Think Ahead To Craft A Resilient Business Plan

January 9, 2018 05:16 PM
Mark Westrom

Having a sound strategic plan—and sticking to it—is important in a normal business environment. But it’s pivotal and necessary in challenging times. A strategic plan gives you the foresight to stay on track. Too many producers, though, don’t have a plan or put it on a shelf and fail to use it.

Mandy Westrom farms with her husband, Mark, near the town of Elbow Lake in west-central Minnesota. Their strategic plan became especially valuable when her father-in-law died in 2016 because they farm both with Mark’s family and with Mandy’s parents, who are preparing to retire. Their home farm encompasses about 3,200 acres of corn, soybeans and wheat. Mark runs a seed business and they also do custom farming, spraying and rolling, among other field work.

The strategic plan helped them look at the big picture.

“It keeps you on track and accountable to yourself as an owner and to your partners, whether renters, landlords, employees or family,” says Mandy, a registered nurse who spent years in leadership managing a team of 26 employees at her community’s critical access hospital. She spent countless hours on a multimillion-dollar hospital construction project, where she learned the value of having multiple strategic plans in place.

Multipurpose Document. A good strategic plan shows financial partners or landlords that you’re making thoughtful decisions based on the overall goals of your operation, says Sarah Beth Aubrey, CEO of Aubrey Coaching and Training and a columnist for Top Producer. 

It offers assurance and stability, providing a road map for your operation to grow in the months and years ahead. As farm businesses continue to become more professional organizations, a strategic plan is a business requirement.

The benefits of a strategic plan extend beyond owners to business associates with whom producers interact and collaborate on a regular basis. “Having them understand our goals is really valuable,” Mandy explains. “It gives them a 30,000-ft. snapshot and vision of what we want for our farm.”

The Westroms have worked with Innovus Agra consultant Bret Oelke to develop and write down an educational plan outlining their strategy to share with their banker.

“We did our due diligence,” explains Mandy, who also participates in a women’s commodity marketing group to hone her farm business tool set and network. “They doubled what we asked for last year.”

Farmers who don’t articulate their long view of the future and the tactics they will use to achieve it face enormous risks.

“When organizations fail to develop and implement strategy that maximizes value, one often sees the same patterns of behaviors or ‘sins’ occur over and over,” says Carl Spetzler, CEO and chairman of Strategic Decisions Group (SDG). He and Mazen Skaf, partner and managing director at SDG, have studied the deadliest strategic oversights, which align with the pitfalls Aubrey sees.

Focus Areas. Five areas are of greatest concern, experts say. The first is lack of planning. “Individuals or groups will call me and say they want to have a training, or a strategic planning meeting, thinking it’s all the same thing,” Aubrey says. “So their needs aren’t met.”

To successfully begin a strategic plan, it’s important to identify expected outcomes and determine a step-by-step plan for reaching those outcomes as part of the discovery process, she adds.

It takes discipline and commitment to stay on task during the development and implementation of an effective plan. “Management teams can lose control of the strategy or go off the mission of what they want to accomplish,” Aubrey says. “You don’t have to hire someone, but often it’s helpful to have a trusted person help out.”

That kind of big-picture thinking is sometimes best led by an expert outside the organization, Aubrey says. “The leader needs to listen, so that’s an advantage of having someone else as a facilitator.” 

Beyond Simplicity. A second area of concern is that producers might not take the necessary time to develop and implement a strategic plan. Farmers can subscribe to the “keep it simple, stupid” or KISS philosophy, Spetzler says. They might think they can develop a plan in days rather than weeks or months. But the strategic planning process can bring complexity and uncertainty. It takes courage to face the unknown, but it’s often necessary to achieve desired results.

In her business, Aubrey requires farm owners and management teams to prepare a prework plan before the first meeting. She wants them to identify the outcomes they desire to ensure her time with the team is valuable and effective.

The plan doesn’t need to be set in stone. In fact, it should be flexible because a variety of factors will influence your thinking as the planning process continues.

Mandy says her plan “changes and evolves, builds and grows. It serves as a tool for guidance as well as an in-line check with our finances.”

Outside Perspective. Producers also face a third risk when they fail to obtain enough external input on a proposed strategy. The way to correct this is to involve the right people.

“Family boards and farm management teams can struggle with this because CEOs can be protective of what they want to share, and they may be nervous about who they should invite or include,” Aubrey points out. “It’s really important to think about who needs to be there in terms of the strategy. Each person is expected to play a role, and each person is to come prepared to share their thoughts.”

Include people who will be affected by the plan, even dissenters, to address issues early on and ultimately gain buy-in, says Skaf with SDG. A plan can get derailed if contrarians aren’t sufficiently included because organizational resistance will develop.

“Foster a culture of inclusion and process,” he recommends.

That type of multidisciplinary thinking is central to the landmark business book “Good To Great,” written by Jim Collins and published in 2001. It documents the tactics elite companies use to shift from moderate to extraordinary success.

“The executives who ignited the transformations from good to great did not first figure out where to drive the bus and then get people to take it there,” Collins says. “They got the right people on the bus (and the wrong people off the bus) and then figured out where to drive it.”

Evaluate the roles of each team member and ensure no voices are left unheard as you plan your strategy.

Maintain Focus. A lack of knowledge or awareness is a fourth area that can lead producers astray from the core objectives of their strategic plan, experts say. Be aware of constantly shifting market factors. Blinded by early success, Polaroid didn’t see the market trending toward digital photography until it was too late. An inability or unwillingness to internalize external changes can disrupt your business model and leave you vulnerable, Spetzler says. “It requires humility to recognize it and change,” he says. He refers to a Mark Twain quote that serves as a good reminder to always remain vigilant: “It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so!”

Keep Moving. The fifth and largest pitfall of any strategic planning process is inactivity, lack of follow-through or a combination of the two, Aubrey says. Spetzler agrees.

“When organizations are presented a new strategy year after year, have long and cumbersome planning cycles, or decisions are separated from the budget process, you can have dissociation of implementers from the strategy effort,” he cautions producers. “There’s an overemphasis on thinking about the potential at the expense of thinking about the delivery.”

Equal time should be spent focusing on what actions will be needed and also on who will be accountable for taking them.

For all of these reasons, it’s important to view your strategic plan with renewed focus and attention to both the big picture as well as the granular details. Determine what is keeping you from implementing it. “It’s all a process of getting back to the core value of what you want to do,” Aubrey says.

Have a bias for action and an execution perspective linked to effective strategy, adds Spetzler, advising producers to take to heart a Will Rogers quote: “Even though you are on the right track, you’ll get run over if you just sit there.”

When the right people on your team employ specific behaviors at the right time and in the right way, your operation can change potential strategy pitfalls into virtues.

And when circumstances in life or business change, a strategic plan keeps your operation on track, says Mandy, the Minnesota producer.

“We really put pencil to paper a year ago and made it work,” she says. “We were very transparent with our remaining parents. It’s a business first because if we don’t farm with a business sense first, it won’t be a family farm.”

Use This Straightforward Framework to Begin Your Farm’s Strategic Plan

Companies that get the most benefit from strategic-planning activities have four things in common, say Kermit King and Nicholas Kachaner, senior partners and managing directors of the Boston Consulting Group. The organizations tend to:

• Explore strategy at distinct time horizons

• Constantly reinvent and stimulate strategic dialogue

• Engage their organizations broadly

• Invest in execution and monitoring

Process planning and careful execution are key to developing and implementing a successful strategic plan. The illustration below shows some of the top questions to ask and some of the best steps to take.

“A strategic plan helps farmers up their game when they’re negotiating with landlords or their financial partners, and it will benefit them in every area of their operation,” says Sarah Beth Aubrey, CEO of Aubrey Coaching and Training and a columnist for Top Producer.

Don’t be intimidated by the process, she adds. “Thinking strategically and developing a plan need not be a long, drawn-out affair,” Aubrey says. People tend to avoid strategic planning because they don’t think they have time to do it, but it needs to be done.”

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