During a snowstorm, I arrived in West Point, Nebraska, to present at a conference hosted by four collaborating agribusinesses. These companies came together to offer lifelong learners a cutting-edge seminar focused on technology and innovation. Much of the seminar group was attentive and eager to gain any differential edge in their business strategy.
A quiet, young producer actively listened throughout most of my presentation and often jotted notes. After the session ended, this producer approached me and asked for my advice to young producers. Well, this is only a beginning, but here are five good points to start.
1. Invest in productive assets.
One of the keys to success is wise investment. Remember, this includes investing in your own emotional, mental and physical well-being. In other words, invest in assets that will provide a profitable stream of revenue, both short and long term. Don’t be enamored of the “latest or greatest” things. Actually, a good investment is often based on good ol’ common sense. Prudent investments may include a good set of cattle, selected equipment and technology, productive land, or buildings and structures. Resist the temptation to keep up with your peers and neighbors. Whatever advantages they may have, no business can enjoy success without solid business management practices.
2. Watch for trends that might provide a competitive edge.
More young producers are branching out. Specifically, they are looking beyond the norm for solutions or opportunities that will increase revenue. These could include, for example, adding grass-fed beef into a livestock operation, partnering with an older producer without a succeeding generation, sharing equipment between farm businesses, or joining a buying/selling cooperative of commodities. In short, think interdependent, not independent.
3. Seek a good producer-lender relationship.
As a young producer, you will most likely have to borrow money. A good lender can be helpful in facilitating an appropriate loan structure, terms and rates, which is critical. When finding a lender, consider if he or she knows the industry, and if they understand your goals and vision. Do they have experience in supporting young farmers, and can they provide education and training? Each of these elements is important for a good side-by-side relationship with your lender. A lender can be one of your most significant business relationships, especially when starting a new business.
4. Maintain and enhance your knowledge coefficient.
Knowledge is information as it is applied to your business. This component is critical. Focus on business, financial and marketing practices. Remember the law of diminishing return (paraphrased): Apply capital and energy to where you get the biggest bang for your buck until it’s all used up. Actually, this point feeds into the final of the five points as maintaining and enhancing knowledge requires the support and participation of others.
5. Establish a good circle of mentors.
Test your thoughts and expand your critical thinking through a circle of mentors that includes at least some individuals outside the family culture. Advisors (either single or a group) should include some peers as well as some more experienced individuals. Because of its cyclical nature, success in agriculture requires varying perspectives, a mix of young ideas with seasoned experience. In addition, agriculture is often in rural communities or geographically isolated, which can make networking outside of the industry more difficult. Yet, a perspective outside of the industry can be extremely valuable and should be included in matters under advisement.
Depending on the type of enterprise, current status, goals and resources, your specific priorities as a young producer will vary. However, the aforementioned items will set a good foundation for a profitable future that can evolve and grow, as it most likely will several times over. Good luck!
Originally published, April 2017