Consultant lists the mistakes certain to kill family farm business
FARGO, N.D. -- Imagine your farm with a "code of conduct," spelling out that family members will "honor the demands for peak work time frames" such as harvest and calving.
Jolene Brown, and her husband, Keith, farm near West Branch, Iowa. Brown is a professional public speaker but also offers consulting sessions for farmers constructing business-first families, versus familyfirst operations. She was one of the featured speakers that attracted more than 200 people to the 103rd Northwest Farm Managers annual meeting in Fargo on Feb. 8.
Her curious topic: "The Top Ten Stupid Things Families Do to Break Up Their Business." Among specific suggestions in her talk, Brown says farm leaders may assume that employees and in-laws will know they must respect Mother Nature's timetable and "go hard" at certain times of the year to make the farm business succeed. But this may need to be spelled out in advance for in-laws to avoid disillusionment.
Among Brown's list of sure-fire ways to kill a farm business:
* Assuming all genetic relationships equal good working relationships. Existing owners must decide whether they want the business to continue as a business, including the transition of labor, management, leadership and ownership.
* Believing the farm can financially support any and all family members who want to work together. The senior generation must secure their financial future, Brown says, and cash flows must match the estimates. One thing to be considered is whether the business really needs them, and the costs to the business.
* Assuming others will or should change and not me. She brings four things to family meetings-- mirror (to show the client who may need fixing), tissues (to deal with emotions), duct tape (so people shut up and listen, and to tape them down) a two-by-four (so clients realize she's there for a purpose and is in control of the meeting).
* Presuming a conversation is a contract. Statements such as, "Work hard. Someday this will all be yours," and "I'm going to retire," often are lies, Brown says. Get things written down, including a code of conduct.
* Believing mind reading is an acceptable form of communication. Work to build bridges between generations through a "contract" to communicate clear expectations. Be mindful of differences between generations, including World War II (born 1922-1945), baby boomers (1946-1964), GenXers (1965-1980), Generation Y (1981-2000).
* Failing to build communication skills and farm/family meeting tools when the times are good so they'll be in place to use when the times get tough. Meetings (including an annual meeting) should be businesslike, to assure inclusion. The organization should create and adapt a snapshot overview for your business, including such things as goals and evaluations, transition management and appreciation,
* Ignoring the in-laws, off-site family and employees. Spouse roles should be understood. People are members of the family instantly, but have to contribute to the business to be a part of the business, and be compensated correctly. People active in the business should have a total of 51 percent of the ownership, so that they can make the decisions.
* Forgetting to use common courtesy. "We often treat strangers on the street with more courtesy than family members," she says. She says people should start business meetings by reporting something good that's happened since the last time they met.
* Having no legal and discussed estate, management transfer plan or buy/sell agreement. "Parents do not owe their children a business but do owe our children morals and values," she says. She says the parents also owe children an opportunity for an education, as well as legal, discussed and revised plans for the estate.
* Neglecting vital facts of fair and equal treatment, including paying cash for emotional debts and failing to celebrate. Fair doesn't always mean equal, Brown says. Transferring ownership too soon or too late can be a mistake. It is a mistake to "assume more salary and gifting of assets are solutions to a relationship problem," she says.
Mikkel Pates writes for Grand Forks, N.D.-based Agweek, which is owned by Forum Communications Co.