Is the Grain Elevator Business Model Broken?
Let Me Give Away the Ending: No Despite years of articles predicting the irrelevance of the country elevator, it continues to be an important part of...
When you see what appear to be good, well-established, long-standing companies suddenly fall apart it makes you wonder. How do good businesses go bad? When you take a close look at companies that get into trouble, there tends to be a common denominator that leads to their demise…they stray from the core disciplines of sound business management. In simpler terms: they get distracted and forget to follow the rules.
The grain business is no exception to distraction. The commodity markets by nature attract a lot of noise that can steer even the soundest of companies off course. It takes a constant dedication to keep on a disciplined track, especially when there is a lot of hype over the newest, latest and greatest idea. But, as it has been proven time and time again, those that stay focused on the core disciplines of their business stand strong through good times and bad.
When it comes to the country elevator, the principles that keep it on solid economic ground begin with these five disciplines:
Focus your time and resources on the things you can affect. For example, discussions with customers about their marketing plans and profitability are valuable points of contact that lead to meaningful decisions. On the other hand, debates over which way prices are going are rarely productive. The challenge is to eliminate the distractions, decide what is important and direct your company’s energies toward meaningful, result-oriented activities.
Train deep within your organization. A company’s employees are the lifeblood of its business. Having knowledgeable, well-trained and motivated people is essential to your success. This applies to people at all levels, from the person at the dump pit, the one driving the truck, at the counter, on the phone – anyone that has contact with customers should have at least a general understanding of the focus of the business and the ability to effectively perform their job and clearly respond to customers questions and comments in a clear, consistent and informed manner. It pays to go deep with internal education.
Last but not least, companies must be fiscally responsible in all environments. Yes… that means “saving for a rainy day.” For the country elevator, it’s all about building working capital. When times are good it is the opportunity to build capital that will grow the business into the future. Being prepared financially for any environment is an important discipline that must never be forgotten.
Be what nature intended you for.
Adhere to disciplined, proven practices.
Focus efforts on things you can affect.
Train deep within your organization.
Practice fiscal responsibility in all environments.
Let Me Give Away the Ending: No Despite years of articles predicting the irrelevance of the country elevator, it continues to be an important part of...
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