Much discussion about the attributes that lead to success in business is occurring in the agriculture industry. With increased uncertainty surrounding weather, markets and trade issues that lead to volatility, these attributes will become exponentially more important. The FINPACK team from the University of Minnesota’s Center for Farm Financial Management recently held their lender's conference in the cold, snowy confines of Minneapolis-St. Paul. For audience engagement, a series of questions was asked using clicker technology for anonymous responses. One question centered on the top attributes of the most profitable operations. Participants could select up to three attributes. Let’s examine what characteristics these lenders thought were most important.

What was the top attribute? Thirty percent indicated that producers who develop and use financial statements for decision-making, such as the balance sheet, income statement and cash flow statement, rise to the top of the pack like cream on milk. I often cringe when I hear producers saying they have to fill out financial statements to request credit or because the lender requested information. Another eyebrow raiser is when the lender fills out these financial statements to complete the loan package. Financial statements are often a requirement to obtain credit, but should also be used to manage the business. Given the economic outlook, the proactive use of financial statements will be imperative over the next few years.

The planning and execution of a marketing and risk management plan was second on the list of desirable attributes. Whether it is commodities or value-added markets, more producers in the profitable segment are getting the message about the importance of marketing and risk management.

The next attribute listed is becoming much more prevalent in the down cycle. Many profitable producers are generating off-farm income and diversifying their revenue sources. 

The lenders also indicated that modest family living expenses often lead to success. Many times it is not the actual cost of one family that strains a business, but the number of families living out of the farm from a global or overall standpoint.

Another trait popping up on the radar screen was that many profitable producers are good negotiators of leases, rents, fixed and variable costs, and overall asset management. I overheard several discussions at the conference that producers who collaborate with others and create win-win situations are more successful.

One trait that surprisingly made the list was producers who are in the top 20% of production managers are more likely to be profitable. While producing one’s way to profits is important, it was seen as a top attribute by only 7% of the participants engaging in the surveys. 

On these cold winter days, step back and ponder some of these results and compare your business and your management philosophy to these attributes.