In a recent article I wrote about the core macroeconomic factors that I feel will have a large weighting on 2015, including the strengthening US dollar, weakening world Oil prices, Russia’s Wheat export policy and potential falling energy prices.
Through lessons learned in 2014 and looking ahead to 2015, I believe Australian agriculture will continue to experience volatility, although is also faced with some extraordinary opportunities, which has led me to think about how we can build a sustainable, resilient agribusiness environment in Australia.
This week I am sharing six strategic areas for Australian farm business to focus on in 2015, each of which can be integrated into your farm and business management.
Customers form the core of any business. Customers provide you with purpose, a reason to strive, provide vital feedback and most importantly, by putting food on their table, put food on yours.
In a recent post I explained the concept of Customer Plans replacing Business Plans. Today customers have more power, are more inquisitive and are more informed than ever before.
If your business is in tune with your customers, not only meeting but exceeding their expectations and looking at their present and future needs, you will find that business performance will follow.
Farm management needs a customer focus regardless of whether you are supplying the next stage of the supply chain or the end consumer. Customers will change preferences over time, that’s only natural. You need to be in front of the curve and have the flexibility to move with the times.
For Australian agriculture, it’s time we focused on our customers and not just improving farm-gate metrics.
Cash, the stuff that pays the bills, invests in technology and pays for strategic developments. You can plan on ways to generate cash throughout the year and if your business generates lumpy cash flow, then perhaps you could explore ways to create sustainable cash flow, on or off-farm, to supplement income and build your cash ‘war chest.’
Not only does cash provide a buffer in times of need, it also provides a pool of funds for off-farm investments, on-farm development and/or expansion.
Develop strategies to generate short, medium and long-term cash flow.
There are two components to capital; having a strong balance sheet, and having ready access to funding.
Your balance sheet should be treated as the immune system of your business. If it is strong and healthy, you can withstand any minor ailments that come your way and you have the strength to take on the next opportunity.
Access to capital is also important. A strong balance sheet improves chances to access internal or external capital sources. Capital doesn’t just come in the form of credit from the bank. These days there are many options depending on the amount of capital, the term and what you are seeking to achieve.
The key to maximising the sources of available capital is to have a strong balance sheet, cash flow and all of your affairs in order – often the best time to raise capital is when you don’t need it. Your business requires robust systems and clarity of purpose for any capital investor, the bank or otherwise. AMC can assist in exploring ways for your business to access capital.
Credibility is everything. Often you only have one shot with a customer to make an impression and do a good job. Credibility consists of trust, integrity and loyalty. Essentially, do what you say you are going to do. Always look for ways to help people and don’t always seek commercial benefit.
Credibility will build your profile with customers and create enduring relationships to support your personal and commercial endeavours.
Think Different. A great way to consider creativity is Apple’s Think Different campaign by Steve Jobs.
“Here’s to the crazy ones; the misfits; the rebels; the trouble-makers; the round pegs in the square holes; the ones who see things differently. They’re not fond of rules and have no respect for the status quo. You can quote them, disagree with them, glorify them or vilify them. About the only thing you can’t do, is ignore them. Because they change things, they push the human race forward. While some may see them as the crazy ones, we see genius. Because the people who are crazy enough to think they can change the world, are the ones who do.”
Why does agriculture have to be considered traditional? If the investment community class agriculture as alternative, then perhaps it’s time we acted as such. Challenge your business model and you may find ways of doing things that are more efficient and rewarding than expected.
Compounding means the ability of a business to generate earnings from previous earnings through reinvesting. For example, investment in research and development, innovation, or sustainability. It also means the combining of a number of elements, for example, the elements outlined in this article.
Compounding leads to the growth and sustainability of a business by making your business work for you with one action building on the success of another.
AMC specialise in providing farm management and strategic advisory services to selected clients. Call or email us today to see how we can help you build a sustainable, resilient farm or agribusiness. T: +61733079555 or firstname.lastname@example.org