How solid are your foundations?

In this current era of information overload, it is easy to become distracted by factors that take our focus away from what is truly important: knowledge of fundamentals and the foundations of your operation. 

Anyone who has done any work with me recently would have seen me use the analogy of building a house.  The question is ‘Where do we start with building?’ and the answer is the foundations. 

Once the foundations are solid we can then add layers to these foundations, brick by brick.  Would you buy a house that has a fantastic new roof yet the foundations are crumbly and disintegrating?  I doubt it, however unfortunately I am seeing all too often that this analogy is the case in a majority of rural businesses. 

We are ‘assuming’ that all is okay with our fundamentals, we’ve looked at those things before and so they are right.  With this assumption made, businesses are looking for the ‘silver bullet’.  The one factor that if embraced, will change all the problems they have.  In reality though, there is no silver bullet.

What are the foundations, the fundamentals that are being ignored?  It depends on what business you are running, however the four main areas come back to the four main areas of holistic management that Resource Consulting Services (RCS) teaches:  People Management, Business Management, Land and Grazing Management, and Livestock and Crop Management. 

Challenge your businesses each month on these four areas to ensure that you are controlling the factors that are within your control.  For example:

People management:  This area of your business has a lot to do with your communication levels; you need to ensure you have regular strategic meetings and clear objectives of where you intend your business to go.  If people’s roles are clear and they understand what they are responsible for they can concentrate their skills more successfully. In business it always comes back to people, if you assume this area is controlled and its not, then your business will suffer.

Business management:  There is a main reason why industry leaders know what is happening in their business and why they are in control.  Is it a co-incidence?  Definitely not.  If you don’t know things such as what your budgeted profit is, then what are you doing to change it?  You won’t have an idea on how your budget is performing against your actuals per month, which means you haven’t challenged your costs to remove any waste areas or costs not contributing to profit.  Which enterprises are your most profitable?  If you have trouble answering any of these questions then you run the risk of working very hard for no profit.  Very few businesses can actually tell me if they made a profit or not!  That in itself concerns me.  We are also being asked to complete more viability assessments of rural businesses by lending institutions than in previous years.

Land and grazing management:  Healthy soils lead to healthy plants, which make for healthy animals which lead to healthy people.  There are many questions you could be asking to gauge your level of success for land and grazing management. By learning how to identify if your business is converting sunlight and rainfall into plants, and then those plants into profit is invaluable. Other skills like learning what your feed budget is tell you and recognizing if you matched Stocking Rate to Carrying Capacity are things that are priceless for businesses.  Work out how much grass you have, then sell it to the highest bidder!

Livestock and crop management:  You can make such a big difference to your business when you are aware of which enterprise contributes the most money to pay for your overheads, finance costs and profit. Questions like “what are your livestock numbers/ their weights/ pregnancy status/weight gain” etc are all questions industry leaders are able to answer year around. 

The points above are just a few key points to make for a strong and secure foundation for your business.  It is important to develop a system where it becomes normal to challenge the fundamentals at a regular basis.  If the foundations are solid then you will have the scope to be able to do the small things that will take your business that bit further.

David McLean is a teacher and consultant with Resource Consulting Services