3. EXAMINE TECHNOLOGY ADOPTION
Successful businesses also pay attention to the benefits and drawbacks of new technologies they adopt, so follow their lead. Focus on tools that simplify procedures and processes. For example, game-plan the utility and benefit of any number of computer programs that track feed and feed delivery, animal identification that meshes with health and reproductive programs and herd management software, or other management tools that cut down on repetitive or inefficient actions.
That is, your objective is to search out those technologies that offer improved task precision, that enhance management information or offer better process control — and also make economic sense for your operation. This is a great place to decide the best way to reinvest your retained earnings.
4. PLAN FOR BUSINESS GROWTH
The old business growth model was operations-centered — it featured hands-on management with a hierarchical command and control structure and little need for interpersonal skills. A closed information system was not a hindrance because owners and managers “did it all.” But that doesn’t cut it anymore.
In today’s dairy economy, business growth centers on a team approach that depends on leadership and delegation and requires open access to information so that the right messages and incentives are delivered to the entire team. Efficiencies of scale have increased in importance and business relationships are combined with family dynamics.
If this does not reflect your dairy business, or you are not in the midst of a transition to this model, you need to determine why not. The longevity of your business depends on this answer.
5. IMPROVE OPERATIONAL EFFICIENCIES
For a farm to be successful over a long period of time, it must respond rapidly to competitive and market changes, benchmark to achieve best practices, and establish a few core areas of strength, notes Michael Langemeier, agricultural economics professor at Kansas State University. To do that, you must work to improve your operational efficiencies, like the use of standard operating procedures that help you focus on product quality and consistency. Again, efficiencies of scale come into play, as does continuous process improvement.
A study of farms with five years of continuous data in the Kansas Farm Management Association program shows that the farms with above average cost efficiency levels, on average, were larger, were more cost efficient, and had higher profit margin, asset turnover and return on asset ratios. These results illustrate that it is possible for a farm to have a sustained comparative advantage which allows the farm to grow at a faster rate or make relatively larger off-farm investments if that’s the direction they decide to take.