May 17, 2016
Three Secrets for Long-Term Success
Carl Sohn, Director and Business Advisor
Surviving and thriving in business isn’t easy. What causes some to be successful while others struggle? In our work with agricultural business across the Northwest, we see three common traits shared by successful, sustainable businesses.
- Vision: The ability to chart a clear picture for the future
- Management: A commitment to control the controllables
- Focus: The capacity to maximize strengths
Vision: Chart a Clear Picture for the Future
Those who clearly articulate and share a common long-term vision are more likely to achieve success – period. A generic ‘bigger and better’ statement is not enough. Having a clear vision enables decision makers to orient day-to-day and strategic priorities toward the same long-term objectives and reach milestones along the way. Your business’ vision should paint a picture of what success looks like next year, five years, and even ten years down the road. Your vision should be specific and include milestones to track progress:
2021 Vision – Key Strategic Milestones
How will you measure progress along the way?
Are there certain things you need to do to achieve success?
Address business, management and ownership/estate planning.
Management: Control the Controllables
Uncontrollable factors such as weather and commodity markets affect all ag businesses – yet some producers do better than others. Why? They control the controllables. You can maximize results by focusing the business’ resources and your time in areas where you control the outcome. For example, you can mitigate lower commodity prices by adjusting production practices or marketing your products in innovative ways to differentiate or garner quality premiums. If you don’t know which controllables you need to focus on, analyze your records – this requires that you maintain and use accurate records to measure financial performance and optimize production results.
While proactively controlling the controllables is a key strength of successful producers, it shouldn’t come at the sacrifice of your ultimate goals. Smart managers adapt proactively to changing external conditions, but do not let those external factors distract them from goals and priorities in their vision. For example, tax policy is an uncontrollable, but many producers purchase equipment at the end of the year to lessen taxes. This practice is effective for reducing taxes in the short run, but may get in the way of strategic objectives such as building capital reserves for land purchases.
Focus: Stick with Strengths
All successful businesses are honest about their weaknesses and address them proactively, but the most successful businesses also know and relentlessly capitalize on their strengths. In the book Good to Great, Jim Collins found that businesses that focus solely on core strengths consistently outperform competitors who get distracted by side ventures or projects. These focused businesses are keenly aware of what they do best, and spend all their time and resources building on those strengths to yield results. To identify your core strengths, answer the following questions and identify areas where your responses overlap in all three categories.
- What are we passionate about?
- What do we do better than our competitors?
- What drives profits in our business?
The Secrets to Long-Term Success
For businesses and individuals, the chance of being successful over the long run will skyrocket if you develop a clear vision for the future, focus on controlling the controllables and stick to your strengths. Make a map for success and follow it!