Develop your team--have a winning season.

As you're reading this, baseball spring training is getting underway in warm, sunny places like Florida and Arizona. Baseball's owners and managers are carefully evaluating their talent, rookies and veterans alike, to see who has what it takes in their respective positions to assure the team of a winning record in the long season to come. If you're running a business you also need some "spring training" time to evaluate your lineup and maybe make some key position changes or trades in order to remain competitive.

If you're involved in the mushroom business today, you have no lack of challenges: labor issues, energy costs, crop yields, compost quality, competitors--the list goes on and on. In this article I'll throw one more challenge into the mix: "Have you developed the best possible management team to help you run your business?" Just like the baseball manager, doing a good job of developing talent is essential to having a winning team.

Why Lenders Are Interested In Your Lineup

As a lender, I spend lots of time looking at financial performance and it's certainly important that we make loans to financially successful businesses. (It's kind of like looking at your team's won / lost record). Loan requests are evaluated on the basis of financial issues, such as:

* What's the historical profitability?

* How strong is the company's balance sheet?

* What are the crop yields and quality of production?

But, these days financial performance is not enough. While financial results are important, lenders also look at less quantifiable measurements of the risk associated with a particular business. A lender's analysis of a borrower's risk profile can also be influenced by the answers to questions like:

* Who are the key managers and what do their resumes look like?

* Do the members of the management team have the skills and credibility to deal with the challenges they will be faced with?

* Are the key managers strategic in their thinking, or are they simply following orders?

* Is there a clear succession plan for both ownership and management?

These factors, and others, play a big part in giving lenders the confidence that your business is up to the task of facing the many challenges in today's business environment.

Early in my lending career I had an experience that impressed upon me how important people are to the success of a business. A young man applied for a loan to fund his small dairy farm. His business plan looked reasonable. His financial projections showed that he could repay the loan. The business had adequate equity and collateral to support the loan. However, as I was working with him, I wasn't totally comfortable with his management skill and ability to effectively manage the business. But, based on the strength of the financial numbers that were right there in black and white, I made the loan despite my concerns. Within six months the business failed and I was faced with a messy collection situation. Fortunately this was a small loan, but I had learned a valuable lesson about lending. When it's all said and done, loans are made to people, not companies or financial statements. The success of a business is largely determined by the skills of the people involved.

This understanding becomes even more critical as businesses get larger. Although the founder or owners of a business may have a solid track record of performance, as a business expands, it becomes more and more dependent on employees and non-family managers. It is critical that the right people are in the right positions. It's also vital that the owners have delegated appropriately to assure that the business continues in the event of a death or sudden departure of a key person. All of these factors go into a lender's analysis of the risk associated with that business.

Develop Your "Farm" Team

There are many ways to develop a top-notch management team, but the first step is to take an honest look at the strengths and weaknesses of yourself and your key managers. Really try to give an honest appraisal of what you are good at and where you might be lacking. It's very likely that what you really enjoy most about running your business is what you are also best at.

For instance, if you love being out there in the growing room more than the office and tend to measure your success in terms of production per square foot, you've probably got a good handle on the production side of the business. The bigger challenge for you might be making sure that you have people in place to provide financial management for the business. If you don't enjoy dealing with labor issues, you might be tempted to limit the size of your business just to avoid some of those headaches. But, if you put someone on your team with strong skills in that area, they can help you deal more effectively with those issues, so you can be free to focus on what you do best.

An honest appraisal of your strengths and weaknesses, other family members, and key employees should be a regular part of your business management. You need to have a "spring training" kind of process, even if it doesn't always happen in the spring. You may need to provide your people with additional training to be effective or maybe even reshuffle job duties to better match responsibility to expertise.

There is no single method for developing a strong management team that's right for every business. There are a variety of strategies you can use to get the expertise you need. These might include:

* Hiring a non-family manager who brings the needed skills with him from a previous employer.

* Investing in training and education for yourself or others in your business to enhance the areas where you are weak.

* Hiring the necessary expertise from a consultant, independent contractor or third party provider. Many specialized functions such as accounting services, human resources, or payroll management lend themselves well to this strategy.

* And don't forget to take a long-term view. Unlike major league baseball, your goal might not be to win the World Series every year. You probably should shoot for good solid growth over many years, for long-term success.

"We Are Family"

You may remember that refrain as the theme song of the World Series champion Pittsburgh Pirates of 1979. As we all know, most mushroom related businesses are family owned and operated, and developing a winning team with family members has its own set of unique challenges. Just because a business owner's child, sibling, spouse, (insert any blood relation), desires to work in the family business, you still need to match their maturity, skills and interests to a particular role in the company. Entire books have been written on this topic, so I won't even attempt to go into greater detail here. Suffice it to say that bringing family members into the business is a process, (much more challenging than hiring an unrelated employee), that requires deliberate thought, planning and communication. I would encourage you to seek outside expertise in this area to increase the chances of a successful and satisfying transition for everyone.

Pitch To The Outside When Necessary

Developing family talent may be a desirable outcome, but it's usually a long-term project. In the meantime, don't be afraid to go outside the family and even outside the mushroom industry to fill key roles. An individual who has a proven track record of success in another industry can add a lot of perspective to your business. If they've been successful elsewhere, it's likely they'll be successful for you if you have them playing in the right position. In other words, staff your team with the right people, not just the right job descriptions.

Hitting Home Runs

Just like in baseball, developing a top-notch player for your business takes years of training and experience. It is a long-term project that is never really finished, but putting in the time in spring training to get the right team on the field will surely pay off with lots of home runs and a winning record in October!

Jay Shannon

MidAtlantic Farm Credit

jshamnon@mafc.com

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