Baby Steps to Bigger Profits:

The 5% Rule

www.hebertgrainventures.com

CropSphere 2016

Overview• TEPAP & Dr. Danny Klinefelter• The 5% rule outlined• Why is 5% important• Farm Financials 101• 5% brain storming

TEPAP & Dr. Danny Klinefelter• The Executive Program for Agricultural

Producers – Alumni association AAPEX

– In short, a masters program for farm manager’s

• Dr. Danny Klinefelter– Director of TEPAP

– Executive Secretary of AAPEX

– Named by Top Producer magazine as one of the 25 people in the world who will have the greatest influence on the future of American agriculture, 2009

TEPAP Farm Management Philosophy

• 7 Key Principles:

1. Jack Welch – True competitive advantage

2. Wayne Gretzky – Strategic Management

3. Analyzing – what not to do & Opportunities

4. Learning Organizations – if its not broke haven’t looked hard enough

TEPAP Farm Management Philosophy

5. Continuous Management Improvement

6. Timing

7. The future belongs too……

The 5% Rule

• Baseball analogy - .300 hitter vs .250• Klinefelter Farm credit study - data showing

top 25% were only about 5% better than average (82-87)

• David Kohl FINBIN research (2012)– Top 20% NI of $859,000

– Bottom 20% $14,000

– Gap widening?

5% - fun part for #’s nerds

5% baby steps = BIG EFFECTS!

Why is 5% important……

Why is 5% important……

Why is 5% important……

Catch a Unicorn and ???

How are we going to accomplish?• Biotechnology• Information technology (measuring and

monitoring)• Mechanical Implementation/process

control technology• FARM MANAGEMENT SKILLS

Gross Margin & 5%• Margins

– Coordinate!!• Marketing

• Inputs (2009)

• Accrual Financials– Producers

– Banks

– Accountants

– Consultants

– Insurance

Gross Margin & 5%• 4 R’s

– Right source, rate, time, place

• On farm trials– VR

– Chemtrition

– Fungicides & seed treatments

– TKW, seed rate, plant stands….

– Sectional control

• Peer groups• Tools in the tool box

Gross Margin & 5%• Price

– $130/mt variance

• EDUCATION– Futures

– Options

– Basis

• RISK MANAGEMENT– Old programs and

advisors not necessarily helpful

• Biggest losses in average and good years

LPM & 5%• Cost management• Perfection Vs

Logisitic’s– LPM focus –

efficiency

– 24 hr shifts

– Auto steer

– Combine settings

– Data collection

– Pro drive

– Operator training

– Mindset shift…….

LPM & 5%• Change is inevitable

– not broke = look harder

• Strategic mgmt. – in vs on the business

• HR – shifts, culture, value efficiency

• Benchmarking• Peer groups• Advisory boards

LBF & 5%• Tends to be a

function of age and equity

Another thought….• Enterprise resource

planner• Human

hours/acre????

Why is this all important???• Legacy

– Leave the dirt and Financial Statements in a better state than the last generation

– Feed the world

Reading/Audio Books– Good to Great

– 4 hour Work week

– 7 Habits of Highly Effective People

– Scaling Up 2.0

– The Rockefeller Habits

– The E-myth Revisited

– Great by Choice

– Rich Dad, Poor Dad

– Klinefelter Articles, Boehlje Articles

– www.wittmanconsulting.com

– Strategic Coach

Kristjan Hebert, CPA, CAManaging Partner

Office : (306) 739-0028Cell : (306) 435-9924

hebertgrainventures.com Twitter: @kristjanhebert facebook: Hebert Grain Ventures

PO Box 1307Moosomin, SKS0G3N0