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Scenario Analysis Helps Turn “Cant’s” into “Can Do’s”

Dr. David Kohl
Educational Opportunities: 
Grain, Dairy, Swine, Beef, Young, Beginning Farmers, Women in Ag
Home > Education & Events > June 2017 > Scenario Analysis Helps Turn “Cant’s” into “Can Do’s”

Hi. I'm Dr. Dave Kohl professor emeritus agriculture economics at Virginia Tech, Blacksburg, Virginia. Of course, we'd like to welcome you back to the Macro Clinic. Today's theme is, “Turning a Can't Do into a Can Do.” Oftentimes when I'm out on the road working with agriculture producers, they will say, "Well, I can't do cash-flow planning," or "I can't do a business plan because the business environment is too uncertain." Let's turn that can't into a can do. Even with uncertainty you can still do the cash flow but how? You do scenario analysis. 

In other words, explore different scenarios on production, cost, markets and financials. Scenario planning can help you monitor your business progress not only throughout the year but over the years. 

Another can't do I often hear? "We can't send that younger generation away, we just can't get along without them. They're our best hired worker." My response to that is if you're a good manager you will find ways to make adjustments in your business so that you can send that younger generation away. I like to think of it as letting them "Make mistakes on somebody else's money." You're trying to cultivate the next best manager and possible owner out there into the future. Developing leadership takes time and experience. 

Making it work, may mean internally adjustments. Don't be afraid to send that younger generation out there to learn new skills. 

Another one I'll hear is, "I can't do transition planning. I don't have time for that." Well, oftentimes to turn that can't do to a can do, I have producers conduct “the drop-dead exercise.” We write everybody's name on a separate sheet of paper and put them in the middle of the table. We pull the name out and say, "You're dead. Now what are we going to do?" Oftentimes the dead person will try to talk. Without proper transition planning, the biggest winners could be Uncle Sam and a bunch of high-priced lawyers and accountants. 

The final can’t is, "I don't have time to take a vacation." Sometimes you have to be creative to schedule vacations. If you can't take a full week, take a few three-day weekends. To be successful, you've got to balance business with lifestyle and you've got to prioritize your priorities. Next time you hear or say the “can't do,” try taking the other side and say, "How can we turn it to a can do?" Well, next time. 

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