The 7 Principles for Successful Farms
By Danny Klinefelter, 05.27.2015

During the 25 years since I started The Executive Program for Agricultural Producers (TEPAP), I have observed seven characteristics or principles that apply to the most successful farms. They are:

1. The only truly sustainable competitive advantage is the ability to learn and adapt faster than your competition.

2. Strategic management is the ability to anticipate, adapt to, drive and capitalize on change.

3. The best organizations spend as much time analyzing with the need to stop doing as they do evaluating new opportunities.

4. The most successful businesses are learning organizations. This means that everyone in the business needs to recognize that someone, somewhere, has a better idea or way of doing things, and they need to be compelled to find it, learn it, adapt it, and continually improve it.

5. Success requires continuous management improvement at a rate set by the leading edge of your competition and not by your current comfort zone.

6. The main difference between top 10% and the rest of the top 25% is their timing, in terms of when to enter, expand, cut back or exit; whether it’s an investment, a marketing decision or a business activity.

7. The future will always belong to those who see the possibilities before they become obvious to the typical producer.

More recently, I’ve started to notice that the same attributes apply to the businesses adopting Granular. They tend to be early adopters – they move before their competition. They also recognize that soon government regulators are going to require evidence supporting and verifying compliance with environmental and conservation regulations. Real-time recorded verification of timing and application rates will become necessary. Also, this documentation and proof will shortly thereafter be either required or rewarded by the marketplace. If food retailers are convinced their customers are demanding products based on verified and audited sustainability practices, they will begin moving toward the qualified supplier model. This will mean one of two things for the producer: 1) a price premium for those who can prove compliance with specified practices or 2) being excluded from certain markets if they can’t.

The other practice I’m seeing more of is the use of activity-based managerial accounting. This means looking at both the cost of and returns to specific attributes, practices, locations and enterprises. With margins being compressed, the winners are going to be those who know their strengths and weaknesses, which are reflected in very specific costs and returns. This not only improves decision-making, it also improves timing – knowing not only what to do, but when to do it. Both of these, I believe, will become critical to the long-term sustainability of farms, and it will happen sooner than we expect.

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