You are a CEO.
Whether you are a janitor in a school, bagging grain in a feed mill or run a multi-million dollar farming enterprise, you are the Chief Operating Officer of your life. The buck stops with you, and at the end of the day, you are ultimately responsible for every situation that you find yourself in. Life becomes a lot better when we accept that even in the bad hands life can deal us, we can only control ourselves.
As the CEO of the Faber Family Funny Farm, I distilled some of the areas that I often spend time thinking, writing and speaking about into a two-part series: Believe it or not, you are a CEO.
In part one, we’ll cover three areas: Risks, Debt, and Competitive Advantage. In part two, we’ll dive into Personal Strategies as well as the importance of having an Exit Plan. Hopefully, some of what I share will resonate with you, and in some small way, be helpful to your life.
Believe it or not, you are a CEO: Part One
Several years ago our dairy coop toured Starbucks headquarters, yes that Starbucks. Most of the trip was an inside view of how they take mini pumpkin spices and turned it into catnip for basic white girls the world over. However, we got a chance to hear from the risk management team at Starbucks where they hedged interest rate risk, coffee, milk, and fuel. They iterated that the goal of their division was to never make money but to provide a consistent return on share price and be able to give consistent guidance of where earning would be quarter to quarter. It struck me in that meeting that we are no different in our farming operations. While on a smaller scale and probably smaller margins, we too are accountable to our partners and our banking institutions on giving guidance on profitability and hedging our risks appropriately.
Dealing with Debt
Debt, it’s not just a four-letter word. While personal debt is something that we should run from, debt, when managed properly, is a great tool. With apologies to Dave Ramsey, there are some benefits to debt. Debt allows us to gain size and efficiency to be more competitive. Debt allows us to weather downturns in our markets to ensure that we are in business to capitalize on a rebound in a cyclical commodity industry. Used appropriately, we can maximize business returns by using debt. That being said, we need to have the discipline to pay down operating lines when times are good because the rain will come again and someone needs their umbrella back.
Know Your Competitive Advantage
We are all gifted with skills and advantages that others don’t have. Seek to quantify what your advantage in life and in business is, learn to be self-aware. The bar of competition is continually being raised in the agricultural world, and we need to understand what separates us from the others and what separates the others from us. What does it take to be in the top 1% and how can we get there? Our advantage may be a lower input cost, higher yield, or higher margins due to hedging. Being able to quantify why we are doing well or struggling, is a skill that needs to continually be improved upon.