March 31, 2008 | Dr. John Foltz & Dr. Christine Wilson
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Do You Make the Grade? A Report Card for Your Feed and Grain Business, Part Two

We look at several new metrics you can use to rate your businesses performance.

AUTHOR'S NOTE: In our last column we presented Part One of a Grade Card for the feed and grain business. This month we give you Part Two of the Grade Card — additional criteria you can use to evaluate your firm in some key strategic management areas. Our grade card can be thought of as a method to assess where your business is — a subjective measuring tool relative to your own perceptions, and perhaps relative to other firms in your industry.

As with our last column, we start with the presentation of our grade card. Please utilize the grade card we have provided in Figure 1 to grade your business in the areas listed. Once you have rated yourself on the measures provided, rank the areas according to their importance to you as a manager. Following this, determine which areas need improvement (It's your call — but we would say if you have a "C" or below in an "important to highly important" area, this would be a good place for some follow-up.) Then read through the accompanying sections where we provide insight, ideas, tools and resources to assist you in raising your grades!

Business planning and strategy

Business planning is a process that some managers and employees find challenging and a form of drudgery while others find it invigorating and forward looking. We think the difference lies in how a business executes and utilizes the planning process. Manager's Notebook covered this topic in several previous columns (see January '01 and October/Novemer '01 — available from John Foltz at jfoltz@uidaho.edu).

Question 1 refers to whether or not your feed and grain business engages in a "successful" strategic planning process. As mentioned above, strategic planning has significant benefits:

  • it provides a "road map" to help guide your business;
  • helps determine successes and items for improvement (often carried out through a "SWOT" type analysis – which stands for Strengths, Weaknesses, Opportunities and Threats);
  • it gives you the opportunity to look at new directions or opportunities;
  • helps focus resource allocation (time, talent, money) for those most beneficial activitiest;
  • strategic issues can be brought up for management review;
  • and finally, strategic planning can help develop better inter nal coordination of activities.

Many firms report that strategic planning just allows for better communication, coordination and profitability for the company — helping put everyone on the same page.

You might feel that our question is a loaded one – focusing on the term "successful." We define success here as 1) a process that's done with some regularity; 2) is inclusive and incorporates input from all key decision makers and driving key decisions in the company; 3) it is truly strategic in the longer term. While success may lie in the eye of the beholder, we suggest successful strategic planning provides you with better performance on almost all of the grade card criteria.

Our second question asks about whether you are entering new markets, or offering new product lines or services (see Fig. 1).

The astute manager is always on the lookout for new markets, new products or new services. Ways to increase your grade here primarily relate to several issues we touched on in last month's column — scouring information sources to keep abreast of your industry and networking. If you can "leapfrog" your competition by garnering new and useful information through reading or networking, you may have a first mover advantage that may pay off handsomely. Of course, a very deep understanding of your customers' business, and their issues provides great insight (more on this below).

Question 3 asks if your firm is taking advantage of strategic alliances. This topic was covered in our April/May '01 Managers Notebook column on Innovative Business Arrangements (https://www.agecon.purdue.edu/cab/research/articles/expandingefforts.pdf).

A strategic alliance can be defined as an agreement between individuals or entities whose stated actions work toward a common goal. Strategic alliances usually make sense when the parties involved have complementary strengths; thus, it may behoove your firm to try to develop strategic alliances with key business partners.

In the grain industry, an alliance might be utilized to develop an area wide website shared by several elevators in a region, which can be utilized by farmers for marketing or gathering market information. Thinking a bit more broadly, an alliance between an elevator and a local farm equipment retailer might result in sharing advertising. In the feed business, an alliance could be utilized to add new products to a local manufacturer's line of feed, where the benefits go beyond just purchasing the product.

The next question focuses on how well you are using the internet to support your business. There is a fine line that can be drawn between providing a full-service/all-encompassing website that provides up-to-date market information as well as allows your customers to access their account, and one that just lists the facts like name, address, phone number, contact names, etc. To understand the value of a full-service website, conduct a cost/benefit relationship to determine if the added expense is warranted.

There are some good examples in the whole Internet/Web services approach in general. As an added perk, many banks, credit card companies, mutual funds, etc., offer a variety of online services to their customers free of charge.

Since there are no printing or mailing costs, moving customers completely online can reduce a firm's expenses. These incentives can be built into a well thought-out plan, helping it become more efficient and self-sustaining. Other firms have successfully used the approach where you build the site, get the customer used to the convenience, value and simplicity of using the site, and then eventually charge them for the service. Market Research is cheap to do here so spend some time online, check out what other websites offer and identify what features your customers would find useful.

The next question looks at whether your business is considered a supporter of the community. We tackled the pros and cons of this issue in our June/July '07 column titled "Corporate Citizenship: What's in it for Your Business?" (see: http://www.feedandgrain.com/print/Feed-and-Grain/Corporate-Citizenship--Whats-in-it-for-Your-Business/1$615 ) Supporting your local community indicates that you are "invested" in your town. While the "Wal-Martization" of America is something many local businesses fear — their approach and success can be overcome with focused effort. Experts indicate that the best way to compete with Wal-Marts (and other similar competitors) is to develop your own niche for product and service (i.e., don't carry products the Big Box stores carry), provide exemplary customer service and support your local community. Community support comes in a variety of ways and you may already be doing many of these things like supporting the county fair, purchasing 4-H and FFA members' livestock, and buying advertisements in the high school football program.

But sometimes it pays to take an even more proactive approach. Examples of other projects/ideas might be: having your employees run a food drive to support your local food bank; annually purchasing the awards given to local Boy Scout or Girl Scout troops; making your conference room available on a regular basis for community groups, and publicizing this fact; hosting a job shadow project on a regular basis for a high school student; sponsoring a day of community service in conjunction with your local city council. Volunteers can plant trees, plants, pick up trash around town, and repair/paint park fixtures with your feed or grain business serving as the hub of "volunteer central" where jobs are assigned, refreshments are provided, etc.

A website you might find useful for information and a resource, regarding optimizing a local advantage is the New Rules Project — a project of the Institute for Local Self-Reliance (http://www.newrules.org). A portion of their website is devoted to retailers, and is entitled "The Hometown Advantage — Reviving Locally Owned Business."

The final question is the mirror of No. 2 – do you review your divisions, locations, product lines, and services regularly and "prune" those that underperform? One famous management author, Michael Porter, said that "strategy is deciding what not to do." Too often, we add and add and add, and never take a look at what we should quit doing. We can always find reasons for not dropping a product line (three customers still use it), not closing a location (what if our competitor bought it?), etc. However, great managers have to be objective here and decide when the gain will be greater than the pain.

Marketing (See Fig. 2) is the next area where we ask you to grade yourself, and it is another topic we have written about numerous times in this column. Questions 1 and 2 are "general" marketing questions and the "Manager's Notebook" columns (column title, followed by the issue) that follow might be good places to start: "Market Segmentation: "Making It Work in Your World" - October/November 2007; "Bigger Profits Through Targeted Sales" — January 2007; "Taking a Fresh Look at Your Marketing Strategy" — January 2006; all available at: http://www.feedandgrain.com/publication/archives.jsp?pubId=1

Question 3 focuses on a couple of marketing tactics that many businesses do not do — customer surveys and focus groups. The idea here is to be proactive and gather data directly from both customers and noncustomers. You can ask these groups broad questions about long-range product offerings or services that you might offer; or you can be more specific and focus on day-to-day operations and what survey respondents find both good and bad about your business.

Gathering this data might be as simple as including a self-addressed, stamped postcard with six questions in your customers' bills three to four times a year. Or, you might go to the time and effort to develop a more comprehensive mailed survey. A quick and inexpensive option to consider is an online survey service such as Survey Monkey (http://www.surveymonkey.com) which allows you to customize a website or e-mail with questions. The data is then easily compiled into usable statistics or narrative bullets which can be used for future planning session or in communication vehicles like statement stuffers or e-mails.

A final method of collecting this type of data is through focus groups. Meeting face-to-face with customers and prospects sometimes gives you more direct insight into their thinking. A list of closed (yes/no) and open (discussion type) questions can get them going and help direct the conversation. If you precede or follow this with a small meal (breakfast or lunch), you will be amazed at the useful information you will uncover — and how much these people will tell you!

Related to question 4 — a quality control program starts with your commitment promise, followed by an outline of how your program is to be carried out. In the feed and grain industry, we often rely on inbound ingredient testing to determine grain/feedstuff quality (and thus value). On the product sale side, most grain merchandisers feel that the determination of the quality of grain is addressed either in the grade or more specifically by the contract of sale. This is probably a fair statement of the market workings for both buyer and seller. However, on the "feed" side there are perhaps larger quality control issues that feed manufacturers are forced to address.

Depending on how you graded this question, you may want to consider a stronger quality or service guarantee. Guarantees of this sort indicate both a promise and a commitment on your part to handle issues that may arise. Most management gurus would argue that you will get more benefit from such a guarantee than it will actually cost you. In the book Extraordinary Guarantees: A New Way to Build Quality Throughout Your Company and Ensure Satisfaction for Your Customers, (Amacom Books, 1993) author Christopher Hart argues that "by translating every element of customer dissatisfaction into pain for the company, an extraordinary guarantee cuts through bureaucracy, breaks down barriers, creates a sense of shared mission, and sharply refocuses corporate priorities on those elements that most need fixing."

The last question here addresses a key gap we see in many feed and grain firms — no effective sales management function. As feed and grain firms grow, many keep a "small firm" organizational structure. Next thing you know, someone has 18 salespeople directly reporting to them, which is about as good as no sales management function. Do you have a sales manager or someone with that responsibility in your business? Is this person actively involved in coaching and training activities? Do your salespeople have detailed territory plans? Are these plans reviewed regularly? Are salespeople compensated based on their ability to deliver against the plan? Sales management is much more than, "go get 'em folks!". If you score a low grade here, you might want to consider an excellent resource, ProActive Sales Management — a book by Skip Miller published by Amacom Books.

Communications

Communicating with stakeholder groups is the final area of our grade card (See Fig. 3). While almost everybody agrees that good communications are vital to the workings of business and life, almost all of us can improve in this area. These improvements will pay off by uncovering problems before they become too big, and by supporting the emotional side of people's "need to know."

A company newsletter aimed at your customers can go a long way toward solidifying the relationship you have with your clientele. Such a newsletter can be published and mailed on its own, or it can be a simpler one-page affair mailed with your monthly statements. You can also do something via e-mail or fax if your customers prefer that form of communication.

Obviously the challenge here is to continue to come up with fresh ideas for the newsletter. However, a running list of stories could include: meet the staff (one person/newsletter with updates); meet our customers (a brief customer profile); highlight a new product or cover a problem that you are seeing in the market; your creativity is the only limiting factor here. The firm companynewsletters.com (www.companynewsletters.com) suggests a couple of other novel ideas to highlight employee volunteerism and achievement.

The next question asks if your firm has an effective way to communicate with your employees. Regular staff meetings are good ways to ensure this communication, and also provide for input from them to you as manager on issues at hand. Many companies find a productive way to do this is to schedule regular monthly or quarterly meetings. If you take this approach, you will find that items to put on your agenda will constantly come to light; you just need to keep a sheet to add them to. A key point: Make sure you really take meeting seriously if you do them. Have a purpose, run them efficiently, make sure they create value. You do not want your "communication vehicle" to be a monthly source of pain for your employees.

The next question under communications refers to whether your company has a website. There is no doubt today's customer continues to become more user savvy with online tools, and while agriculture tends to lag a bit behind on the learning curve of some applications, we feel that we can do our customers a big service by providing them useful Internet applications like market and weather data links.

Concluding comments

Over the past two columns, we have highlighted a number of areas where grading your business can be useful. Of course, assigning your own grades can be tricky as you can be both too easy and too hard an evaluator. Consider using these tools in an employee meeting as a way to collect employee opinions and to start conversations about improvement. You might even consider using the grade card with a select set of customers, and advisory group or suppliers whose thoughts and insights you value. The bottom line here: It is very hard to manage what you don't measure, so put the cards to work and see if you are making the grade!

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