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Corn+Soybean Digest

Strategic management important for both small, large farms

Strategic management is just as important for a one-family farm as it is for a larger farm with many employees.

"All farms can benefit from strategic thinking and management," says Kent Olson, farm management economist with the University of Minnesota Extension Service. "Much is written about strategic management for businesses, but very little is specifically targeted for farmers." Olson has just completed a 47-page paper, A Strategic Management Primer for Farmers.

He uses a sports metaphor to illustrate: "Good team players read the playing field before deciding what to do during the game," Olson says in his paper. "They know their own strengths and weaknesses and those of their team members. They know where their team members are."

"They see where the ball is relative to the goal. And they see the opportunities and threats and move to the best position to help the team accomplish its goal."

"Former hockey star Wayne Gretzky summed it up very well," says Olson. "Gretzky said, 'I don't skate to where the puck is. I skate to where the puck will be,' in describing his strategy for hockey."

Within this sports metaphor, Olson says a farmer crafts a strategy by understanding the business environment, seeing where and what is happening, and looking for strengths and weaknesses in both his or her own farm and the competition. Then the farmer moves the farm to the best position to take advantage of opportunities, to protect the farm from threats and to help

accomplish goals and objectives.

Crafting a strategy can help the farmer-manager focus on what is truly important when making decisions (even day-to-day decisions) that will affect the success and survival of the business. Olson says short-term opportunities such as a good deal on machinery or threats ("sign now or lose this chance") may create distractions.

"Short-term decisions may also lead to decisions that don't fit the chosen strategy, and may not contribute to long-run goals. However, short-term opportunities and threats should not be ignored completely," Olson says. "They may be a signal that the business environment has changed so a farm's strategy needs to change."

"Paying attention to short-term events is part of scanning the overall farm business environment," Olson says. You can find his paper at on the Internet. Or, ask a county office of the University of Minnesota Extension Service to

download it for you.

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