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SpringtimeSpring is such a wonderful time of renewal, hopefulness and anticipation. For farmers, ranchers and gardeners, the production cycle stretches out ahead of us, like blank canvas awaiting our strokes, alive with the vibrancy and verdure of springtime. With some well-planned strokes and such a rich palette as a backdrop, a masterpiece year seems not only possible but well within our grasp, in springtime. Experience reminds, however, that unseen risks and circumstances will challenge us. The beauty and success of our year, in fact, will depend heavily on our response to those challenges. And our response will depend on our planning. I would like to address the subject of contingency planning in this column, not to dim any of the hopes and prospects of spring, but to consider the important discipline of anticipating and avoiding unseen risks and challenges. That is what contingency planning is all about--planning for things that may never happen, in hope that they never will. We often do contingency planning without even thinking. But doing it with deliberate thinking is what makes it a discipline. I recently purchased something I've never owned before--a small, square black box. It is heavy, cumbersome, and not at all handy, so I don't even use it much. It sits on a shelf in my office, and I hope it never fulfills the ultimate purpose that I bought it for. It is a fire protection box, and I bought it to protect some valuable papers and pictures, in the event that our house should catch fire and burn. It also includes some backup copies of financial and other data from our home computer. That is a fairly small example of contingency planning. For farm and ranch businesses, the risks are far larger and more complex. Yet the human dimension is no greater, because any fire in my house would impact my life very, very closely. And that is contingency planning--dentifying areas of risk that seem distant and abstract, anticipating the possibility that they could, in fact, impact our lives very, very closely, and planning some strategies to avoid or manage them. It isn't easy to identify risks, given that they are by nature distant and abstract. Recently we have read about farmers and ranchers in the north dealing with historic flooding. From the south comes word of wind and wildfire, in deadly combination. To the west, Greensburg continues its recovery from a historic tornado. All of these and more are reminders of risks that can, and likely will, touch others, eventually. Back in January, at the Top Producer Conference in Chicago, Purdue's Mike Boehlje presented "A Risk Audit For Your Business." He has developed an audit process to identify business risks, and breaks them down into the following nine broad areas: o Business climate o Tactical performance o Operational procedures/processes o Financial o Leadership/governance o Integrity and reputation o Regulatory/legal and permit compliance o Information technology and access o Strategic positioning Even assuming we could precisely audit and catalog all existing risks to our business, which we can't, we would still have an incredible challenge in planning for them. There aren't any easy answers in contingency planning, but here are three ideas to think hard about in your business and life today, as you consider the important discipline of planning for unseen challenges. Network--If and when a risk becomes a reality in your life, the people who surround you and the support they provide is vitally important--even more so than we are often aware of, which is why it is so needful to consider your network now. What is the quality of your professional support network? How is your family working together? How do you relate to your neighbors? I actually looked through the latest issue of the Journal while writing this, and the one story that caught my attention was the one about the friends of Danny Paris in Tahoka, Texas, helping him with his farming as he fights MS and throat cancer. It is a beautiful illustration of an effective support network. Systems--By systems, I'm referring to the structures, policies and procedures that help govern our businesses. Effective systems don't replace effective people, but what they do is help effective people transcend circumstances. I realize you can only go so far with this, but it is not just a joke that you really can determine the quality of your management by disappearing from your business for a month. Such a disappearance, or any other emergency or risk realized, will be less catastrophic and destructive to your business to the extent that you have effective, systematic structures of business governance, communication and processes already in place. Value--When doing contingency planning, it is important to think hard about what you really value most. Often the planning we do doesn't correlate very well with the value of what might be at risk in our lives. Should you face a catastrophe by fire, tornado or flood, what are those things that you would be looking for, first of all? It is important to recognize what and, especially, who are most important to us, and to do all we can to protect and safeguard them from unseen risk. "Not everything that counts can be counted," and a disciplined process of identifying risk to family businesses, and beginning some planning around those risks, will be well worth our time.
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