As the calendar year draws to a close, many farm co-ops are also approaching their fiscal year-ends. As a co-op CEO, now is a good time to ensure you’ve taken all the necessary steps and checked all the boxes to prepare for the next year.
“We anticipate that 2024 will require extra business attention, especially with ongoing global conflicts, widespread droughts and policy changes,” says James Jirak, Pinion farm co-op advisor. Here are five things you can do now to prepare for the coming year:
1. Prioritize financial planning.
Now is a good time to revisit your budget, tax strategies and financial plan. Looking at past performance, does it make sense to be aggressive in expansion and growth or to step back and build working capital? With lower-than-expected harvests in 2023 for most of the country, building storage is probably not a huge need, as co-ops are not carrying as much grain as normal.
Consider what is happening in the space of services, such as agronomy and feed production. More and more farmers are purchasing their own sprayers. Is this an area where demand will wane? Shifting livestock herds will impact feed mill demands as we have seen in the past couple of years, so feed expansion should also be evaluated.
Pro Tip: Look at your departmental ROI and put more budgetary resources into those areas that preform the best.
2. Examine your board make-up and succession plan.
With annual meetings coming up, make sure that you have a competent slate of board members for the next year. If you do not have an associate board member program, the annual meeting is a good time to start one. Candidates that do not make it onto the board are good candidates for these programs.
Pro Tip: Think about patrons that serve on other boards such as school, county extension and municipal boards. People sitting on these boards typically have good intentions – usually driven by service rather than compensation.
3. Focus on retention.
Most are feeling the squeeze of finding good employees right now, making it even more important to focus on keeping your best performers. While money is a top priority for employees, it is not the only factor to retain employees. Studies have shown that good management and a positive work environment factor in just as much, if not more than compensation.
Be sure that employees have a voice, and their thoughts are heard and valued. The more “buy in” with the co-op they have, the more valued they will feel. It costs 1.5 times the annual salary of an employee to onboard a new one by the time they are productive and up to speed, so it costs much less to keep an employee than to hire a new one.
Pro Tip: Take time to ensure your compensation is competitive with the market, but also pay attention to other factors of retention like benefits, flexibility, and opportunity for advancement.
4. Evaluate your cybersecurity.
The new year is a good time to re-examine your cybersecurity program. Unfortunately, horror stories of phishing, cyber attacks and ransom attacks are becoming more commonplace. Make sure you are protected – no one wants to tell the board they lost thousands of dollars because of a security breach.
Pro Tip: Consider implementing extra security measures like two-step verification, or investing in cyber insurance for another layer of protection.
5. Search for ways to improve efficiency.
Are there departments where you are bleeding money, just to offer a service? Consider off-loading, or selling these services to individuals in the community that may want to run the business. You may even want to make they a sweetheart deal on these, to keep the service available to the community.
Pro Tip: Look across your entire payroll and take note of areas that could benefit from automation or outsourced providers. Small changes could increase efficiency, reduce your overhead and improve the flow of business.
“Most importantly, don’t forget your patrons”, encourages Jirak. “The end of the year is a good time to get their feedback.” Consider hosting producer roundtables to talk about the previous year and any challenges the co-op can help solve. “Doing what we’ve always done” may work for a while, but if producer’s needs are not met, they will go elsewhere. Seeking input helps you help them, shows that you care and builds a stronger relationship.
Connect with a Pinion farm cooperative advisor to prepare for year end or for help with strategic planning, DPAD reporting and other services to reach your business goals.