Putting the farm business plan first
They set their GPS for Des Moines, Iowa, mapping diverse routes from family farms in Washington, Texas, and 10 other states, to converge at a singular destination: the 2011 Generating Success Conference.
Parents arrived with their successors: sons, daughters, and their spouses. This next generation sometimes came with their own diaper-clad successors in tow.
All had a mutual goal: setting aside the tyranny of the urgent back home to focus on the future of their farm business.
“Many farmers are very good at production,” said Jolene Brown, conference keynote speaker. “But we neglect the leadership and skills of the people who make that production happen.”
As many as 54% of the participants were part of a two-generation operation; 27% had three generations. Their key concern at the 1½-day conference, sponsored by Stine Seed Company and supported by Sukup Manufacturing and Farm Credit Serivces, was underscored by these statistics:
● 58% reported they didn't have an up-to-date estate plan.
● 78% said they didn't have a written plan to transfer the business to the next generation.
In fact, participants ranked making a transition plan as their greatest challenge, followed by maintaining good communication among family members (32%).
Brown relied upon a generous heaping of humor topped with hard truths to bring home a message. “Being a Business First Family doesn't demean the family,” she said. “It means you honor family so much you want to do the business right.”
She didn't mince words as she listed The Top 10 Things That Make or Break a Family Business. Among the lessons Brown shared, “Financial advisers say it's best if your senior generation has 50% of its retirement income away from the family business,” she says. “Otherwise you'll micromanage the business to death.”
Brown advised the younger generation, “Parents don't owe their kids a business,” she said. “And you and the business will reap multiple benefits if you have a non-family boss for at least two years.”
She added, “With family, more – not less – must be in writing. This includes clarifying job descriptions, exit strategy, transition, compensation package, and how decisions are made. And don't forget, the number one job of a business leader is to replace himself or herself.”
I.D. Leader potential
Don Jonovic, Family Business Management Services and Successful Farming magazine's “Can Their Problem Be Solved?” columnist merged management advice and humor to guide families toward a winning vision of how to generate a winning succession team.
“New challenges and opportunities require new ways of learning and thinking,” he said. “If developing the next generation of leaders isn't an issue for you, keep using Family Farm version 1.0. If it's an absolute strategic necessity, you must update to version 2.0, with more written agreements and more focus on developing leader skills and business experience.”