Year-End Review and 2017 Planning
The holiday season and the end of 2016 are upon us. Many newsworthy things happened in the beef cattle industry in 2016 that affected everyone in the beef business. Some were good and some were not so good, but all affected the successes of beef cattle producers throughout the year. The end of a year of managing any business, including beef cattle production, provides an opportunity to assess and evaluate how well management plans and practices worked throughout the year. That assessment should lead to adjustments in management plans to be better prepared to succeed in 2017. Ability to adapt and change to meet new industry standards will be critical to future success.
To evaluate the past year, consider major areas of management decision-making, such as cattle production, financial management, and marketing. In cattle production, this can be anything from breeding dates to vaccination programs to bull-buying decisions. In financial management, this can be an assessment of how well your cash-flow statements, balance sheets, and budgets that you or your banker prepared at the beginning of the year projected what really happened. In terms of marketing, this can included how well your cattle marketing efforts dealt with the declining market that we faced, particularly this fall. Were there things that you would do different if you could do it over again?
As an example, here are some steps to consider in developing a marketing plan. First, determine what you reasonably expect to market in 2017. This should be what (steers, heifers, cull cows), when (at weaning, after backgrounding), and what you expect them to weigh (e.g. 150 steer calves weighing 550 lb. in mid-October). Second, evaluate your financial situation and its influence on your market options. For example, how does your cash flow situation influence when you need to market your calves? Next, consider price targets. Set target prices at what you need (breakeven price), want, and hope for. While you cannot control prices, setting targets helps to determine where you are relative to the existing market at any point in time. Plan how you will monitor the market outlook. Will you follow sale barn reports, the futures market, or use some other tool such as subscribing to a market service? Finally, use all of this information to develop a marketing strategy. For example, be prepared to consider the offer of a forward contract in early summer relative to market projections into the fall. Ultimately, the final step of the marketing plan should be a plan to evaluate your marketing at the end of the year in preparation for adjusting the marketing plan for the next year.
As you consider these things, did you have written plans for production, business, and marketing decisions? If not, consider creating written plans for 2017. As you assess what you might do the same or different, write those things down as your beef cattle business plan for 2017. Writing them down can be an important process in making sure that you have thought them through thoroughly and that they are as sound as they seem in your head. We often think we have a strong mental grasp of something, but have struggled to write it down clearly or tell someone else about it. Our thoughts are often not as clear and complete as we think they are. Writing down the plan provides the opportunity to ensure it is as good as you think.
Another valuable aspect of a written plan is that it is a communication tool to discuss plans with family and others involved in your beef cattle operation. First and foremost, everyone involved needs to be “on-board” and supportive of the plan. Second, it gives an opportunity for feedback and improvement to the business plan.
Other types of plans that may not need to be evaluated on an annual basis should also be considered. For example, is your estate and generational transition plan in place and up to date? The holidays are a time that family is often together, providing an opportunity to discuss these sorts of long term plans.
This is the time of year to celebrate Christmas and New Year holidays. It’s also a time to celebrate our personal, family, and business successes through the year. Take the time to truly appreciate these celebrations, and also take the time to use them to make plans for success in 2017.
Source: Ken Olson, South Dakota State University, iGrow