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The COVID-19 pandemic has added rocket fuel to change in business and society. In farm and ranch business management, teamwork with family members is critical for success. A recent webinar with female farm managers in Kansas provided perspectives of how they were specifically navigating the economic white waters created by COVID-19. The group was asked, “What specific actions are you taking in your business, family and personal life for resiliency and agility?” They could select up to three responses from the choices given. 

Surprisingly, 68% indicated that they were re-examining business, family and personal goals. Black swan events, such as the COVID-19 pandemic, often require one to internally analyze what is important in the priorities of business and life. Many business owners will indicate that goal setting is academic and superficial; however, as the results point out, it’s a high priority that adds focus, prioritization and balance in the decision-making process.

Next on the list, 41% of respondents indicated building cash and working capital were important for resiliency and agility. This group was spot on as cash and working capital, whether it’s a business or household, are critical for adverse situations or taking advantage of opportunities. 

Just behind cash and working capital, the group chose refining and fine-tuning the family living budget as an important action for resiliency and agility. The personal family living budget is just as important as the farm budget. A dollar cut from the family living budget is often worth $1.25 to $1.40 because withdrawals are often taken before any federal, state or self-employment taxes.

The next priority, listed by about 35% of participants, was refining the cost of production budgets and breakeven points. With volatility in costs, production and markets, a good spreadsheet that monitors the cost of production and breakeven points can be a tool to monitor trends and competition in the agriculture industry.

About 30% of the women's group indicated that they were exploring local markets and value-added opportunities for resiliency and agility. One lesson that the COVID-19 pandemic has taught us is that concentration of supply and marketing chains can be an economic Achilles' heel.

The use of advisory teams and increased communications with lenders, suppliers and family members was listed by one in five of the participants. Often the views of others and the act of sharing ideas and solutions can be a best management practice, particularly during stressful times.

Last on the list was a marketing and risk management plan. Interestingly enough, many lenders and male participants often list this item as either the first or second priority for business resiliency and agility. Just as goal setting was a surprising result at the top of the list, a marketing and risk management plan was another surprise at the bottom of this priority list.

Dr. Kohl is Professor Emeritus of Agricultural Finance and Small Business Management and Entrepreneurship in the Department of Agricultural and Applied Economics at Virginia Polytechnic Institute and State University. Dr. Kohl has traveled over 8 million miles throughout his professional career and has conducted more than 6,000 workshops and seminars for agricultural groups such as bankers, Farm Credit, FSA and regulators, as well as producer and agribusiness groups. He has published four books and over 1,300 articles on financial and business-related topics in journals, extension and other popular publications.

© Northwest Farm Credit Services 2021