Does the name Coco Chanel ring a bell for you? Your Mom probably used her products when you were growing up. I know my Mom did. Coco Chanel was a French entrepreneur who founded the famous fashion and perfume brand “Chanel.” I know – you’re probably asking – where am I going with this?
Here’s what I am considering. She was an entrepreneur with thinking that I admired. She stated: “I have continually invented my life by observing that everything I disliked had an opposite, which I would do.” Isn’t that true in the dairy industry, too?
We all despise low milk prices. What’s the opposite? Stronger prices! None of us enjoys ridiculously high feed prices, especially if they are driven by rumors. How about losing money for four straight years? You’ll much prefer the opposite of having positive profits and cash flow. However, in order to achieve these objectives, you must develop a plan. Yes, a plan is necessary on everything you do.
The same can be said for feed costs. You can use call options and feed contracts to protect yourself against massive increases on prices. Will you call every Put Option on milk pricing or every Call Option on feed prices correct? No, probably not, but this is not exactly rocket science. We are just trying to smooth out some of the highs and lows, in order to stabilize your cash flows month to month and year to year.
Here are a couple recommendations, based upon the solid possibility that the dairy industry may not become easier over the next 10 to 20 years. First, understand that you can’t always find the exact contracts you desire. Second, remember that our minds and how we deal with these challenges, operate just like parachutes. They only work if they are “open.” Remain open to new approaches and concepts. Talk to people who understand these items. Then, take action!
Here are three questions offered by my Business Coach Dan Sullivan of The Strategic Coach, along with an industry application for each of them:
- “What about your personal situation do you dislike the most – and what is its opposite? What’s next?” Do you feel like you’re working 24/7, while your children are growing up so quickly? What can you change? How about delegating more tasks to your team? It can really build more accountability for them. Plan to get away with your family, at least once in a while for an afternoon. I plan my getaways with family a year at a time. Want to know why? If I don’t, it simply won’t happen! As John Lennon stated, “Life is the stuff that happens when you’re making other plans.” Things happen, so get your team involved to free up some time and encourage them to do the same for their families.
- “From an organizational standpoint, what do you dislike most about how you’re performing? How would you transform this situation into its direct opposite?” Let’s say your herd’s milk production is lower than you’d like to see. What can you do about it? Talk to your nutritionist? Reevaluate your current feed situation? Are your costs out of line? Study them and review them with someone who truly knows what they should be. I’m here, if I can assist you with this task. Ask me about my MUCI program, if you’re interested.
- “What one situation in the marketplace do your clientele (i.e. you, as a dairy producer) dislike the most?” What can you do? Do you really despise low milk prices? Do you have a “marketing plan” for your milk? Are you using DRP, as explained above? How about MPP? Do you need some assistance? Do you know your Break-even levels?
They say that the “definition of insanity is doing things the same way and expecting different results.” What will you do differently, going forward?
Here’s a suggestion for you. Watch for our new Success Strategies Business Navigator Program. If you are open to learning new concepts and discussing them with other producers, you should look at this new program that will start this fall. It’s completely online, freeing you from travel but offering you an opportunity to learn from industry experts in the areas of milk marketing, management, financial analysis & banking/finance. For the value of the milk production of one 85 lb cow for a month, you can enroll in this quarterly workshop program. What have you got to lose? Check it out at:
You won’t regret it. I wish you the very best for a success-filled year!