By: Dr. Kohl
Goals are one of the basic components of a business plan. This is a transitional time of the year, often spent reflecting on the past and planning for the coming year and beyond. Establishing goals is a multi-faceted task involving the business, family and one’s personal life.
In the future, goal-setting will not be an option, but a requirement for producers. At a recent meeting, this comment was followed logically by discussion surrounding business environment and many interrelated factors common to all farm businesses, regardless of size. For example, factors such as market volatility, price, costs and weather each impact business finances and operations. In one producer’s case, his business is a large, multi-enterprise operation with numerous family members including brothers, sisters and cousins. There are two owners; one is a family member and one is not. Additionally, the non-family member owner also serves as the farm manager. The annual goal setting process for this group is focused and pointed making sure everyone is on the same page and headed in the same direction.
Establishing goals is also a critical tool in communicating with spouses, family, lenders, suppliers, landlords and even the community in general. Whether it is dealing with a financial planner or detailing transition management with partners, goals establish the parameters of the discussion. Specifically, goals allow you to map out a plan to get where you want to be.
In today’s world of instantaneous communication and information overload, emotions often supersede logic in decision making. In marketing, for example, the tendency towards the sensational makes a good marketing and risk management plan absolutely essential. The plan provides objectivity and logic to seemingly illogical or even urgent situations.
Maintaining balance between business, family and personal priorities is critical, but can be tricky. This is yet another area where goals can help dictate a positive outcome. Long-term sustainability relies upon a strong equilibrium which means everyone involved must know and agree on the priorities. For instance, if a business is investigating a new enterprise expansion, a transition or maybe even an exit, a simple set of goals forces one to slow down first and think through possibilities on paper, before any commitments are made. Again, this interjects logic, includes all the players and helps to avoid major missteps.
Tips for the Process
Whether personal or with all business partners, goals should be written before they are verbalized. Occasionally, there may be a dominant personality, especially in family businesses, who attempts to control the goal-making process, or perhaps, even the actual goals. This creates a counterproductive, emotional environment where vital information is likely to be omitted. A scenario like this one is detrimental for the business, relations, as well as motivation.
Remember to list out both short (one to two years) and longer-term (three to five years) goals. In addition to business, family and personal goals, consider adding mental and physical goals as well.
Does the process work?
The answer is resoundingly yes! I know an upper Midwest producer who decided to improve his health by losing weight. He laid out incremental goals of diet and exercise and lost 170 pounds. So far, he has maintained this goal for five years!
Another business established weekly team meetings as well as an annual strategic planning day. The outcome has been improved communications and development of a written business plan to better guide their decision-making. The business is enjoying smoother operations as well as more consistent profits.
One producer set a goal to improve his business marketing and consequently, decided to turn those responsibilities over to his daughter and son, both members of the Millennial generation. Together, they established goals within a marketing and risk management plan. As a result, they increased net farm income by 20 percent! Even with the increase, the producer felt they may have left money on the table, but appreciated that the logic kept them all out of emotional and stressful decisions.
Are you ready for the challenge? Over the holidays and into the first of the year, take the leap and write down your goals. You may just be surprised what emerges as most important. This is a great way to jumpstart your year, energize your business and maybe even see a dream come true!