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September 2012 Archive for Fiscal Fitness

RSS By: Dairy Today: Fiscal Fitness, Dairy Today

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.

Mark BradyBy 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

Staying Competitive in a Tumultuous Market

Sep 17, 2012

A banker’s checklist for success.

Steele Greg (2)By Greg Steele, AgStar Financial Services, Dairy Lending Specialist

Competitive pressures are only going to continue in today’s dairy businesses, and if you’re not improving, you’ll fall behind the competition. Rapid rises in feed costs, market volatility and increasing land costs are just a few of the factors contributing to the turmoil, making it progressively more difficult for even the keenest manger to develop a 2013 budget that leads to profitability.
A proven approach that can lead to business success is to hire a qualified business consultant to serve as an expert resource for you and your business. Some would contend that working with a business consultant is essential — a key strategy to remain competitive in the dairy business. Seeking the assistance of a qualified, experienced business consultant with whom you can talk openly and receive candid feedback, can make the difference between black and red. Business consultants can help analyze, provide insight and offer guidance for many aspects of an operation.
Below is a checklist to get you started:
Accounting and Production Systems:
  • Is the information generated adequate?
  • Do systems improve and support management decisions?
  • Does it provide the information necessary for tax reporting compliance?
  • Do processes and procedures support capturing/measuring reliable and accurate information?
Budget projections:
  • Are budget assumptions relevant?
  • Will cash flow be adequate?
  • How will necessary capital purchases and improvements be funded?
  • How is financial performance measured?
Financial Monitoring:
  • What key performance indicators are recorded, measured and discussed on a routine basis to track financial progress?
  • How are the financial and production systems linked to provide economic analysis of performance?
  • What kind of benchmarking can be used to compare your operation to others in a fashion that can identify opportunities for improvement?
  • Where are the bottlenecks that are limiting profits?
  • What can be done to improve the cost structure?
  • Are capital, management and resources being managed effectively?
  • What improvements in the operational systems are needed?
Margin management programs:
  • What elements are needed to have a sound marketing plan?
  • Is the cost of production predictable?
  • What tools are available to implement a marketing program?
  • Which strategies and targets will be most successful to your business?
  • How often do you evaluate and adjust the plan?
Employee management:
  • Where are the opportunities to improve labor efficiency?
  • Are parlor procedures sound?
  • Is the work force organized?
  • Would increasing job specialization improve performance?
  • What additional employee training is needed?
  • Are OSHA and other labor regulations in compliance?
Business structure:
  • Is the business structured for long-term success?
  • Are various tax management options available?
  • Are the “buy/sell” agreements adequate?
  • Will the business structure accommodate growth?
  • How will growth be funded?
Risk management:
  • Are the plans in place to protect the business from excessive risk?
  • Are interest rates fixed?
  • Are input supplies booked?
  • Is milk priced?
  • What are the contingency plans for a crop failure, a disease outbreak or the unexpected?
  • What is the environmental risk to the business and are you prepared for unforeseen events such as manure spills or accidents?
Succession Planning:
  • What is the vision for the business and personnel?
  • What are the opportunities for the next generation?
  • How can it be implemented?
  • What is the timeline for the transfer?
Too often people are intimidated by the fees associated with management or financial consultants. Don’t be. Simply put, business consulting is an investment into the future performance of your business. Fees are generally structured on an hourly basis however; some consultants do provide service on a project basis, depending on the nature of the work. Keep in mind that a good decision that improves business revenue or reduces cost will more than pay for the cost of consulting many times over.
The services of a qualified business consultant can be just the tool to help your business compete for the long run. I believe this old adage fits well here: “If you are not trying to constantly improve your business, you are falling behind the competition.”
Greg Steele is vice president of agribusiness capital with AgStar Financial Services, ACA. His focus is working with commercial dairy operations that have grown and expanded their business. He provides expertise in the area of finance, business planning, and accounting. Contact Steele at (612) 963-7941 or For more insights on markets, risk management and other topics that impact your operation, visit


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