By Dr. David Kohl
The 21st century’s defining feature? “Turbulent times with a surprise around every corner.” From economic upheaval to geopolitical tensions, from shifting consumer demands to societal transformations—today's agricultural landscape is marked by relentless unpredictability. At a recent conference for young and beginning producers, a panel of seasoned industry veterans were asked to share hard-earned wisdom about surviving—and thriving—amid extreme market volatility. What follows are battle-tested strategies from those who've not only endured numerous boom-and-bust cycles but emerged stronger on the other side. Their collective experience offers a roadmap for the next generation facing an increasingly unpredictable future.
Controllables Versus the Uncontrollables
Focus your business and personal life toward what you can control, and develop deliberate plans for what you cannot control. This is essential when facing challenges like extreme weather, technology-driven geopolitical shifts, or changing consumer preferences. Instead of becoming overwhelmed, pause and think strategically about mitigating impacts. Prioritize examining your risk management and production practices based on your unique situation and strengths. During industry downturns, concentrate on reaching breakeven and minimizing losses. During profitable periods, build working capital and financial liquidity to both protect against future hardships and position yourself for new opportunities.
Cash Flow Guidance
When a farm management consultant was asked about the defining characteristics of top-performing producers, the answer was immediate and clear: those at the peak of the profit spectrum consistently take ownership of their financial numbers through disciplined cash flow monitoring. These successful producers do not just create monthly or quarterly cash flow projections—they actively compare those projections against actual results throughout the year. This ongoing financial vigilance provides them with crucial guidance for both immediate decisions and long-term strategy. By maintaining this financial awareness, they transform their numbers from mere paperwork into powerful decision-making tools.
In addition, planning for different scenarios with various production, price, and expense possibilities helps set realistic boundaries. This provides objective guidance during turbulent times, reducing emotional decisions. It also allows for quick adjustments and better awareness of your business's current status.
Operating Plan
The operating plan is often overlooked in projections. It's about whether you can execute and monitor after planning. This process is called REM: Respond, Execute and Monitor. Timely execution often separates above-average businesses from the rest. To use a sports analogy, can you not only talk the talk but walk the talk with a disciplined approach? This operational plan is crucial for communication with suppliers, lenders, employees, and other stakeholders essential to your business and personal success.
Cost of Production and Breakeven
A customized cash flow and operating plan helps you make objective decisions during uncertain times. While university Extension publications often offer general figures, these must be tailored to your unique business situation. The panel emphasized that successful managers understand which specific components most significantly impact their bottom line and focus on monitoring these variables closely.
Focus, Focus, Focus
The key to maintaining focus is having written goals, both short and long-term. These serve as your North Star or lighthouse in navigating both challenges and opportunities. Hold yourself accountable by sharing these goals with peers and advisors who can periodically check in on your progress.
Personal Health
Mental health discussions are increasingly common, but physical and spiritual well-being are equally important for maintaining energy and focus. The panel emphasized the importance of taking daily breaks from technology—about two hours—to read and rejuvenate your mind, body, and soul.
Final Thoughts and Perspectives
Lessons from the 1980s farm crisis:
- Your self-worth is not measured by your net worth.
- Remember, there's no traffic jam in the extra mile. Your discipline and focus on the basics will place you in that extra mile.
- Building strong relationships and surrounding yourself with the right people is crucial for successfully navigating any business cycle.
Dr. David Kohl energizes agricultural lenders, producers, and business professionals with his keen insight into the agricultural industry through extensive travel, research, and networking around the globe. He is a Professor Emeritus of Agricultural Finance and Small Business Management and Entrepreneurship at Virginia Tech, Blacksburg, VA. Dr. Kohl has traveled over 10 million miles in his career and conducted over 7,000 workshops and seminars for a variety of agricultural audiences. Additionally, Dr. Kohl’s personal involvement with agriculture provides a unique perspective into the future trends of the agricultural industry and economy.
