We consider dairy farming to be an occupation, a way of life, and often a family tradition. This is all true, but on top of that, a dairy farm is a business.
“Treat your business like a business. You’ll have a much higher chance of being successful, even in tough times,” said Mike Boehlje, a professor in the department of agricultural economics at Purdue University. He was the opening keynote speaker at the Professional Dairy Producers of Wisconsin’s Business Conference held last week in Madison, Wis.
“Financial resiliency and agility — that’s what we have to focus on as we think about the future,” he told the audience. “You can’t just worry about defense, you have to have offense, too.”
Boehlje offered 10 objectives businesses need to be successful in turbulent times.
1. Create value for your consumer. “You have to think about your customer,” he said. This would include understanding customer needs and differentiating your service.
2. Focus on strategy. This could involve product or process innovation. “Customers want more than just standard milk,” Boehlje said.
3. Increase asset utilization. For this category, Boehlje said to consider leasing rather than buying, outsourcing, or custom hiring certain jobs.
4. Increase margins. This can be done through cost control, timeliness of purchases, and by using best management practices and technology.
5. Grow volume and/or sales. Here, he said you are looking to improve productivity and make more volume with less investment.
6. Manage money/capital. Boehlje suggested to use debt carefully, and again mentioned opportunities where it may make more sense to lease rather than buy machinery.
7. Use time efficiently. He recommended to focus on management and hire skilled employees.
8. Manage operating and strategic risk. He said this could be done by conducting a risk audit and through forward contract pricing.
9. Get smart. “Professionalize your team,” he said, by educating yourself and the people who work for you.
10. Think like a CEO. “CEOs worry about managing people, money, relationships, and strategy,” Boehlje said.
“It is extremely hard, if not impossible, to predict the future,” Boehlje said, “so position yourself for both the challenges and opportunities.”