Former Alberta Agriculture risk management specialist Bruce Viney spoke with heart at the Western Canadian Feedlot Management School earlier this year telling about his own experiences in cattle feeding as he covered points from his new publication, Business Fundamentals for Better Feeding Agreements.
He got his start as a cattle feeder when he leveraged scholarship money he had earned for his studies in agriculture business management to get a loan from the cattle feeder association and have his first pen of cattle fed at a custom yard. He and his wife went on to own and operate a grain and cow-calf farm for 16 years, custom fed cattle for a while, and he remains active as an investor placing cattle in custom yards.
He discussed risk management from the perspective of the seven things successful farm managers do as identified in a 2015 survey commissioned by Farm Management Canada.
Successful managers never stop learning. On the whole, he’d say the beef industry is pretty good at this with many organizations putting on events, providing resources, and being active on social media.
He feels cattle feeders are right up there on the second point of seeking help from advisers and consultants, such as veterinarians, nutritionists and accountants. These connections and even those with clients are learning opportunities as well.
Where producers start to fall short is on point three: writing down a business plan, following it and reviewing it annually. This might seem like a daunting task at first with financial, production and risk management aspects alongside interrelated parts that might include environmental, safety, animal care, sustainability and succession plans.
Successful managers know their cost of production and what it means to their profits. The beauty of spreadsheet-style programs available today is that they make easy work of running what-if scenarios to see the differences that changes in input costs and market prices would make to your bottom line. Weigh one thing against another and think about alternatives when trimming costs, he advises. Labour, for example, is the top expense at many custom yards, but if you cut a staff position, what would that mean for demand on your time or for animal health and death loss?
Tied to that, successful managers do risk assessments and strategize on ways to manage business (financial) and production risk, taking into consideration uncertainties that can’t be accurately predicted such as weather and trade issues, and always with an eye on ways to seize opportunities.
They develop budgets and financial plans and they keep their books up to date and use their own numbers to make business decisions.
“All of this can be rolled into a business plan,” Viney says. “This is something you can do yourself. Take a three-ring binder with a divider for each section and start with the basics. It doesn’t have to be done in a day. Get started on it and it gets easier as you go. You might need help from your accountant for bits and pieces, but most of it comes from you — your vision, goals, strategies, opportunities, what you want for your family and employees, your financial statements and performance records. These are absolutely critical to convince yourself, your partners and bankers that you are going to make money. Use your advisers, ask questions, keep learning, do your business plan.”
Be clear on your vision, goals and priorities, he adds. This first part of your business plan might seem rather touchy-feely, but it is so important to guide your business decisions during the best of times and the worst of times.