The title of the Agricultural Marketing and Management Organization’s last winter workshop might have made attendees laugh, but the subject was anything but funny.
Led by popular ag speaker Jolene Brown, “Stop the Fighting on the Way to the Funeral Home,” focused on doing business the right way in an industry known for its focus on families.
“What kind of business do you want to be?” Brown asked growers. “Do you want to be a family-first business or a business-first family? Ninety-eight percent of every phone call, email, conversation, question that I get comes from people operating as a family first. (People say) ‘we don’t want to rock the boat. We don’t want to get dad mad. We think there’s a will. We get along fine. We love each other. We’ll be okay.’ You are basing your future on a habit, an assumption, a hope, or a tradition. Sometimes that works. I call that lucky. If you want to be a family-first business, that is okay, as long as the business can be a hobby. But don’t count on it for productivity, profitability, peace of mind, or sitting together happily at the holiday table.”
In her presentation, Brown highlighted several points growers need to consider when operating as a business-first family. She acknowledged that some people don’t like to think of their farm as business first, but said thinking that way doesn’t demean the family. It means respecting the family by getting the business right and choosing to operate as a business.
“If not, you may lose both the family and the business,” she said.
Assuming all genetic relationships equal good working relationships. Acceptance in a family is unconditional. Acceptance in a business is not.
“A family business is not a place to rehabilitate a family member. If someone in your family is lazy, addicted, arrogant, etc., why would you hire them? Someone else wouldn’t,” she pointed out.
Brown suggested answering three important questions. The first is what (do the existing owners want the integrity of the business to continue?), followed by when (when will ownership of the business transition to the next generation?), and then who (who will own what parts of the operation?).
Believing the business can financially support any and all family members who want to work together. Questions growers need to ask include has the senior generation secured their financial future? Are the financial resources and performance level of the business strong? Are estimates and expectations based in reality? Will money, land, and equipment be loans or gifts?
“Don’t loan money to someone you aren’t willing to take to court, otherwise, it’s a gift,” Brown said. “Don’t rent to family members you aren’t willing to make sure honor the contract. Treat things as a business.”
Brown also advised growers to make sure their books are accurate, timely, and transparent.
Assuming others will/should/must change and not me. “If the achievement of your goal depends upon the assets or power which someone else has and they do not have your same goal, they do not have the problem.”
Presuming a conversation is a contract. Three of the biggest “lies” farmers often tell are:
- “Work hard, and someday, this will all be yours.”
- “I’m going to retire.”
- “You don’t have to worry about your brothers and sisters. They have their jobs. They aren’t interested in the business.”
Good businesses have written leases and contracts; employee documents such as reviews, job descriptions, and benefits; a written mission statement and a long-term plan; meeting minutes; an updated will; business and contingency plans; powers of attorney for finances and healthcare; and organization papers that detail the business structure.
“If it’s not in writing, it doesn’t exist,” Brown said.
It’s also important to write down prerequisites for ownership in the family business. Brown said owners transition three things in a legacy business: education, experience, and hard assets. She suggested having requirements for education; experience; a minimum personal financial investment in the business; sweat equity; compliance, adherence to and support of existing policies and management; and a positive reflection of the family, the business, and the industry.
She explained that fair and equal are not the same. Using a pie analogy, equal means everybody gets the same size slice of the pie. Fair means rewarding the person who made the pie (or the investment of time and resources) with a larger slice.
Failing to build communication skills and meeting tools when the times are good so they’ll be in place to use when the times get tough. Brown suggested short daily “huddles” to spread information, to coordinate the day’s activities, and to appreciate each other. Schedule monthly meetings, with an agenda, to discuss important issues and make larger decisions. Annual meetings should include an annual review, reporting, and celebration.
Ignoring the in-laws and off-site family. What is the role of the spouse in the business? What are the spouse’s expectations of the business? Does off-site family play a role in decision making?
“They can be your best friends or worst enemies,” Brown said.
Having no legal, discussed, and revised estate, management, and ownership transfer plan and a buy/sell agreement that trumps a will. In Brown’s opinion, parents don’t “owe” their children a business, but they do owe children morals and values; an opportunity for education, “which doesn’t mean you have to pay for it”; a legal, discussed, revised estate plan; an ownership and management transfer plan and a buy/sell agreement; and a listing of details beyond the will.
Brown’s final point was to appreciate and celebrate. She listed three things that can bring joy, laughter and celebration into growers’ lives: accept things you can’t control or change, look for humor every day, and associate with folks who are enjoying themselves.
“Without communication, cooperation, and commitment, you can count on resistance, resentment, and revenge,” she said.
More information about Brown can be found at jolenebrown.com.
