I see many folks struggling to adapt to the curve balls Covid-19 is throwing right now, and rightly so.
I grew up on a commercial farm and have been working with Ag businesses for over 25 years. That experience has given me a unique perspective on the current economic environment brought on by Covid-19. In agriculture, every day has the potential for disastrous events, many of them completely outside of your control with far reaching consequences. Early or late frosts, droughts, floods, disease, wild price swings in your products and supplies, all can dramatically impact your business. So what can you learn from Ag during these trying times?
- Take care of your people. Period. You need your customers, vendors, employees, and your family to make it through tough times. You take care of them, they take care of you. Alienate them, and you will never recover.
- Cash Flow is critical. I like to think in terms of the good, bad, and ugly scenario planning. This year, I am including a really ugly category as well.
- Stop thinking in terms of absolute numbers and start thinking in probabilistic terms. Play the odds for success.
- Highly leveraged businesses are at high risk. Borrowed money is an accelerator, and it works both ways – up and down. Its it probably to late to change your debt position, but think about that as banks try to loan you money. Banks have marble floors for a reason.
- The higher your risk level, the more cash reserves you need.
- Adapt to changes quickly. Be flexible and fast. What worked yesterday isn’t going to work tomorrow.
- Diversification can be a good thing. 9 times out of 10, my advice to entrepreneurs is to focus, because they have so many ideas, they need reigned in. But businesses that have multiple income streams and diverse customer bases are in a much better position now than those who are dependent upon a single customer or single income steams. It works best if you build complementary and synergistic segments.
- Mindset is everything. Focus on what you can control, work on the biggest problems first. Recharge each night so you can be fresh the next day.
- Tough times are followed by good times. Think long term to stay focused on what matters most. Your monthly and quarterly targets are gone, position yourself for the long term.
- Remember, hard times make for great managers.
Step back, breath and think logically. Put numbers to thoughts. We are in this together, don’t forget to ask for help if you need it. Put aside the fear and get excited to be thinking differently and challenging the assumptions we once knew as fact. You can do this, AND make your business better than ever.
Stay apart and stay healthy!