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| The Man With a Plan. Meet Ron Marshall: “Plan to succeed or you plan to fail.” |
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| Livestock marketing
planning has been the focus of KNIGHTRO since its inception. After
more than forty years of
teaching and preaching the power of understanding the fundamentals of
livestock marketing, I’ve finally met an individual that shares
my passion for helping farmers help themselves. Meet Ron Marshall. Though his focus is more about grain farming, it is totally compatible and applicable to livestock production. After our introduction and spending some time together, he sent me the following letter and an outline to his approach to agricultural marketing: Dear Ken, Our discussions about marketing and life have been such a joy to me and I look forward to our continued relationship. Thank you for all your wisdom and kind words for me. You are a true blessing. I have identified some components to a good marketing plan that we feel are important. I don't have all the answers. I still have many things to learn. I just have principles that we use as a guide to do the best we can with what we are given. We look forward to the relationships most of all. We like working with hard working people that share our passion for testing ideas and discussing improvements. We want to quickly turn negatives into positives through hard work and a good thought process. We want our customers to be more profitable and enjoy their work more. And we feel fortunate to be part of that evolution. The following list of components, we feel, lead to good decisions for our clients' ag businesses. When developing a plan for a client, these components and principles guide our work. Cost Cost analysis can seem unimportant to many producers. Many times it seems this is an area we have no control over so, "it is what it is." This type of thinking leads to trouble. When project costs are not managed, it is too easy to let other areas slip as well. If we want to be good marketers we have to start with good cost numbers. It is the foundation of a good margin projection and a good plan. Without it, we have no way of knowing how we are really doing financially. Position How much time do we really spend thinking about our position? Maybe we spend too much time thinking about it. The first step here is to know our numbers and most folks do, which is good. Knowing the numbers is only the beginning. We must start thinking in terms of what are we going to use for next year's projections and the following years as well. Are we going to be conservative or aggressive? In the current year the numbers move around a lot, depending on weather, disease, or other health factors, we may need to change our production numbers numerous times to accurately project our position. Most folks think in terms of percent sold, and when our production changes, our percent sold changes as well. Product Mix The right mix of products can have an impact on our profitability and an impact on our vision. The product mix must match what the market is asking for and the outcome our vision is leading us to. If we are to remain profitable, we must produce products the market wants. A margin projection will lead us to that answer, but we have to be willing to look at and change our product mix when the market calls. Our vision also guides our product mix. If the outcome we are looking for is to retire in the next few years, we may focus on things that improve our assets. The product mix will likely be different than for someone who wants to grow their business and improve profits and cash flow. Timing Cash flow marketing, or maybe said in a different way, selling when everyone does, is likely the leading cause of poor marketing results. But it is not the only timing factor we must consider when looking at a good marketing plan. Market structure is very important and needs to be considered when working our marketing plan. The market will demand products more vigorously at different times of the year and we need to look for those opportunities and capitalize on them. One thing we can be sure of is if we are selling because we need cash, we will not be the only one doing so. Planning ahead is the best way to avoid selling when the market is weak. Risks In agriculture there are many risk factors and understanding them is important to managing our business. If we are still farming today, we are doing a good job managing our production risk. I would venture to say that as a whole, farms today are relentless about managing production. When we consider the impact this factor alone has on profits and sustainability, there is no wonder why this is so important. But how good are we at managing other risks like price and input costs? These areas need the kind of relentless scrutiny that production gets. Pennies of improvement in price and cost mean dollars to the bottom line. We have to understand and manage all our risks. Price Objectivess Without price objectives our marketing efforts are destined to fail. Emotions and frustrations will fill our days and lead to sleepless nights. So how do we set prices? We must look to our vision first. We need to know where we want to end up. I also feel we need to learn from history and use what it has shown us as a guide. We must be realistic about the opportunities. We have to stay grounded. Being optimistic is important too, especially when we look into the future. We must have a system that will do these things. Margin Projection The margin projection, from a financial perspective, is our most important tool. This is where it all comes together for planning. We have looked at our fixed and variable cost, so we know where we will break even. We have estimated our production, so we know what we have to sell. We have identified the price range that we have seen in the past, so we know where to start setting our price objectives. We have considered the timing of our cash flow needs and identified opportunities to sell when prices will be better. The margin projection sets the frame work for making these and other decisions. It allows us to understand the drivers of our business better than ever before. Financial statements and ratios help our bankers evaluate, tax statements help the government know how much we owe them, but nothing aids management more from a financial perspective than a good margin projection. To compete today we must have one to run our business. Vision Having a written vision of what we want to achieve is arguably the most important activity of a good plan. Vision identifies where we want to end up and creating it is a six step process. It is also the easiest activity to skip, but skipping it can be a big mistake. Like being in the middle of the woods without a compass; without a vision, our planning, projecting, and positioning may not lead to the desired outcome. A quick example of our vision is to retire in the next 2 years and sell our stock to a young up and comer, we should not be writing a plan that shows an increase of production in year 3. We may be able to show a profit and a market for the increased production, but it must match our vision. It sounds simple doesn't it? Writing down the vision is very important and then we have to share it with someone. That person may be our consultant or our spouse but for it to stick it has to be written down and shared. Relationships The last thing I feel I need to stress is we need to develop better relationships with people around us. It may be a buyer, a supplier, a farm with similar values, or a family member that is involved in our business. Relationships provide opportunities and blessings. Sincerely, Ron Marshall Consultant and Partner Marshall Marketing and Farm Records www.marshatlag.com 651-301-9185 ron@marshallag.com I encourage you to meet with Ron, as you will come away a better person with more ideas on how to become more profitable than you ever imagined. His professionalism and outstanding character will enrich not only your life, but also your bank account! |
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