Business entrepreneur and builder, Dave Kier, shares some unique wisdom in this Leadership Tip from October 2022.
Larry W. Sharp, BAM Support Specialist, IBEC Ventures
Larry.Sharp@ibecventures.com
—–
There is a misconception that having more people, more money, and more assets produces more results. When we built our “mega” feed mill, it was rated at 350,000 tons per year. We reached a peak tonnage of 780,000 tons per year. The contractor couldn’t understand how we got so much more feed out than it was designed for. I told him he designed it for that volume but assumed most won’t realize a mill like that’s fullest ability. You see, the contractor’s experience with other mills they built was that the owner wouldn’t push it beyond 10 – 12 hours a day 5 days a week, and they assumed that although the mixer could produce 100 tons per hour, most actually got 50 or less tons per hour. I had to figure out how to get more from what I had. I couldn’t afford low expectations.
One of the mistakes often made when starting up a business is the mindset that all must be in place as if the business will be a raving success from the first day. We hope for the best but plan for the worst. Another mistake I have observed is what I call “exuberant success”. Once we “turned the corner” and our bankers observed our profitable growth, they and other banks began pursuing us encouraging us to take out more loans. One bank even began looking for other mills for us to acquire. I turned down several offers for more money because my focus was not on getting more money, but on paying it back in good times and lean times. That takes fiscal restraint. More can result in less. Your quest is to maximize the resources you currently have.
I was grateful for our humble beginnings. I was grateful my dad showed me the wisdom of working towards success, not assuming it. I have observed missionaries setting up a business overseas thinking they need everything in place from the first day. That mindset does a couple of things. First, it sends a message to the people in the area that the missionaries must be rich. Secondly, it sets the bar too high from the start. Either the funds were donated, which means they may have obtained all they are going to get from their donors, or they went into debt. It is sure nice to have all the stuff one could want from the start, but all the stuff comes at a cost. A business needs to strive to build margin in their finances so they can weather the tough days, because they will come. It’s good to be a bit hungry. This condition makes you better. This condition keeps your eyes focused on the customer and on obtaining more customers.
How do we get more from less? Think of when God led the Israelites out of Egypt. He took them the long way around to prepare them. He taught them. He toughened them up. Instead of being slaves doing what they were told, now, they had to think, plan, and trust the Lord. Manna didn’t come down 24 hours a day, 7 days a week so they had to plan their meals. Water wasn’t abundant, so they had to learn how to be frugal with what they had.
How did we get almost twice out of feed mill than it was designed for? We learned what the true capacity was of every, and I mean every stage of the feed milling process. We learned what stage was a constraint holding back the other stages, and we adjusted accordingly. We measured the mills’ performance at every stage and did time studies to see if adjustments made were effective. More importantly, we taught the personnel to have high expectations. This meant we pushed them to not work harder, but wiser, and to understand machinery are not like people. Machinery doesn’t get tired the harder you run it.
We constantly sought ways to add value to our customers, because every customer and every ton of feed sold was vital to our success. Losing a good paying customer was a tragedy for us, causing us to re-evaluate ourselves. Keeping the customer was the responsibility of every person in the company, which is how we grew to produce more than 1.2 million tons with one salesman in the northern part of the state, and one in the southern. More from less.
We developed unique cost analysis tools that didn’t require a lot of extra time by our accountants. Too often, companies add office staff as they grow, as if the administration department of the company isn’t under the same expectations. We more than doubled the size of our company without adding any accountants. We learned what was essential for them to do and what wasn’t. We purchased better software to improve office efficiencies. We designed software for our transportation fleet, so we could learn how to improve its efficiencies, and how to eliminate errors. When you have good cost analysis and productivity information, you can more wisely know where to invest to get the quickest return. When you don’t spend ahead of your earnings, you then have the resources to invest in what adds the most value.
If you are in business as a ministry, you are to pray for the best, but be humble and not assume it. As I often say, success can be our greatest enemy. I am thankful for my humble beginnings. So should you be.