GFM Network News

Six lessons for diversification from the Glenn family

of

Succession spurred diversification and expansion for the Glenn family of Keene, Ont. And, oh yes, that beautiful new shop helped too

topic image
For the Glenn family, diversification has also facilitated succession planning, creating more opportunities for the next generation to contribute based on their skills and interests. Photo: Deb DeVille

In 1981, Jim Glenn wanted to supplement the farm’s income during the winter. So he fired up his new John Deere 3140 loader tractor and headed for town, doing snow removal for commercial properties in the village of Keene and the nearby city of Peterborough.
Between jobs, Jim would grow the business by keeping his eyes open for snow-filled driveways, introducing himself to the owners, and offering to clean the lanes right then and there, before dropping off his card.
As importantly, he quickly got very good at listening to potential customers, learning how to ask them the right questions that would lead to adding them to his customer base.
In time, those snowplowing revenues paid for principal and interest on a second tractor, and then three others, all while upgrading to bigger and better models.
And there was another benefit that helped build even more business over time. Jim was now able to justify hiring full-time employees instead of seasonal short-term summer labour.

Related: The brave new world of Prairie wheat

Lesson #1: Customers will pay for better, consistent service and products

topic image
Jim Glenn Photo: Deb DeVille

It isn’t that complicated. Customers want you to show up when you said you’d show up, do the job you said you’d do, and do it at the price you said.
Yes, you do have to be price competitive, says Jim, but you don’t have to be the cheapest, as long as you match the product to the customer’s needs.
His first off-farm diversification helped Jim learn this lesson, and it also gave him the confidence and experience to expand into several other businesses, including selling and delivering hay, straw and shavings throughout Ontario, Quebec and the northeastern United States.
It also helped him slowly grow the farming base, with the next generation of Glenns, Matt (now 36) and Paul (33) joining the business full time.
Today, the Glenns farm about 1,500 acres along with their hay, straw, and shavings delivery business and their seed dealership. About 500 of their acres are in hay, and Glen Isle Farms buys about three times more than that from local growers to meet market demand.
Jim and his wife Marg left the dairy business, but they wanted to use their equipment and take advantage of the area’s natural ability to grow good forages. So they started into the hay business — growing, selling and delivering hay to horse and dairy customers.
They’ve been able to grow this business by matching customers’ needs to the products and service they provide, and they are always looking to expand their customer base. For example, with the trend to a scale increase in dairy herd sizes, the Glenns saw an opportunity to sell dry hay and straw as roughage in their total mixed rations (TMR) feeding systems.
These dairy farmers had become specialists in milk production and didn’t want either the hassle of trying to make their own dry hay, or the trouble of dealing with inconsistent quality. “They don’t even own a baler anymore,” says Jim. “They rely on us to provide dry hay or straw and they focus on milking cows and harvesting high-quality haylage to increase milk production.”

Related: The four factors that are changing agriculture

Lesson #2: Know what your customers want

topic image
Good communication is key to successful marketing, says Paul Glenn Photo: Thinkstock

“It’s much easier to ask specifically what people want ahead and be honest,” says younger son Paul. “It builds trust.”
Marketing is also about matching customer needs with the product, and differentiating and blending appropriate products to meet those needs profitably. But it takes good communication. For example, the Glenns have found that large dairy farms are a good market for the horse hay bales that didn’t fit the strict requirements for the premium “flake hay” market in the U.S.
So they sort hay bales as they stack them and store in the sheds to separate the different grades of hay, and they do it with the lights fully on, the way their hay broker customers do during deliveries.
And they are always looking for ways to increase efficiency for everyone in the chain.
One of the breakthrough moments for this business was when they started taking payment for hay by credit card. It took the stress off collections, the customers love the convenience, and the drivers could just leave a statement rather than handling payments.
It also reduced overdue payment risk. “I’m a member of our local chamber of commerce and that’s where I got onto a Visa program for small businesses,” says Jim. “It’s worth the two to three per cent; it gave us guaranteed payment, at delivery.”
Differentiated marketing also contributes to the success of their bulk shaving delivery business, Superior Shaving Supply, which mainly serves dairy, horse and poultry farms.
Jim has even found that communicating with competitors can also lead to new opportunities, even though it seems counterintuitive. For example, he met a competing shavings supplier who handled a lower-priced product. They decided to provide product to each other to blend and meet different customer needs and price points.
In this context, the lower-priced product works well for new dairy pack barns, which might be a market the Glenns would otherwise miss.

Related: That little blue elevator

Lesson #3: Think expansion when you think buildings

topic image
With 18 trucks operating from the 13 buildings at the main site, having all Glen Isle’s teams head-quartered in the same office space helps to ensure effective logistics. Photo: Deb DeVille

“The right building creates business opportunities.” says Matt.
In 1977, Jim’s father Clarence had had the foresight to build a small office separate from their home. However, by the time Matt and Paul were actively involved in the farm, the farm had sprouted the snowplowing business, seed and input sales, and the hay, straw and shavings delivery businesses, and it conducted them in three other, separate offices.
It was time to consolidate offices and to build a new shop. “We’ve built a new shop every 20 years,” says Jim. “1974, 1994… and then 2014.”
In the early 1990s, they bought a farm with a heifer lot on a sand-and-gravel rise that was flat-topped and that would be easier for the trucks to access than the home farm, situated on a windy road with a big hill. This new property naturally evolved into the epicentre of all their businesses’ activities, so they rented an office trailer for this location and tried it as the official hub of their many various operations.
“It was a way to tell if this was the right location before making a big capital expenditure,” explains Matt.
Today there are over 13 different buildings in the yard and a fleet of 18 trucks. The layout of the yard and the design of the sheds allow them to store and efficiently transfer both bales of hay and straw and bulk shavings. Some are drive-through sheds while others are pole barns facing mostly south, all built to fit 53' trailers into separate 24' wide bays.
They had outgrown the existing shop at the home farm and with succession planning, the Glenns started looking at how their businesses were growing and what profit centres should be developed to match the next generation’s skills and passions. Paul, for instance, is a diesel mechanic.
So they went from thinking about building a shop to service their own fleet to potentially servicing an expanded fleet and also other companies’ trucks and equipment with the potential of even selling some parts and trucks.
The plan they settled on tripled their space, and ended up at 13,000 square feet of shop and office space.
Already they wish they had made it bigger.
This decision has pushed revenues, this past year adding an additional 25 per cent.
Plus it has led to further add-on sales. Customers come in to get their tractor or truck repaired or to buy some seed, and they see that the Glenns have some parts, filters, and belts in stock, or that they deliver hay, straw and shavings.
They also discovered that having all their businesses in one site not only generated more sales, it also created efficiencies between the managers.
Although each of them manage specific parts of the organization, now that they’re in one location, they can quickly confer on bigger decisions. The downstairs office space accommodates Matt and Paul’s offices and their sister Joelle, who oversees payroll and other administrative duties.
During succession planning they decided to set up four corporations to separate each business, and although it seemed too complicated at the time, it has worked out well. It gives them a clear picture of how each enterprise or profit centre is doing. This also separated their other businesses from the farm corporation to reduce exposure to liabilities from the numerous business activities like snow removal and transportation of their products.
The new office also adds a practical professionalism to the family business. At first they were concerned about the perceptions of how a big, new building would make them look to customers, but instead it has had a positive effect. It’s been more of a quality response. “Customers want to do business here,” says Matt.
They’ve also found that non-farm business clients expect decent, organized office space. And other businesses are now seeking them out. As if to prove it, during our interview, a telephone buzzed. It was a European short-line company looking for them to become distributors.
Upstairs is Jim’s office and a boardroom with a long, rough-hewn table that Paul made himself. This is where they meet accountants, lawyers and, occasionally, politicians, and it’s where they work out deals with dealerships and customers. “It’s the best thing we ever did,” says Jim.
“We are away from the noise, the interruptions downstairs,” Jim explains. “We can meet together, with suppliers and buyers.”
This is also where the Glenn family meets to discuss business decisions. In this space they can disagree freely, and have discussions away from staff and non-management family members.
“It’s neutral territory, not someone’s kitchen table where we are supposed to have dinner happily after,” says Paul.
The boardroom is wired for laptops to plug directly into projectors, Internet and eventually into a big screen. A new interconnected phone system was installed to communicate between all the offices, including the boardroom.
“When I started farming we worked with what we had,” says Jim. “Today the younger generation brings so much energy and so much technology. I just sit back and smile.”

Related: Steinbach dairy is cream of the crop

Lesson #4: Shop around for banks, professionals

topic image
Make sure your financial institution is a good fit for you and your operation. Photo: iStock

Sometimes when it rains, it pours, and you need a reliable umbrella when it does. During the shop building process, two neighbouring farms suddenly came up for sale. Jim had been trying to buy each for 40 years so the Glenns decided to take the plunge, even though this meant investing more in land, buildings and equipment than they’d invested in the previous 15 years combined.
Then during their weekly meetings with the contractor, they found costs were running significantly over budget. Delays in building permits affected construction too, which is when the costs for many of the trades began to multiply.
They also made changes to meet commercial code, like extra drywall and truss divisions, a larger septic system and even a wheelchair accessible bathroom.
One particular morning, all these factors and more came to a head when the costs from trades were tallied up. In retrospect, Paul wishes he’d acted as general contractor himself, so he could negotiate directly with tradesmen and keep better track of the cost overruns.
“Even if you don’t want to pay for specific jobs that went over budget or weren’t done correctly, the builder can put a lien on your building. So you have to pay them no matter what kind of job they do or how many extra hours they charge you for,” Paul says.
Unfortunately, that very same week their long-time banker was let go, and the bank they had been with for decades suddenly got nervous and started stalling.
Although it was a stressful time, it led the Glenns to shop around, negotiate in more detail and rethink how they structured their financing. By switching banks, they saved more than $30,000 a year in fees, negotiated a lower interest rate and got better service.
“The other loaning agents had our financials and plans analyzed in four or five days and a proposal on our desks,” says Jim. “The old bank said it would take three months to run the numbers.”
The process of having several competing financial institutions review their financials and business plans taught Matt and Paul some banking principles, and they also learned about loan structure options. Most importantly, they learned to shop around for credit and spread out their bank relationships and loans as part of good business practice.
“It’ll give you different banking ideas,” says Jim. “Now I think you should shop it every couple of years.”
Their expansion has also proved the need for good professionals. When they ran into some challenges with trying to change the zoning from agriculture to commercial for their new shop, hiring strong, professional legal counsel has helped with the process and has been worth it. Matt and Paul are astonished at the extra cost of time, money and stress the zoning process on commercial businesses has been compared to their previous experience building for their farm.
Recently, they also changed accountants to one more specialized in agriculture. “The other accountant did a good job at our books but didn’t understand our business to know the right questions to ask,” says Paul. “He thought our grain buggy was our drill.”
Although the new accountant’s office is in another town, it’s well worth the drive for better advice, specific to agriculture. “It doesn’t really matter where your accountant is, if you’re spending $150/hour, you want it to be good sound professional advice.” says Jim.

Related: Take these tips to the bank the next time you need a loan

Lesson #5: Moving wheels make more money

topic image
With 18 trucks operating from the 13 buildings at the main site, having all Glen Isle’s teams head-quartered in the same office space helps to ensure effective logistics. Photo: Deb DeVille

With all their diversified businesses, the Glenns had outgrown their old 40' x 60' shop. They needed more space and easier access for the trucks, so they decided to build for the future, utilizing Paul’s skills as a diesel mechanic.
“Often commercial work pays higher margins than farming,” says Jim.
The outside truck repair and sales spelled an opportunity for several reasons. First, having their own mechanics on staff resulted in a cost savings of about $120,000 per year, says Matt. Using those skills in a bigger facility on the farm meant they had the extra capacity to repair other people’s equipment. Now they have five mechanics working in their shop.
New trucks depreciate in value rapidly, but once they reach 300,000 to 400,000 kilometres, prices level off for the next several 100,000 kilometres, especially if the trucks are well maintained. The Glenns also noticed when farmers like themselves went to buy transport trucks, they were automatically shown the units shoved at the back because of their poor condition.
From their own experience, the Glenns knew that farmers, although they don’t need brand new shiny trucks, do need reliable, safe units that can handle tougher conditions and field driving.
So they put a plan in place to take advantage of this niche and their skills by proactively reselling their own trucks. They buy them with about 500,000 kms, and use them for two to three years. Then the trucks are put through their own shop for an overall maintenance regime to ensure they are working well. They clean them up, repair them, replace any tires that need it and then resell them.
The Glenns have their own diagnostic equipment and licensed software, which has become very important with trucks produced after 2008. “After the treatment, they’re 110 per cent right, ready to go,” says Paul. “We guarantee they’re in good operating condition.”
The price for good-quality, well-maintained trucks doesn’t drop very quickly between these two usage points. Compared to the cost that dealer repairs and parts would add to the older trucks, using their own shop and staff has meant decent margins, and it’s a predictable cash flow for the company.
With this replacement strategy, their running costs are extremely competitive at about 50 cents/km, says Paul. By having their own on-site repairs, it keeps their wheels turning because the hay/straw/shavings business operates year-round. “They (our trucks) make money mostly everyday if they are not parked in a shop being repaired,” says Matt.

Related: Locking your crop prices in early

Lesson #6: Organize work flow to improve efficiency

topic image
Photo: Deb DeVille

The layout of the shop is similar to a car repair shop so that trucks can be pulled in and lined up in a herringbone along the side to be worked on at various stages. Four large overhead doors with windows line the front, while at the back is a over-sized door for combines.
All their own farm equipment repairs happen in the back so any customer repairs are at the front. “Over the years I’ve learned to fix it at the end of the season, before you put it away,” says Jim. “That’s when you remember the little things that were going wrong.”
Jim prepared the site for construction, including the six-inch grade gravel hauled to the site by their own trucks and leveled with their own equipment. The concrete floor is finished with extra hardening to avoid pitting and sloped at three degrees to one centre drain, with some areas level for changing fluids. “Getting the floor right is the most important thing,” says Paul. The drain has only one trap to ensure enough flow so it won’t get clogged and so that if it does get clogged, it’s easier to clean out. The drain goes out to an oil/sludge separator before discharge into the septic tank.
They went with radiant tube heating instead of in-floor heating because it was cheaper and they also installed exhaust fans that can change the air in the shop in less than two minutes. In the summer heat, they can open a few end doors to catch a cross breeze.
Instead of buying an expensive hot water pressure washer, Paul found that separate water heaters attached to a regular pressure washer are about a third of the cost and just as good. Rainwater goes from the roof into a 3,000-gallon underground tank to feed the washers.
Investing in mobile electric scissor lifts instead of ladders has saved time and is much safer. Paul manages their parts inventory with new software, so they don’t need to keep much on site, only about $25,000. An outside company manages their bolt inventory.
“It has really paid to have that service — you don’t want to be spending time driving to town to buy bolts,” says Matt.

Related: Follow the five per cent rule

explore

Stories from our other publications