North Dakota Grain Dealers AsssociationAnnual Convention January 20-22, 2013

AGENDA

Capital Management

Risk Management

Board of Directors - Top Ten List

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CAPITAL NEEDS!!!!

ASSETS

Capitalization (Funding) Assets

Two Types of Capital

• Equity Capital = No Interest Paid– Allocated (Individual owners)– Unallocated (Retained Savings) = Permanent Equity

• Debt Capital = Interest Paid– Current Liabilities– Long Term Liabilities

Operational Risks

Natural disasters

• Insurance– Are you adequately covered?

Management disasters

Employee issues - Succession planning

Inventory valuations & quality

Human Error/Safety

Fraud

Financial Performance & Capital Management Risks

Profitability

Liquidity

• Do you know your borrowing capacity?

Leverage

• Spend $ (capital) on the right things

Four Cornerstones of Risk at Your Coop…

Legal Risks

Contracting Practices - Is the contract binding?

Environmental – Do you know what they are and have you taken measures to mitigate them?

You could be “debt free”; but you will never be “liability free”!

Counter Party Risk

Buyers/Sellers

Suppliers/Contractors

Partners

Confidential and Proprietary 5

TOP TEN Be team oriented and improve your meeting facilitation skills

Everyone’s perspective is important (Offer, seek, and if need be, force it out!)

Watch over the coop’s equity like it was your own, because…

Insist on feasibility studies, projections, budgets, competitive bids, etc…

Rigorously ask questions and challenge management strategies in the board room, but support Board decisions outside the board room.

Get rid of the rubber stamp and communicate with one voice

No Sacred Cows

Be willing to walk away, or challenge the “old way”

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TOP TEN CONT… Respect the duties and responsibilities of the Board and Management—they are

different

As a director you don’t get paid enough to deal with employee or operational issues.

Seek outside expertise (Advisors, appointed directors, industry experts, etc…)

Preferably someone without a dog in the fight.

Implement sound risk management practices and monitor them

Market conditions change rapidly; don’t get caught wearing shorts in a blizzard.

Spend 70% of the board meeting on strategic issues and 30% on operational issues

Map the trip and hold management accountable to keep it on the road.

Understand the business, its financial position, and monitor results

Know the assets you have to work with and their limitations (Fixed, Human, & Financial)

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Did you catch it…?

#10) HAVE FUN

AND

ENJOY WHAT YOU DO!!

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Thank You!!!