In my June post, “Get your Motor Runnin'” I talked about the importance of routines in our crop production business during seeding. Guess what? It’s harvest time! Woot woot! More routines… Wait a minute…Maybe I am celebrating a bit prematurely. I think in many of our life and business experiences, we remember the good parts and our brains help us dismiss or downplay some of the more negative elements.
Seasonal businesses know all too well the equity stake Mother Nature holds in their business. Crop producers put all their eggs into the basket in May and wait for Mother Nature to disburse the right mix of sunshine, rain, pests, and temperature to produce the cereal, oilseed or pulse crops that make their way into the food chain each fall.
As a business owner, you understand the importance of cash flow to your business. That’s the added stress at this time of year – will the crop yield sufficient cash receipts to recover the input costs and provide a return on the investment? So, how do we mitigate our risks?
If you are lucky enough to be able to use irrigation, you can mitigate the risk of “not enough rain” but you are helpless to mitigate other natural risks. We purchase insurance for crop loss and hail. This protection allows us to sleep at night – knowing that if we have a crop failure, we will be able to recover our input costs with insurance proceeds. Of course, you know what happens to insurance rates if there are claims… they go up! So, just as you have insurance on your home and auto to protect yourself in case of an incident, you hope you never have to use it. Same for us.
We also mitigate / hedge some of our price risk using forward contracts for all / part of our production. But, that’s a story for another post.
What insurance and benefits do you have in place as a business owner to mitigate your risks? Do you have critical illness insurance? Key person insurance? Life insurance? Disability insurance? If you “went down”, would your business and family have the resources they needed?
A few parting words…
If you have crop producers as clients, cut us a little slack at this time of year. We don’t have time to talk to you right now unless it absolutely relates to our ability to get our crop off.
If you see equipment on the roads as we move combines, trucks and trailers, please do your part by driving safely and being patient. We really are not on the public roads if we can help it! And, we’ll be getting off as soon as we can!!! We will pull over if it is safe to do so and then you can safely get by.
Teach your passengers the important role that Canadian agriculture plays in the economy – over $1 billion in exports every year. Thanks.
Are you a business owner struggling with cash flow and looking for effective strategies to mitigate your risk? Let’s talk!