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Planning meetings essential to partnership

Agriculture.com Staff 01/13/2014 @ 11:41am

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.

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