Sharpening Your Business IQ: Tips for Farmers Date: 8/11/2020 12:10:53 PM Author: Compeer Financial Educational Opportunities: Articles Interests: Grain, Dairy, Swine, Beef, Young, Beginning Farmers, Specialty Industries, Women in Ag Home > Education & Events > August 2020 > Sharpening Your Business IQ: Tips for Farmers Share: Great athletes, popular politicians and successful business people all have one thing in common: a sharp, intellectual grasp of their chosen sport, field or industry. This focused Intelligence Quotient or “IQ” is what sets apart average partakers from the prolific performers. According to ag economist Dr. David Kohl, a strong business IQ is as relevant to farming operations as it is to any other endeavor -- perhaps even more so. “In an era of razor-thin margins and extreme economic volatility,” said Kohl, “bringing a high standard of business acumen to the business of agriculture is vital.” Kohl believes that for a farm’s advisors, lenders in particular, understanding how much the manager knows about his or her business provides great insight into that manager and the operation itself. Components of high business or financial IQ Kohl identified 15 Business IQ Management Factors that help set up operations’ crucial conversations for the future. In order to best guide and counsel clients, our team at Compeer Financial works with clients to prioritize and objectively assess their management IQ to determine areas of business opportunity and risk. From determining acumen and engagement in business practices like cost of production, goals, record keeping, marketing -- and even attitude -- Kohl’s simple, 15-question tool helps farmers determine how to strengthen their financial management skill set. It can also provide a lender perspective into how to best work with specific clients. Typically, people with scores of 34 or above have a more proactive mindset, which can serve them well as Kohl predicts an entrepreneurial philosophy and the ability to improve efficiencies will be what differentiates the average from the top producers. “Likewise,” explained Kohl, “if a manager doesn’t have a willingness to fill in the screening and discuss their answers, it tells you something about this person and their business. Will their business model be sustainable long term?” A constantly changing normal As the world recovers from the COVID-19 pandemic, new business models will emerge. Those who are proactive, creative and have a high ranking on Business IQ Management will enhance their chances for reaching their objectives, both for the short and long hauls. For example, Kohl believes that a solid Marketing and Risk management program is not an option. It’s a necessity. As are understanding working capital and liquidity and keeping those tempting family living expenses under control. “Investing in people, remaining agile and a positive, proactive attitude are some of the softer skills that will help reinforce the success of those farmers already leveraging their high business IQ’s,” said Kohl. One of the most reassuring and motivating things? It’s not a matter all or nothing. The qualities outlined on Kohl’s Business IQ Tool are learnable. They can be practiced, worked on and improved, giving any producer the power to plan, strategize, execute & monitor. If you’re looking for ways to improve your financial literacy, Compeer has many tools to help, including The Numbers Coach, DIY online learning modules and resources like our grain and dairy margin managers, available on your time, at your convenience. Comments There are no comments. Leave comment Name: Email: Comments: Enter security code: Compeer Financial - Specialist Advancing agriculture and rural America Articles Appraisal – Just an Opinion? Tips for Selecting the Right Appraiser. Articles Illinois Land Values and Market Drivers Articles Crop Insurance and Risk Management Articles Is Your Farm Operation Ready for Growth?