baby steps to bigger profits: the 5% rule steps to bigger profits: the 5% rule cropsphere 2016...
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Baby Steps to Bigger Profits:
The 5% Rule
www.hebertgrainventures.com
CropSphere 2016
Overview• TEPAP & Dr. Danny Klinefelter• The 5% rule outlined• Why is 5% important• Farm Financials 101• 5% brain storming
TEPAP & Dr. Danny Klinefelter• The Executive Program for Agricultural
Producers – Alumni association AAPEX
– In short, a masters program for farm manager’s
• Dr. Danny Klinefelter– Director of TEPAP
– Executive Secretary of AAPEX
– Named by Top Producer magazine as one of the 25 people in the world who will have the greatest influence on the future of American agriculture, 2009
TEPAP Farm Management Philosophy
• 7 Key Principles:
1. Jack Welch – True competitive advantage
2. Wayne Gretzky – Strategic Management
3. Analyzing – what not to do & Opportunities
4. Learning Organizations – if its not broke haven’t looked hard enough
TEPAP Farm Management Philosophy
5. Continuous Management Improvement
6. Timing
7. The future belongs too……
The 5% Rule
• Baseball analogy - .300 hitter vs .250• Klinefelter Farm credit study - data showing
top 25% were only about 5% better than average (82-87)
• David Kohl FINBIN research (2012)– Top 20% NI of $859,000
– Bottom 20% $14,000
– Gap widening?
5% - fun part for #’s nerds
5% baby steps = BIG EFFECTS!
Why is 5% important……
Why is 5% important……
Why is 5% important……
Catch a Unicorn and ???
How are we going to accomplish?• Biotechnology• Information technology (measuring and
monitoring)• Mechanical Implementation/process
control technology• FARM MANAGEMENT SKILLS
Gross Margin & 5%• Margins
– Coordinate!!• Marketing
• Inputs (2009)
• Accrual Financials– Producers
– Banks
– Accountants
– Consultants
– Insurance
Gross Margin & 5%• 4 R’s
– Right source, rate, time, place
• On farm trials– VR
– Chemtrition
– Fungicides & seed treatments
– TKW, seed rate, plant stands….
– Sectional control
• Peer groups• Tools in the tool box
Gross Margin & 5%• Price
– $130/mt variance
• EDUCATION– Futures
– Options
– Basis
• RISK MANAGEMENT– Old programs and
advisors not necessarily helpful
• Biggest losses in average and good years
LPM & 5%• Cost management• Perfection Vs
Logisitic’s– LPM focus –
efficiency
– 24 hr shifts
– Auto steer
– Combine settings
– Data collection
– Pro drive
– Operator training
– Mindset shift…….
LPM & 5%• Change is inevitable
– not broke = look harder
• Strategic mgmt. – in vs on the business
• HR – shifts, culture, value efficiency
• Benchmarking• Peer groups• Advisory boards
LBF & 5%• Tends to be a
function of age and equity
Another thought….• Enterprise resource
planner• Human
hours/acre????
Why is this all important???• Legacy
– Leave the dirt and Financial Statements in a better state than the last generation
– Feed the world
Reading/Audio Books– Good to Great
– 4 hour Work week
– 7 Habits of Highly Effective People
– Scaling Up 2.0
– The Rockefeller Habits
– The E-myth Revisited
– Great by Choice
– Rich Dad, Poor Dad
– Klinefelter Articles, Boehlje Articles
– www.wittmanconsulting.com
– Strategic Coach
Kristjan Hebert, CPA, CAManaging Partner
Office : (306) 739-0028Cell : (306) 435-9924
hebertgrainventures.com Twitter: @kristjanhebert facebook: Hebert Grain Ventures
PO Box 1307Moosomin, SKS0G3N0