The agriculture economic down cycle is in full force for many commodities and those involved with businesses providing goods and services to the agriculture industry. Many members of the next generation on board are facing one of their first challenging economic cycles. The period from 2013 to 2020 had a very similar feeling, but this time inflated costs and elevated interest rates are increasing the severity of the situation. If you have not “been there and done that,” there is advice available from those that not only survived the 1980s, but prospered in the decades to follow.

Emotional stability

There is an old saying in business and sports, do not let the highs get too high or the lows get too low when measuring your success. Increasing land values that inflated balance sheets in previous good times allowed some producers to refinance losses, but this time lenders may be less generous. The Federal Reserve’s zero-bound interest rates from 2008 to 2022 appear to be in the rearview mirror. One takeaway from the 1980s is not to equate your self-worth to your net worth because it can be very fleeting.

Make cash flow relevant again

Focusing on your business and personal cash flow, which is 80 percent of a business plan, is a powerful strategy during a down business cycle. Comparing cash flow projections to actual results on a monthly or quarterly basis is critical in identifying trends, implementing corrective actions, and monitoring outcomes. Cash flow, along with monitoring accounts payable, inventories, and accounts receivable, can be the first line of defense in difficult situations. Relish “mini victories” whether that be small changes in gains or minimizing losses. Remember, the business journey is a marathon and occasionally you are going to “hit the wall.” When that happens, you will have to dig deep and find the mini victories to bring you back.

Get back to the basics

Headlines in the media can often get you to focus your energy on the uncontrollable variables versus the controllable ones. The key is to outline your goals in writing and let the numbers do the talking. As previously mentioned, seek mini victories which might be making your way to breakeven, minimizing losses, or generating a small profit. Often this requires one to focus on the operational plan that generates the numbers. This is very important for all involved. Whether it is a lender, consultant, advisory team, partner, or spouse, being coachable and being prepared to seek different ideas, views, concepts, and principles and assess what got you here and what is going to get you there will be important.

Physical and mental health

Maintain a balance between business and life. This requires regenerative practices concerning yourself. Whether it is walking, running, yoga, or lifting weights, exercise is critical. Shut off your technology and listen to the silence for a couple of hours each day. Strive to maintain a good support network, whether that be a person, dog, cat, or cow. On one of my recent flights, a support pig was allowed on board! His name was Arnold, just like the pig on the old television show Green Acres. The bottom line is that economic cycles and waves are always going to be with us and require us to develop a “lighthouse” to keep business and life on course.