agrivisions newsletter · 2017-03-22 · as swot, an acronym for strengths, weaknesses,...

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THE PRODUCTION AG INDUSTRY’S TWO BIGGEST WEAKNESSES BY NATE FRANZEN, AGRI-BUSINESS DIVISION PRESIDENT FirstDakotaAg.com (article continued on next page) AGRIVISIONS ® NEWSLETTER Experience... the Difference! MARCH 2017 FirstSource for news about First Dakota’s COMMITMENT TO AGRICULTURE In times like these - with low to no margins - guarding against your weaknesses becomes a critical factor in success. Hopefully, you have identified your weaknesses without question. For some, it will be the difference between staying viable or not. We all have weaknesses. It is important to recognize what those are and take calculated steps for finding solutions to guard against them, especially if they have the potential to be fatal weaknesses. To effectively identify those, the strategic planning process known as SWOT, an acronym for Strengths, Weaknesses, Opportunities, and Threats, is often completed. The SWOT analysis utilizes your strengths to overcome your weaknesses, which helps guard against threats and takes advantage of opportunities. I want to focus on two general industry weaknesses I have observed in my nearly 25 years as an Ag Banker. The first is the ability to truly know your financials and have a system in place so you can make informed, accurate financial management decisions in a timely manner. The second, living by a disciplined marketing plan, one that removes emotion and allows you to make decisions with confidence when the market gives you opportunities. If you do these two things well – congratulations - you are in the minority and you will perform well in today’s environment. Financial management is step one in positioning yourself and your farm or ranch for long term success. Have you dedicated time and energy to sharpening your financial management skills lately? No question - this is some of the best time you can spend. Too often I see farmers and ranchers only motivated to manage their financial records for their CPA to minimize taxes or for their banker to keep funding sources in place. Certainly I agree these are both valid reasons; however, they are not the most important for your long term success. More importantly, you need to know where you are financially in a timely manner. I promise you - this will lead to better management decisions and improved financial performance and viability. Know your income statement, current and historical averages. Know your balance sheet, the snapshot of your financial position at any point in time. Know your cash flow, the projected budget that demonstrates you can meet your financial obligations. Track your cash flow with actual versus projected on a monthly basis. Lastly, know your enterprise analysis, your break even by enterprise on your farm or ranch operation. A common mistake I see in an enterprise analysis is one that does not factor all costs into the equation, both variable and fixed. Generally, producers are good at factoring in their variable costs, but often fall short on fixed costs. Items often left out include machinery and equipment costs, accurate land costs, and accurate family living costs to name a few. I am always troubled when I see a producer make a marketing decision to sell inventory at what they believe is a profit only later to find out it was at a loss because they didn’t have everything factored into their analysis. Keeping a strong financial management system in place will position you to master the second general industry weakness.

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Page 1: AGRIVISIONS NEWSLETTER · 2017-03-22 · as SWOT, an acronym for Strengths, Weaknesses, Opportunities, and Threats, is often completed. ... Austin Perry Wyatt Perry Erin & Reed Petersek

THE PRODUCTION AG INDUSTRY’S TWO BIGGEST WEAKNESSESBY NATE FRANZEN, AGRI-BUSINESS DIVISION PRESIDENT

FirstDakotaAg.com

(article continued on next page)

AGRIVISIONS®

NEWSLETTER

Experience... the Difference!M A R C H 2 0 1 7

FirstSource for news about First Dakota’s COMMITMENT TO AGRICULTURE

In times like these - with low to no margins - guarding against your weaknesses becomes a critical factor in success. Hopefully, you have identified your weaknesses without question. For some, it will be the difference between staying viable or not. We all have weaknesses. It is important to recognize what those are and take calculated steps for finding solutions to guard against them, especially if they have the potential to be fatal weaknesses. To effectively identify those, the strategic planning process known as SWOT, an acronym for Strengths, Weaknesses, Opportunities, and Threats, is often completed. The SWOT analysis utilizes your strengths to overcome your weaknesses, which helps guard against threats and takes advantage of opportunities.

I want to focus on two general industry weaknesses I have observed in my nearly 25 years as an Ag Banker. The first is the ability to truly know your financials and have a system in place so you can make informed, accurate financial management decisions in a timely manner. The second, living by a disciplined marketing plan, one that removes emotion and allows you to make decisions with confidence when the market gives you opportunities. If you do these two things well – congratulations - you are in the minority and you will perform well in today’s environment.

Financial management is step one in positioning yourself and your farm or ranch for long term success. Have you dedicated time and energy to sharpening your financial management skills lately? No question - this is some of the best time you can spend. Too often I see farmers and ranchers only motivated to manage their financial records for their CPA to minimize taxes or for their banker to keep funding sources in place. Certainly I agree these are both valid reasons; however, they are not the most important for your long term success. More importantly, you need to know where you are financially in a timely manner. I promise you - this will lead to better management decisions and improved financial performance and viability. Know your income statement, current and historical averages. Know your balance sheet, the snapshot of your financial position at any point in time. Know your cash flow, the projected budget that demonstrates you can meet your financial obligations. Track your cash flow with actual versus projected on a monthly basis. Lastly, know your enterprise analysis, your break even by enterprise on your farm or ranch operation. A common mistake I see in an enterprise analysis is one that does not factor all costs into the equation, both variable and fixed. Generally, producers are good at factoring in their variable costs, but often fall short on fixed costs. Items often left out include machinery and equipment costs, accurate land costs, and accurate family living costs to name a few. I am always troubled when I see a producer make a marketing decision to sell inventory at what they believe is a profit only later to find out it was at a loss because they didn’t have everything factored into their analysis. Keeping a strong financial management system in place will position you to master the second general industry weakness.

Page 2: AGRIVISIONS NEWSLETTER · 2017-03-22 · as SWOT, an acronym for Strengths, Weaknesses, Opportunities, and Threats, is often completed. ... Austin Perry Wyatt Perry Erin & Reed Petersek

THE PRODUCTION AG INDUSTRY’S TWO BIGGEST WEAKNESSES- CONTINUED...

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800.682.4578

A DIVISION OF FIRST DAKOTA NATIONAL BANK

FIRST DAKOTA

SHRED DAY

Marketing decisions are not easy in agriculture - especially in today’s environment when we have few windows which are short in duration where the market gives you a chance for profit throughout the year. You must develop a system that allows you to act and capitalize when these rare and short market opportunities present themselves. Know your numbers so you know when the market is truly offering you a profit. Have a plan that is fluid and flexible yet motivates you to execute. Marketing plans must be fluid and flexible because we all know things can change throughout the growing season based on weather, production performance, and other unpredictable factors. Timely financial systems and market awareness will allow you to adjust as needed throughout the year. The other key to your marketing plan is putting in dates and pricing targets that motivate you to act. At the end of the day, you must execute sales when your plan indicates you should. Otherwise, why have a plan? Be confident in your decisions and don’t look back. The most successful marketers maintain a forward looking posture most of the time.

At First Dakota, we want to help you with these challenges and others. That is why we established the Growing American Farmers and RanchersSM AgriVisions® Beginning Farmer program. Class four of this program is getting started now. In our Beginning Farmer program, we focus on education to help members master the skill sets needed to proficiently manage their financial success. Furthermore, we also established the Keep Farmers Farming (KFF) department in our Ag Division. Our KFF consultants work with farmers and ranchers to assist with strategic planning, financial management, and build a system to boost your confidence and skill sets to succeed in the marketing process. They are also available to assist with transition planning, estate planning, labor issues, and overall best business practices.

As we enjoy and celebrate another National Ag Day and National Ag Week, we thank you for all you do! Every day I am glad I have the pleasure to work with American farmers and ranchers. You are sustainable, environmentally responsible, and globally competitive. As an industry, we must always drive to enhance these things. Remember, the enemy of great is good. If we settle for good, we will never be great. At First Dakota, we are proud of your accomplishments and stand ready to help you build and improve on your success.

Page 3: AGRIVISIONS NEWSLETTER · 2017-03-22 · as SWOT, an acronym for Strengths, Weaknesses, Opportunities, and Threats, is often completed. ... Austin Perry Wyatt Perry Erin & Reed Petersek

Write your perfect legacy. Your legacy is important. Let our Legacy Consultants help you with strategic planning, business practices and estate planning. We can help you ensure your operation develops depth at key positions and with critical duties needed to ensure ongoing success.

ALAN HOJERLEGACY [email protected]

605.270.1684

DANCI BAKERLEGACY [email protected]

605.222.0516

DON KETTERINGLEGACY CONSULTANT

[email protected]

Zach Blindert & Whitney JermanAlex Boekelheide & Jenna DockterGarrett & Sydney DavisMichael & Kayla DeJongGeorge EichSterling & Courtney EschenbaumJustin & Danielle FrickCody GearyKyle GerlachMatt Grussing & Kaci ParkZachery HildebrandtJacob & Mallory KnipplingThomas & Lexy Koch

Parkston, SDMission Hill, SDAlexandria, SDVivian, SDVivian, SDKennebec, SDScotland, SDVolga, SDAlexandria, SDCanova, SDOnida, SDGann Valley, SD

Salem, SDNorthville, SDBurbank, SDKimball, SDSalem, SDLake Preston, SDYankton, SDElk Point, SDMt. Vernon, SDPukwana, SDRamona, SDGann Valley, SDElkton, SD

AGRIVISIONS®

2017

Growing American Farmers and RanchersSM

BEGINNING FARMER PROGRAM

FIRST DAKOTA SALUTES OUR BEGINNING FARMERS AND RANCHERSOur fourth class of the AgriVisions Beginning Farmer and Rancher program is full and begins this month. Our goal is to provide training and a skill set to increase the odds for long-term success. Please congratulate the 2017 class the next time you see them.

Trent & Shannon KubikMyles Nielson Quinton & Stacey PatzlaffAustin PerryWyatt PerryErin & Reed PetersekBrooke Pravecek & Jared HeisingerTravis & Traci RenklyJared & Heather SchulzClayton WobigBlake YackleyRodney & Erin Yost

FIRST DAKOTA

SALUTESAGRICULTURE

First Dakota salutes the families and businesses who work hard every day supporting the Ag industry. Without you, we would not have the land for a resource or our high standard of living.

PROUD TO SUPPORT OUR LOCAL PRODUCERScommitted to agriculture since 1872

Page 4: AGRIVISIONS NEWSLETTER · 2017-03-22 · as SWOT, an acronym for Strengths, Weaknesses, Opportunities, and Threats, is often completed. ... Austin Perry Wyatt Perry Erin & Reed Petersek

225 Cedar Street PO Box 156 Yankton, SD 57078

PRSRT STDUS POSTAGE

PAIDYankton SD

57078 Permit No. 16

ADDRESS SERVICE REQUESTED

First Dakota Convenient Locations In South Dakota… Beresford 605-763-2135Blunt 605-962-6231Chamberlain 605-734-5555 Elk Point 605-356-0289 Kimball 605-778-6218 Mitchell (North) 605-996-3364 Mitchell (Norway) 605-996-3364 Oacoma 605-234-5005 Parkston 605-928-3077Pierre 605-224-5817 Salem 605-425-3111Sioux Falls (Downtown) 605-333-8200Sioux Falls (East) 605-333-8282Sioux Falls (Louise) 605-333-8295Sioux Falls (South) 605-333-8210Vermillion 605-624-5555Wagner 605-384-5456Yankton (Downtown) 605-665-7432Yankton (North) 605-665-4999

Loan Production Offices Columbus, NE 402-563-2326Corsica, SD 605-946-5888 Hastings, NE 402-463-4637 Ogallala, NE 308-284-3260 Platte, SD 605-337-2154Watertown, SD 605-753-5880

F I R S T D A K O TA N AT I O N A L B A N K

Ag Advisory Board Spotlight

Craig has been actively involved in agriculture for 30 years. Beginning in 1977, Craig farmed with both his father and brother. For the last 16 years he and his brother have operated a farming partnership near the Aberdeen area. From 1988 - 1998, Craig was elected to five consecutive terms in the South Dakota House of Representatives where he served as the House Minority Leader and House Whip. Craig was appointed in 2010 to serve as South Dakota State Executive Director for the United States Department of Agriculture (USDA) Farm Service Agency (FSA). Craig graduated from Aberdeen Central High School and attended Northern State University. He understands the importance of being involved in agriculture and his community. He has served on numerous state and local boards including Heartland Grain Fuels, Dakota Fuels, Aberdeen Development Corporation, South Dakota State FSA Committee, South Dakota Wheat Incorporated board, the Brown County Drainage board and is an active 4-H leader. In his spare time, Craig enjoys pheasant hunting, showing cattle with his children, and coaching youth activities.

Dr. Barry Dunn - Brookings, SD

Craig Schaunaman - Aberdeen, SD

Barry has been named the 20th President of South Dakota State University in Brookings. His love of agriculture and ranching began on his family’s ranch near Mission, SD. During that time, he worked with the conservation district and Extension Service to start the original “Bootstraps” group. Barry received Governor George Mickelson’s Award for starting the “Bootstraps program”.

Barry has a PhD in Animal Science from SDSU. From 2004 - 2010, he was the Executive Director and Endowed Chair of the King Ranch Institute for Ranch Management at Texas A&M University. He has received the Texas A&M Kingsville award for “Excellence in Teaching”. He served as the South Dakota Corn Utilization Dean and Professor of the College of Agriculture and Biological Sciences at South Dakota State University from 2010 – 2016. He was the first Endowed Dean at SDSU and has been recognized as the SDSU Cooperative Extension Specialist of the Year. Barry also serves on several boards within the state of South Dakota along with being involved