it even worth solving? Once you’re clear on the problem, shift to clarifying what you really want and how the team or organization will be better off after solving the problem. Nobody likes putting effort into something that isn’t really worth the time, or if they have to do it just because the boss said to. Connect with the why to create more personal buy-in to the change effort.
3. Identify the hurdles you will face in the process. For success to happen after implementing a change, we need to be able to look out into the future for potential situations or tendencies that could derail our progress. The leader is required to model the way over these hurdles; to slow down and coach new behavior and expectations.
4. Incorporate the players. Change is usually a people problem.
   a. Identify who is going to be affected by taking a new approach, and bring them into the solution process—What changes would they recommend to the process? How are we going to support each other in the change? And make sure they and other team members have the authority to hold even the boss accountable for staying on track with the new process.
   b. Identify other players who are part-time and need to be trained;
   c. Or it could be family members who like to randomly come by and make a mess.
   By identifying the players you have a chance to bring them into the solution and communicate what the new expectations will be.
5. Keep banging the drum. During the change process, the leader needs to be consistent in focusing the team on the goal, on coaching people with their little decisions, and regularly bringing people back to the basics of what has to be done differently. It’s catching people doing the right thing. It’s coaching people on the small stuff. It’s training on expectations for new people.

This is the real work of leadership. What we focus on grows—which means we can’t focus on everything. We can’t fall in love with every new shiny idea. It’s having the discipline to say “No” to new ideas because you know the team doesn’t have the capacity to add another change just yet.

Thanks for listening! Email me any questions or comments at [email protected]. See you next week!
Episode #77: Ideas are easy. Change is hard

Questions Help Us Focus
This episode will cover different areas of a business by asking questions to help identify opportunities. Though you may not have answers for all of these questions today, they will start the thinking process and give you an inventory of questions today that you can use as a reference for future thinking, either for you or your team.

Future Questions
Having a clear picture of what you are working to create helps guide decisions when things get muddy. An inspiring dream gives us energy when we’re feeling bogged down. And when we’re not around, the answers for these questions create clarity for our team which can help them to stay on track:

• Who am I working to become? An organization will always struggle to grow beyond its leader, so I need to have a picture of who I’m continually working to become. This should drive reflection of how I’m doing and what I need to be working on.
• In 10 years, a reporter from a magazine does a story about my operation. What do I want the headline to say? This addresses what you want someone to say about your operation—what’s important to you and you really want to create.

People Questions
Looking now at the people on your team, ask yourself these questions:

• What indicators do I have whether my team is top-notch? What behaviors would I see from such a team? How would people in a top-notch organization interact with one another? Now—how does that differ from what I experience with my team today?
• If there’s an employee who’s giving me headaches—knowing what I know now, would I hire this person today? How would I feel if I got a call tomorrow that this person was resigning? If their resignation wouldn’t bother you, maybe it’s time for a candid conversation.

Business System Questions
How we accomplish things is a function of the systems in our business—systems which may be written or unwritten:

• If this person were to be gone for a month, what jobs would not get done? This question helps assess need to undertake documentation of critical systems. Documentation of processes a) forces us to look at how we are doing things and open up further questioning on whether there’s a better way to do them; and b) gives us peace of mind that the critical business systems can continue, even if something happens or someone cannot be reached.

Skill & Expertise Questions
For effective results, the business must be good at some critical competencies:

• What is something that I am exceptional at? What comes easier to me than to others? Often we look at our deficiencies first, but it’s just as important to know what you’re good at and have as a business strength.
• What skills does the business need to move forward? Maybe it’s employee training, coaching from an outside source, honing your own skills in an area—identify competency gaps with potential to hold the business back.

Leadership Responsibility Questions

• What is something only I can do? This question shows the value you give to the business. As the operation grows, you won’t be able to do everything you used to do. It’s important to recognize which things only you can do.
• What is something you do which you can no longer afford to do? Classical economics says with growth comes specialization. In order to specialize, we have to give up some of the stuff we used to do.

Thanks for listening! Email me any questions or comments at [email protected]. See you next week!

Elaine Froese, C.S.P. is a professional speaker, writer and business coach who specializes in helping farm families work through tough issues surrounding succession, business and communication—not only to meet and talk, but to act! Faith Today magazine recently dubbed Elaine “Canada’s Farm Whisperer,” an interesting title for someone who has coached families across Canada for the past 10 years and sat at kitchen tables for over 35 years.

Elaine has been a columnist in Grainews for 20 years and appeared regularly on Canada’s national AgVision TV. She is the award-winning author of Planting the Seed of Hope: A Celebration of Prairie Life, Do the Tough Things Right, Farming’s In-Law Factor and her newest book, Building Your Farm Legacy. She is a member of the Canadian Association of Farm Advisors and the Canadian Association of Professional Speakers.

As someone who grew up on a farm and currently farms with her family in southwestern Manitoba, Elaine understands agriculture from the ground up—and her expertise is sought after across Canada and farming areas in the U.S. Many folks tell Elaine that they “wish they had met her ten years ago.”

ONLINE:

www.elainefroese.com

Twitter: @ElaineFroese

Facebook: @farmfamilycoach

YouTube: @farmfamilycoach

Email: [email protected]

NOTES:
On potential trouble spots with the in-law dynamic on the farm:
The cover of my book Farming’s In-Law Factor features a single brown egg among white eggs. I get a lot of comments from women in agriculture saying, “Elaine, I am that brown egg.” Of course in farming you have two systems, and the family system is highly interlinked to the business system. The In-Law Factor is mainly about daughters-in-law coming on to be a part of a farm where their husband is the successor and sons-in-law coming to the farm where their wife is the successor. When you’ve got people without a farm background joining the family and the operation, first there’s got to be an effort to educate them and provide insight into the farm culture. Second, you’ve got to learn to do conflict well—attacking the problem, not the person. If you can do that, it will lead to more harmony on the farm. Farming’s In-Law Factor is about making sure everyone on the farm team has a voice and that everyone knows what all the roles and expectations are. It’s kind of a textbook for all the ag schools across America that do a communication class...because when you get an ag degree, you usually only do three hours on communication—and that’s not enough.

Tools to help us become more aware of expectations we have for other people:
On my website I have a free 19-piece toolkit available to help people communicate better and grow stronger on their farm. To get clear about unwritten expectations, one of those tools is the Ultimate Decision Maker—how many decisions are Dad’s full say, how many are the successor’s full say, and how many are they making together? Another is to do the sheet called What Do You Want, or to just talk about it. And I use a Beanie Baby bull as a talking stick, too, Dean. Whoever has the bull in the family meeting is the only one who can talk, and if you want to speak you have to ask for the bull. If you don’t have it, you listen. Another one of my tools is the Key Challenge Audit--A checklist of 32 statements, one of which deals with anxiety over the uncertainty of my future. Frequently young people check that one off because expectations are not talked about and they don’t know what THE PLAN is.

On the challenge of being the "brown egg":
Marilee Adams wrote a great book called Change Your Questions, Change Your Life. Are you going to become a learner who takes responsibility for the choices you’re making? Or are you going to become a judger and work yourself down into that “poor me” victim mentality? First, are you expressing your voice as a respectful adult? Are you taking the time to collect your thoughts on paper? Do you have positive conflict strategies? Can you put yourself in the other person’s shoes to see their side? Embrace conflict but express your ideas in an open, honest, respectful and constructive way. Stay away from yelling and drama. Also, remember that you get the behavior you accept. If a daughter-in-law is not being treated well, she should write down her thoughts, ask for a meeting with her in-laws (with her husband by her side), do it after lunch and when everyone’s well rested, and address the issue and her frustrations openly. Use the format “I think...I feel...I need...I want...”

On common principles at work on farms with successful transitions:
First, do not assume anybody is going to retire. A study of Iowa farmers showed that 30% of them say they will never retire, so language matters: “Dad, what is your plan for handing over some of the responsibilities as you age?” It’s also important, as you plan the transition, to lock in target dates and timelines; this helps you avoid what William Bridges calls the “Neutral Zone,” which represents the pain of not knowing. Remember how I said the younger farmers often checked the box dealing with anxiety over the uncertainty of their future? So do the older farmers, but their anxiety is around what gives their lives meaning and purpose as they age on the farm.

On tools for the veteran farmer to use in grooming the next generation for farm leadership:
They should encourage peer-to-peer networking with other farmers in the next generation. They are great places to share ideas and be mentored by others. That might mean shuffling duties at the farm and making time for it, but it really is necessary. Being a lifelong learner and building relationships with your farm’s team of advisors are also key. I also encourage financial transparency between both generations. It can be a good idea to build a team of advisors together. The families that are more communicative, maintain a culture of learning together, and are more transparent with finances will have better results with mentoring because there are no surprises.

A final takeaway from this conversation:
I have an old tagline I sometimes used to close out my speeches: “Remember, its your farm. It’s your family. It’s your choice.” Coaches often say counseling is about recovery and discovery. What would you like to discover in this next three months (farming “off season”) about the roles you’re playing in your own life? You always get to wake up every morning and choose your response. What are you going to choose to make it better?

Thanks for listening! Questions or comments on this episode? Drop Dean a line at [email protected]. We’d love to hear from you.

THE CHALLENGES OF BUSINESS
Whether it’s manufacturing, retail, the service industry or agriculture—there is something that makes you feel like your business is tougher than others. For farmers, typically a major source of frustration is found in the grain marketing side of the business. That’s understandable because farming—and in particular the marketing aspect—work differently from most other businesses.

THREE BASICS OF EVERY BUSINESS: MAKE - SELL - COUNT

Make: If you’re in the widget business, the first step is to make widgets. Dry cleaners make clean clothes. Farmers make grains, produce & livestock.

Sell: The widget maker uses ads to create buzz in the marketplace, focusing on increasing the perceived value of the widgets they manufacture, This is how they create customers. This is not how commodity marketing works, where the items up for sale are considered “fungible,” meaning the market doesn’t care where it came from or who grew it—all corn fetches the same price.

• Long-term winnings come to the most efficient producers (Outrun the slowest guy, not the bear)
• Differences in price happen through time rather than from difference between producers (The quality of the product doesn’t change--just its perceived value)

Count: Inventory, bookkeeping, tax prep, etc.

SELLING: SEVEN BENEFICIAL CONTRARIAN MINDSETS

1. Uncertainty equals opportunity: Moving markets provide uncertainty that keeps production costs down. A three-year long 20-cent trading range means the market gets very comfortable with what costs can do, but a more wildly fluctuating price, though potentially quite emotional, means opportunity to sell during peaks and added pressure to cost structure because of that uncertainty.
2. Work on the other end of the leash: Most dog trainers will tell you their best work happens here. They can work with the dog, but what matters most to long-term behavior is tied to the owner. In farming, the two ends of the leash are marketing and efficiency. We might be tempted to focus a lot of energy on the “dog end” of the leash (the markets), but if the trainer is giving mixed signals or reinforcing bad behavior (or the farm leader is not concentrating on the efficiency of the operation) then the dog won’t behave properly for long (we’ll find we can’t market ourselves out of a spending problem).
3. Remember the goal: Selling what we’ve raised can bring a lot of emotion into the picture—anger at pricing, regret for not having done something, paralyzed in fear due to the uncertainty—but we need to remember the purpose of marketing: to turn our production into cash. Be clear, intentional & focused.
4. Even Tiger has a coach: Top performers have coaches to provide feedback, offer a different perspective, apply principles to fit the performer’s needs. What does a farmer need to find in a coach? A credible person you connect with and have a relationship of respect and candor. They can be professional-level coaches with expertise in market planning and implementation; they can be informal, like a friend or uncle with a real knack for insight or wisdom.
5. Ready, steady, GO: Get clear on what to do next. “I’ll sell a good chunk when the market gets high enough” is way too vague. How much? How and where will you price it? At what level? Detail allows you to be patient and pounce when the well-defined time is right.
6. Pass me the gravy: Commodity marketers are price takers, which can lead us into a trap of complacency and helplessness. The “gravy” is the little things that we can do to add value without adding much or any cost: growing seed, specialty traits, having access to end-users who are willing to pay more. Gravy goes right to the bottom line, and once enough gravy goes into equity it starts to make a real difference.
7. Finish the learning loop: Don’t make a decision or take an action without viewing it as a learning opportunity. We only have about 40 chances to market our crop, and if we aren’t active learners who look for patterns, biases and ways to improve next time around—we’re doomed to relive our rookie year 40 times. Becoming comfortable with uncertainty, working on efficiency, focusing on what we really want, having good coaches, building plans and watching for opportunities--these all help with continued learning and focusing on our own development.

Note: There is significant risk of loss involved in commodity futures and options trading, and they may not be suitable for all investors.

Thanks for listening! Email me any questions or comments at [email protected]. See you next week!

In our relationships, words of appreciation are some of the most powerful words we have.

KOUZES & POSNER’S* LEADERSHIP MODEL:

1. Model the way
2. Inspire a shared vision
3. Challenge the process
4. Enable others to act
5. Encourage the heart

SEVEN ESSENTIALS TO ENCOURAGING THE HEART:

1. Set clear standards. This communicates a standard of excellence and defines success.
2. Expect the best. It shows respect and gives people recognition when they see we have high expectations.
3. Pay attention. Be observant of who is doing what, and catch and recognize people doing the right thing.
4. Personalize recognition. Do not use form recognition letters or throwaway gifts. Give something that really matters to them.
5. Tell the story. The best way to add meaning is to tell a story, add details of why you are recognizing this person.
6. Celebrate together. Make it a group setting. It adds gravity when it’s done in a group.
7. Set the example. As leaders, when me model the attitude of gratitude, it sets a standard that permeates the culture

BEFORE, DURING, AFTER:
A key practice is to provide strength and confidence to our team at the beginning of a project. Taking this time shows our trust, need and appreciation for the team and each member’s role in it as well as gives the work more meaning. During the project, be sure to check in now and then, watching what’s going on and making yourself available to field any questions. This encourages the process. Afterward, review what was learned. Acknowledge the effort of all that went well, and celebrate the wins while learning and improving from the challenges.

TWO ADDITIONAL TOOLS:
1. THE POWER THANK-YOU:
a) Say what they did; b) Acknowledge their sacrifice; c) Explain the impact
“Thank you for helping to change our flat tire. I know it ended up making you late for your appointment - but because you stopped, we were able to get our daughter to her flight on time. Thank you!”

2. THE MORNING GRATITUDE CHALLENGE:
For one week, take a moment each morning to be thankful for something. Starting the day with gratitude can lead to more energy, creativity & resilience.

*The Leadership Challenge; James Kouzes & Barry Posner; Wiley; 1987
Encouraging the Heart; James Kouzes & Barry Posner; Jossey-Bass; 1999
for more information visit www.leadershipchallenge.com 

Thanks for listening! Email me any questions or comments at [email protected]. See you next week!