By Peter Martin
In previous columns, I’ve focused on how you can grow your agricultural business, whether through expansion, transitioning to new opportunities, accessing new financing avenues or making the most of what you already have. But a big part of growth involves people. If you can’t leverage your labor force, you’ll struggle to grow.
This year, when you might be struggling to break even, it’s critical you do everything you can to optimize your operation and make it as lean as possible. You cannot do this alone. You must engage your team every day, at every level. Your employees must understand why you’re focused on optimizing every facet of your operation, and they must be on board with that mission. Here are three important steps to ensure you succeed:
1. Identify—and share—optimization goals. Know what optimization at your operation looks like. Look ahead 12 months. Where can you cut expenses yet not sacrifice revenue? Pull up your income statement and examine it line by line. What items can you do without? It might be just you and your spouse, or a whole team of managers working together, who walk through expenses to pinpoint items that could be reduced. An important person to include in this process is the “can you?” guy. This is an outside person you respect who will challenge you with “Can you reduce this?” and “Can you find another way here?” This process will help you establish clear optimization goals.
2. Gather your team for a reality check. All employees, not just your top people, must understand how tough times are. They need to recognize your operation might not break even this year. Pull them together for a meeting that not only underscores the seriousness of this year’s challenges but stresses how each one of them can make a difference.
Engage them with a message of inspiration and motivation, not fear. You don’t want to scare people into quitting because they think the ship is sinking. Let them know this is an opportunity to become the best-run farming business around and you’re all in it together. Their efforts to do everything leaner and better can help sustain the business—and their jobs—for the future.
3. Follow through. You can’t have the reality-check discussion with your team and then stop there. Your message must be repeated so you build continuity, consistency and a culture of efficiency.
Help your employees fully understand your “get-leaner” mission by reaching out to them individually and in group settings. It’s OK to remind a part-time office worker to look for cheaper supplies or to urge an equipment operator to go a little easier on your combine to save wear and tear. From small things, such as buying cheaper coffee or turning off the lights when leaving a room, to the far bigger cuts, each member of your team must be keenly aware of his or her role in reaching your goal. If you don’t follow through with your employees, you won’t be successful.
If you are going to get aggressive in optimizing your operation, be prepared to reward your employees for their expense-cutting efforts. It might be tough to boost their paychecks today, but, properly executed, your optimization plan should allow for a portion of the savings to be passed along to your team. Leverage your employees to meet your goal, and they—and your bottom line—will thank you.
This column is not a substitute for financial advice.