Business continuity takes proper planning
By Greg Wolf
Businesses that experience not only success but longevity are no accident. There are a number of qualities that characterize businesses that have remained successful over a long period of time, and their relationship with their people is vital. This subject is being addressed in a fairly generic way this month; however, the principles are relevant everywhere, and no less in farm and ranch operations, even though the fit sometimes seems less obvious than other industries.
Good employees are foundational to the success of a business, and length of tenure can be an insightful way to measure how highly a company values them. Employees that feel appreciated, that understand their own contributions, and that believe what is asked of them is consistent with the corporate goals of the business are much more likely to give more of themselves for the company and colleagues, and over a longer period of time. This is foundational to business continuity, as high employee turnover both directly and indirectly handicaps business success. A company’s relationship with its employees is a key part of the temperament, and culture of the company. Acquiring top talent, giving state-of-the-art training, and properly incentivizing employees for high performance all contribute to long-term business success. All of this is equally true—and perhaps in some cases even more so—for closely held businesses in which most employees are family members as well. The potential for chaos at best, and conflict at worst, runs extremely high in businesses in which human relationships are in poor condition.
All businesses are surrounded by a community of people that go beyond employees, however. Customers value a well-managed business that can be depended on for consistent quality, an equitable pricing structure, and smooth communications. The old adage “the customer is always right” may not be technically true, but for a business where the customer is always highly valued, strong relationships will develop over time that help build and maintain business success. Other people related to a business include those in the community surrounding the yard. Community relations are often underestimated as to their impact on the success of a business. A local community is much more supportive of a business that is a contributing member, and this includes service to the community as well communications with the community.
While relationships with people are central to the long-term success of a business, there are a number of other things that are important in business continuity as well. The following is a list of areas that should be evaluated for the business you are a part of:
Capital Structure—A successful business must have sufficient capital to grow its asset base and revenue volume. That includes capital on the “bottom side” of the balance sheet, as well as “working capital” on the top side. Working capital measures the current position of a business, and provides business managers with the resources to move quickly—primarily in meeting growth opportunities as they occur, and buffering business risk over time.
Strategic Planning—A documented business vision and mission are vital in charting a long-term course that satisfies shareholders as well as other stakeholders. Those stakeholders include the employees, customers and community members mentioned above. Few strategic plans come to fruition precisely as planned, but that is not the primary purpose of a strategic plan. Instead, they are a valuable tool in exploring and uniting the varying visions business leaders, in communicating business vision among all stakeholders, and in providing a basis for re-visiting and re-planning as the actual business environment and performance unfolds.
Goals and Objectives—A business vision and mission are foundational to the development of goals and objectives to guide management and employees in day-to-day and year-to-year execution and production. “You can’t manage what you don’t measure” is the axiom that drives the value of setting clear goals and objectives.
Continuous Improvement—Long-term success requires a commitment to continuously improving. This strengthens competitive advantages, minimizes inefficiencies, and prepares a business for the inevitable challenges of tomorrow’s business environment. Especially in a mature and cyclical commodity industry like production agriculture, managers must remain sharp to sharp and vigilant in the areas that are under their control to remain successful.
Succession Planning—It is so important that a team has confidence in its leadership, and that includes both today’s leadership as well as a confidence that the right leadership for tomorrow is being cultivated and will be given opportunity to succeed in the future. Farmers and ranchers have a regretful tendency to view leadership succession as an end-of-life issue, often insuring that it in fact is, to the detriment of business continuity.
Talent Development—A successful business is always on the lookout for quality talent to bring to the organization, but also in organic growth—by building on existing skillsets and capabilities through training, retention and performance management systems. This is no less true if most or all of employees share relationship as family members as well.
Retirement Planning—As part of building a positive culture, businesses have to plan well for the eventual retirement of its team players. This includes creative retirement plans, trustworthy plan management, and education to enhance the entire process for employees. “Living poor, dying rich” is common in agriculture, not essential.
There are more aspects to the continuation of business success over time, but these are a few of the most vital aspects to consider.
Editor’s note: Greg Wolf is a consultant with Kennedy and Coe, LLC (www.kcoe.com) and works to help clients of the firm navigate toward better returns in all areas of their businesses. He is based in the firm’s Pratt, Kan., office and can be reached at 620-672-7476.