The never-ending search for efficiency

Newsletter #4.

Last week I announced that I started my own fractional CFO service, this week I want to thank everyone for the support… and celebrate the success 🎉

But that is enough about me for now. Still, thank you 🌷

This week’s topic comes from a podcast episode I listened to about Walmart (Episode link).

I believe Walmart is a great business to study for anyone in Ag as they mastered many of the challenges farmers face:

• Being profitable with low prices

• Dealing with perishable products

• A high proportion of fixed assets

Now, before you say “yeah, but they are one of the biggest companies in the world… they control all their suppliers. None of that is applicable to me”. Just remember that in 1962, there was only one store.

And it wasn’t like Walmart was the only ‘discount store’ or grocer starting at that time. They were the little guy.

Now, in my opinion, the ONE thing that really set Sam Walton apart, and that allowed him to turn this one store into one of the largest companies, is his never-ending search for efficiency.

A focus on efficiency is also what allowed my family’s tulip business to reach the size that it has. And I believe this is what’s required for you to realise more results out of your farm.

This does not mean you have to be a lunatic and terrorise your employees, suppliers and partners to squeeze out every last drop. But it does require you to be aware of it.

Like Walmart’s approach (paraphrased): You can’t be buying someone else’s inefficiency.

Some examples:

• If a logistics company picks up your grain and charges you an above-market price because they never streamlined their processes and now have extra costs– say something about it.

• If your bank saddles you with extra fees or does not proactively offer to re-finance when better rates are available– take action yourself.

• If low-value-add manual labour is taking too much time and can be automated– do it!

All these things in themselves might not seem “worth the hassle” to fix. But every little bit you save goes straight to the bottom line (or profit-before-tax line 💸).

Meaning: you’ll make more money now. BUT, as your margins increase and your farm becomes a better-run operation, you’ll also start to see many other things happen:

• Getting new lending will become easier

• Employee turnover might decrease (as the environment is not so chaotic)

• Making decisions will become easier

And not to forget, your business value will increase if you ever want to sell it.

What might this search for efficiency look like?

For Sam Walton, this was an obsession with his industry. He often went into his competitor’s stores with his yellow notepad to study what worked, and to interview their customers and employees.

When is the last time you visited another farm, especially one in a different country, to learn from their best practices?

Another requirement is to fully embrace technology. Sam Walton was one of the first to invest in computers to organise his inventory system.

In Ag, there are now dozens of AI-driven machines that could make a massive impact. Take ‘Mineral’ for example, a company launched by Google. Their machines can do pretty much anything…

Or more local to the UK, have you heard about the Small Robot Company yet?

Have you taken the time yet to educate yourself about innovation?

Efficiency can come in lots of ways.

My Dutch-Canadian dairy friend I met from Twitter (who also reads this I hope 👋🏻!) said seeking efficiency seems to come naturally to the Dutch. Maybe it’s because we hate to spend money, or it’s because we only have a small amount of land available to us.

But whatever it is, every farmer or business can gain from focusing on this. Every little bit counts!

❗If you run an agri-business and want help to turn it into an even bigger and better agri-business. Don’t hesitate to reach out!

Till next week! 🌷

Joey