Dairy Today: Fiscal Fitness
Financial management experts, lenders and accountants share ways for dairy producers to improve money and credit management. Look for help on budgets, taxes, loans, financial performance and even bankruptcy.
Have You Changed Your Thinking to Keep Up with the Market?
Sep 27, 2012
Transitioning to a multiple-person management team increases your bottom line so you can better withstand market downturns and take advantage of market upturns.
By Mark A. Brady, CPA, CVA, Partner, Cooper Norman
We continue to hear and read about the importance of making management decisions that allow us to keep up with the ever changing markets. This article itself is part of a column titled “Fiscal Fitness” that is intended to help us all focus on the importance of becoming more fiscally fit and how to achieve a higher level of fiscal fitness.
Mark A. Brady will speak at Dairy Today’s 2012 Elite Producer Business Conference Nov. 6 in Las Vegas. Click here to learn more.
In reading many of the articles placed in the column over the past number of months, it is quite clear that management of a dairy today is more than a one-person job. It is a team that can consist of numerous positions and people: from accountants, bankers, and legal council to a variety of dairy consultants assisting with feed, herd health, production and marketing, just to name a few. Hopefully, you have been able to identify and assemble some of the ones needed on your management team. Keep in mind, your team needs to be candid and open in order to provide acceptable appropriate guidance for the operations.
While you are working on the assembly of your management team, it is imperative that the team members be able to have access to relevant, timely and adequate information. The information should consist of items such as forecasts, financial statements, tax returns, budgets, key performance indicators and operational benchmarks. Note this is not an exhaustive list but only a few ideas. If you are not able to provide this type of information to your management team, here is the current starting point. The size, intelligence or capabilities of the team will not matter if they do not have the proper information in front of them.
The change from a one-person management team to the multiple-person management team is not an indication that the individual on the one-person team was not good. It is a function of the current markets that change so rapidly compared to prior markets. We now have so much information available at our finger tips that it is impossible for one person to process everything. In every other industry --from service providers to manufacturing -- the use of multiple experts has become necessary for that exact reason.
What is interesting to note is that most dairies already have the beginning of a larger management team assembled. In today’s dairy environment, most already have accountants, bankers, feed consultants and herd health consultants, to list a couple. The biggest concern is if your expert is the properly qualified expert or if he or she is in the position just because you have been working together for the past 20-plus years. If your business has grown or you desire it to grow, you might need to look for a new expert in certain disciplines.
Also, keep in mind that in your operations, not all experts will continually be a part of the team. You might identify situations where an expert is part of the team for a certain time period or for a certain project. And once the desired outcomes are achieved, they are done.
Remember to keep the end goal in mind -- you know, the goal about having a better “Fiscally Fit” operation that will provide for you and your family for generations to come. The management team is not organized to increase the overall cost of production in your operations. It is to increase the bottom line so you are better able to withstand market downturns take advantage of market upturns when they occur. If this is not what is being experienced, you need to re-evaluate the members of your management team. It cannot be stated enough: The services of a good, qualified expert can be that one advantage that helps your operation compete for the long term. I firmly believe the statement: “If you are not moving forward, you are sliding backwards.”
Based in Idaho, Mark A. Brady is a partner with the firm of Cooper Norman Certified Public Accountants. Brady is a Certified Public Accountant (CPA) and a Certified Valuation Analyst (CVA). He grew up on a Montana dairy. Contact him at 208-733-6581 or email@example.com.