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Are your projects aligned with your strategy?

By Tim Vaux

To maximize your company’s project results and achieve strategic objectives, a highly coordinated effort is required. It’s not of any value to have staff propose and carry out projects if they aren’t aligned with strategic direction. There are “nice to do” projects and there are “must do” projects and it takes disciplined leadership to know the difference and exercise control. I’ve also witnessed projects that are little more than “make work” for the individuals involved with little or no value resulting.

The following checklist is meant to ensure your projects are purposeful:

Is your company committed to using project management properly?

In most companies, several projects are underway at any given time. They may be focused on production, packaging, processing, operations, logistics or marketing among others. There must be a commitment to the art and science of managing these projects in order to get the most “bang for the buck.”

Is there a formal policy for preparing project charters?

Since projects are the means by which company strategies are executed, it is important that they are guided by the company’s philosophy, strategy, and intent. Project charters are the vehicle for doing this. Charters should answer basic questions. For example, “In what ways will the project enhance overall company goals?” The charter covers topics such as who the stakeholders are, methodologies, scope, timelines, responsible parties and a summary of the plan.

Do you have the right people on the project team?

A multi-functional team is required for any given project to ensure all relevant viewpoints are expressed and valued in order to have complete “buy-in” from those affected by decisions made along the way. Although I generally don’t include the company lawyer on the team, it’s important to review progress and results with him/her so that any legal implications are covered.

How can the project team stay on track and not go off on tangents?

Milestones need to be built into timelines. This gives the team as well as management a chance to assess the work done to date against objectives and to make sure the work continues to be aligned with the project charter and company objectives.

Are audits built into the plan?

Once a project is complete and the team disperses, everybody celebrates and moves on. That is the problem with many projects. Implementation of the plan is critical to success. Without proper execution, the entire effort can be a waste of time and valuable resources. An audit plan must be part of the implementation. There is no set time frame for these audits, but the project leader along with company leadership must assess results against expectations on a regular basis. Six months, a year and two-year audits are common. If the audit is built into the project and the company culture allows for this critical step, more of your projects will result in success

The Skilled and Experienced Team at FreshXperts is Available to Help You with Project Management Best Practices.

Contact us when you have issues related to project management and we can assist in helping you align that work with your overall company’s strategic objectives. If you lack the internal resources to accomplish that yourself, we stand ready to help.

In Season: Market Memo

January: 1-7-2020

2020 has started out with strong markets in all growing regions in the U.S. and Mexico.  Weather has challenged growers in the main growing regions for vegetables in the Yuma and Imperial Valleys.  We are seeing low volume as the cool morning temperatures delay harvest and the short days put crops behind.  Growers in December had to deal with a lot of rain and wind throughout the US and Mexico.  The markets for most products have been well over twenty dollars and most contracts have triggered.  We expect most of January to be like this because of two factors:  1) growers will continue to have challenges with cool nights and mornings and the occasional rain and 2) high demand from the New Year resolution eaters. 
 

The trucking industry had an interesting last two weeks.  With the Holidays falling on Wednesdays this year, a lot of drivers took several days off.  In addition, California saw record snow on Christmas night and on the 26th.  This storm took Southern California by surprise and closed our major interstates.  This trapped trucks and drivers in Southern CA and back logged the industry.  The good news is it was short lived and by this week we are seeing things back to normal.  We think logistics will be back to normal capacity by Jan. 10th.

~Paul Grothe

by Ron Pelger

What lies ahead for your company in 2020?

In 1997, the Florida Marlins baseball team won the Major League World Series. The following year, they ended up in last place in their division.
 
In 2012, the San Francisco Giants won the World Series but fell to last place in their division the following year.
 
 Hard to believe, isn’t it?
  
It’s amazing how a professional sports team can become so victorious one year and fall flat on their face the next. It’s a whole lot easier becoming number one than to remain number one.
 
The produce industry is similar to any sport. Every company works hard to build a winning team to reach a top spot in the industry. But what lies ahead after success for the champions?
 
If your company achieved suitable progress and is one of the successful businesses for 2019, what will 2020 be like? Expectations are that you have to do better again.
 
After having celebrated your victory, be especially careful not to take 2020 for granted. Any company can go from the top to the bottom inside of a short time by simply becoming complacent.
 
In order to sustain positive growth, you cannot allow any areas to carelessly slip away. It can happen swiftly and without notice, if company management continues to over-celebrate the previous year’s results. The retailers that cater heavily to the customers will continue to increase their sales.
 
In order to stay on top of the game in 2020, your company will have to be aware of specific vital business areas. These focal points could make the difference in success or failure.

Stay consistent — Some companies can’t seem to identify themselves. They skip around from one theme to another trying to connect with customers. Start a program, stick with it, and then build new segments off of it. Just settle down and make it work.


Keep it simple — Whether your customers are wholesalers, retailers, or consumers, refrain from making them jump through hoops with complicated product items and programs. Simple and easy is everybody’s primary desire.
 
Get opinions —  Before you step over that commitment line, ask other close associates for their views and opinions. If you’re a grower, packer or shipper with a new idea, run it past a few outside experts before producing a million cartons. Test it.
 
Be first in something — Create something new and be first with it. What U.S. president was first to speak on TV? Franklin D. Roosevelt. Who was second? Who was first to fly faster than the speed of sound? Chuck Yeager. Who was second?  Usually, nobody really knows or cares about who was second. Set the pace by being first.
 
Watch trends — Keep an eye on the mod stuff that people are going after. If your company is a trailblazer, come up with something to fit in with the fashionable trends of today. Be a cool operator.
 
Get out in the trenches —  Visit your company. Check into the deepest areas and seek things out. Make sure programs are working and your product is selling. If it isn’t and you don’t know about it, you’re in big trouble. Concentrate on selling, not setting up camp in an office.
  
For all the successes up until now, your company will still have to face some of the toughest challenges in 2020.  Reaching this year’s success requires work.
 
Don't be led into areas where you don’t belong. Do something better than anyone else. And above all, never lower your standards.
 


Ask the Xpert

Q: What are key business attributes that drive business value when selling your produce business to private equity buyers?
A: from FreshXpert, Eric Bosveld

The Private Equity (PE) community is an important source of capital for exiting private business owners and in recent years, has been increasingly active in the Produce Industry.  For example, Agribusiness-focused Blue Road Capital recently acquired B&W Quality Growers from Boyne Capital. Additionally, HKW acquired Fresh Direct Produce (and has since made a couple of add-on acquisitions) while Butterfly Equity acquired Bolthouse Farms earlier this year.  While not for everyone or a fit for every situation, this blog article will outline some of the key factors that may impact the value of a produce business when considering taking on a PE partner.

While most PE firms are ostensibly looking for opportunities where their team can add value by implementing operational improvements, the use of debt financing and the acquired company’s ability to pay down that debt can also be important.  Ideally, the target has a leverageable asset base with relatively consistent and predictable cash flow.  This means that it is critical for the acquiring PE firm to understand the stability of a candidate’s customer base. 
A high degree of customer concentration, or limited recurring revenue, may be a sign of unreliable future cash flow; impacting the PE firm’s ability to use debt effectively.  This increases the cost of capital as the PE firm needs more equity capital to finance the transaction; ultimately lowering the PE firm’s return of equity (ROE) unless they get a corresponding reduction in the purchase price.

In the Produce Industry, heavy reliance on a small number of big retailers or foodservice customers can pose a challenge. Maintainable and reliable cash flow can also be impacted by production and supply issues.  A diverse and reliable customer and supply base will help increase the probability of obtaining competitive valuations from PE firms.
Another key factor affecting future cash flow is the capital expenditure (CapEx) requirements of the business.  For example, produce businesses that rely heavily on hard assets like cooling, harvesting, packing and handling equipment need to regularly replace aging assets; further reducing free cash flow to pay down debt.  Some produce businesses, like greenhouse operations, rely heavily on CapEx to grow and expand the business, as production is usually already at maximum capacity for a given square footage.

Of course, like everything in life, there are always exceptions.  We know of many Private Equity firms that understand the inherent challenges in the Produce Industry. Rather than relying on the extensive use of debt to “financially engineer” a suitably sufficient ROE, they focus on acquiring businesses with talented management teams, so they can work cooperatively to develop growth opportunities, grow profit margins and help the business expand through strategic investments in operations to diversify their revenue and suppliers.

FreshXperts is a consortium of consultants in the fresh industry. 
Experts in all aspects of the fresh industry–from Farm to Fork
Growers - Retailers - Distributors
Logistics - Foodservice -
Start Ups & New Ventures

For more information about our member FreshXperts, visit our team page
http://freshxperts.com/overview/the-freshxperts/
Anthony Totta: CEO; Business and Brand Development Specialist
Tim Vaux: Executive Leadership Specialist
Eric Bosveld: M&A; Agro-Economics Specialist
Phil Pisciotta: Local and Wholesale Distribution Specialist
Ron Pelger: Retail Operations Specialist
Jennifer Lawson: Administration, Information Design
Paul Grothe: Foodservice Procurement Specialist
Nick Pasculli: PR & Marketing
Alan Podufaly: Operations; QC
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