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North Dakota Grain Dealers Asssociation

North Dakota Grain Dealers Asssociation. Annual Convention January 20-22, 2013. AGENDA. Capital Management Risk Management Board of Directors - Top Ten List . CAPITAL NEEDS!!!!. ASSETS. Capitalization (Funding) Assets. Two Types of Capital Equity Capital = No Interest Paid

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North Dakota Grain Dealers Asssociation

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  1. North Dakota Grain Dealers Asssociation Annual Convention January 20-22, 2013

  2. AGENDA • Capital Management • Risk Management • Board of Directors - Top Ten List

  3. CAPITAL NEEDS!!!! ASSETS

  4. 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

  5. Four Cornerstones of Risk at Your Coop… • Operational Risks • Natural disasters • Insurance– Are you adequately covered? • Management disasters • Employee issues - Succession planning • Inventory valuations & quality • Human Error/Safety • Fraud • 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”! • Financial Performance & Capital Management Risks • Profitability • Liquidity • Do you know your borrowing capacity? • Leverage • Spend $ (capital) on the right things • Counter Party Risk • Buyers/Sellers • Suppliers/Contractors • Partners Confidential and Proprietary

  6. 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”

  7. 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)

  8. Did you catch it…? #10) HAVE FUN  AND ENJOY WHAT YOU DO!!

  9. Thank You!!!

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