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Planning meetings essential to partnership

By Dr. Donald J. Jonovic

PROBLEM: Can a partner convince his workaholic co-owner to
respect the need for management and planning?

SUBMITTED BY K.P. VIA EMAIL:

My stepbrother, Dirk, and I took over our third-generation
specialty produce operation five years ago. It’s become a very successful
retail marketing system that is showing exciting potential for growth.

Dirk grew up on this farm. I came to it from the city at age
13 when my mother married Dirk’s dad, Jake, but I took to farming right away.
We worked shoulder to shoulder. After I graduated from Purdue, I gradually took
over the accounting, marketing, and administration. After we bought Jake out, I
developed the new website and greenhouse business model that is driving our
growth, now passing $2 million in revenue.

Dirk and Jake (who still works on the farm)are really
excellent farmers, but they only respect one thing: work. They never stop. They
don’t understand that employees want to spend time with their families. They
even resent time I spend in the office!

Our risk level is rising, but Dirk won’t discuss financial
issues or take time to plan. Jake thinks the same way and encourages him. I’m
at a total loss. How do I bring them to the business table?

DR. JONOVIC'S SOLUTION:

K.P. and Dirk have,
together, built a successful business and a valuable asset base. The upside is
positive cash flow and an appealing career/lifestyle. The downside is that as
the operation gets bigger and more complex, so do the decisions and management
needs.

Dirk’s position is wrong. The reasoning is not difficult:
The more complex the business becomes, the more these risk-taking investors
require careful accounting, budgeting, and planning. They also need good people
to take on some of the farm labor (work) with defined hours, wages, and
responsibilities, while the partners spend more time nurturing and protecting
their investment.

Certainly, work is fundamental to survival, and it’s clear
all of them are very committed to it. However, they’re beyond survival mode now
and have a going business plus significant wealth to preserve and to grow
together.

We all know farmers who use work as an excuse to escape the
unpleasant responsibilities of business ownership and even family life. (An
Australian rancher once told me he saw long hours in the field as “recreational
plowing.”) That’s a lifestyle choice and may be OK for someone playing with his
own assets, but it poisons a partnership.

K.P. may or may not be absolutely right as to the management
and planning needs of their business. One fact is unassailable: By becoming a
partner with K.P., Dirk gave up his right to absolute power over the business
and its assets.

They have a moral and legal obligation to make decisions
together – very difficult without information and impossible unless they talk.

Submitting to formal communication is definitely the most
hated and difficult management challenge farmers have to face, but the health
and future of the farm simply can’t be decided over a beer at 11 p.m. with
everybody dropped in their tracks.

K.P. and Dirk can start small with short monthly meetings: a
quick review of financial condition, discussion of key operating issues,
clarification of key responsibilities. A couple hours at first can do it and
shouldn’t overwhelm or bore anybody.

The choice isn’t whether to meet. The real choice is either
to meet or to split up the partnership while there is still something to save.

 

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