Best Management Practices of Young Producers

In my extensive travels, facilitating workshops and seminars, the element I enjoy most is working with young farmers and ranchers. These producers, many whom are millennials, 18 to 34 years of age, are generally eager, lifelong learners aspiring to make their mark on the agriculture industry. At a recent educational event, the attending group requested I provide them with some of the best management practices of a young agricultural entrepreneurs. While the order is not important and certainly others can be included, the following elements of success are based upon my decades of work in the agricultural industry.

One attribute that sets a successful producer apart from others is modesty in lifestyle. Whether it’s a start up business or one in transition, the amount utilized for family living is critical. Many young producers develop personal family living budgets and then, monitor those numbers. Others will supplement the business or living costs with off-farm or non-business income. This shared sacrifice between business and lifestyle often dictates the ascension of business growth. There is an old saying that is summarizes this attribute well, “life is a matter of choices and priorities.” Choose carefully.

Another unique trait of stellar producers is investment in productive, earning assets. Whether it is livestock, land, equipment, or people, they have a keen sense of what investments yield the highest rate of return. This often entails budgeting and planning on paper before the purchase.

Another aspect that sets apart the successful group is people skills. Often, parents and previous generations acted independently showing little desire to deal with people. Today, interactions with your employees, land owners, suppliers, lenders and in some cases, your consumer, will be critical to success. Both financially and psychologically, your net worth is directly correlated to your networking ability and those with which you network. Additionally, those committed to lifelong learning are usually willing and eager to learn from others; which is one characteristic often observed amongst the successful individuals. More young farmers today seek education outside the industry to expand creativity and heighten fresh thinking.

A strong set of peers as well as a good set of mentors are both critical in today’s roller coaster economy. Peers and mentors serve as excellent sounding boards for new ideas. In addition, they can also lend support when the perils of business and personal issues arise. Sometimes, a good mentor is a family member or neighbor. However, in today’s world of technology, the best mentor or peer may be half-way around the globe. The most successful business models are mentor-driven. Often the experience becomes mutually beneficial as energy and ideas become contagious and fuel the journey for both in the relationship.

A successful young producer will not only make money and pay taxes but, they have a strategy for deploying profits. They focus on efficient growth and build financial liquidity for adverse economic times as well as opportunity. A prudent young producer capitalizes on positive economic times by positioning the business for long-term sustainability. This may mean deploying excess profits into the reserves.

The stellar young producer challenges the normal standards and takes incremental steps of improvement. They focus on the theme of “better is better before bigger is better.” Growing your way to bigger profits can dangerously expose the business as often business systems break down in the aggressive growth mode. Analogous to a professional athlete aspiring for the next level, continue to improve the mechanics of your game while maintaining an eye on the next, big picture move.

It is not about the cheapest interest rate. Young producers seeking success will invest in a relationship with their lender. Ideally, the lender understands the industry as well as the unique challenges of a young producer. Regardless, working side-by-side with your lender to communicate needs and goals is critical to success. A solid relationship with your lender will support you through prosperous and adverse times alike.

Finally, young people who are successful over time have a balance between the head and the heart. Specifically, the passion and energy that comes from the heart must be balanced with the logic and numbers from the head. In some cases, in order to obtain this balance, a partner, spouse, teacher or team of advisors is required.

As agriculture continues to change, young producers will assess new technologies, production practices, regulations, markets and much more. However, in the midst of change, frequently it is the time-tested principles, such as those outlined here, that yield the greatest success. Balance will be essential in successfully dealing with technology, people, finances, growth, family and life. Utilize the resources around you to keep moving forward on the road to success.