Content ID

198311

Taking Advice from Outsiders

Can Their Problem Be Solved?

By Dr. Donald J. Jonovic

The Problem:

How can a family farm benefit from the advice of outsiders who know little about that farm or family?

Submitted by T.T., via email:

My own family’s farm business is in its third generation. We’ve had a board of advisers with three outside members for 10 years. All six of us in my generation meet often with our business attorney and accountant to work on estate issues, operating agreements, and such things.

I’m writing because my husband’s family is so closed off to outside help. Nobody talks about the future. There’s no real business plan or estate planning as far as I can tell. (Maybe that’s because there’s no attorney or accountant involved; at least not any that I’ve met in my five years since marrying in.)

I’ve brought this up a few times with my in-laws, and the response is usually condescending comments about know-nothing, overpriced lawyers who have no clue about farming. Yet these are the same people who hire expensive marketing consultants and buy $250,000 machines from commissioned sales people at the drop of a hat.

I’ve seen the valuable help outsiders can bring to a family farm. How can I help the family I now live with see this, too?

The Solution:

When it comes to crops or livestock, farm people generally find themselves on their own against a lot of forces far bigger and more powerful than they. Standing their ground and surviving makes them veterans of a sort of rural combat. Little wonder they’re so fiercely distrustful – if not disdainful – of outsiders who don’t understand and whom they don’t know. 

If my clients react as T.T.’s new family did when I suggest outside professional or strategic help, my response is to pose two questions for discussion. The first gets at why boards and advisers are essential to a multigeneration family farm.

1. If managers protect their jobs and owners protect their wealth, who in the system protects the business? 

In the early years of a business, the labor, management, and board are almost one and the same – a tight band in a small canoe. They disagree at times, but surviving the river is the shared challenge. Paddle hard. Keep moving. 

With success, that canoe becomes a ship with a crew that mixes retiring founders with successor managers, off-farm heirs, and nonowner employees who are all focused on different decks. They’re all fighting a river big enough to swallow them whole. 

The concept of a harbor pilot was invented centuries ago to fill the need for a guide who had the specialized knowledge and experience to protect the ship from bad decisions. 

That’s a board’s role in a family business: protect the ship by seeing risks the busy crewmates don’t recognize and by helping coordinate their differences in skill and focus.

Occasionally, even an experienced pilot needs help and must make radio contact with experts ashore. Boards find those experts in law and accounting firms, and they’re called professional advisers. 

This leads to the second critical question.

2. If we accept the need for advisers, how do we learn to trust them? 

Just as you learn to trust anyone else: interact, exchange information, make a few low-level decisions with their guidance, and evaluate the results. If things work, build on that. If not, find other advisers and repeat the process. 

Trust is gained by fighting together in the trenches over time. The more time spent, the more is gained. 

The best time to engage outsiders was probably a generation ago. The next best time is today.

 

Your transition team members

Don Jonovic is founder of Family Business Management Services in Cleveland, Ohio. He focuses on management, growth, and ownership transition issues. His farm partnership planning tool, “Ag-Planner/IV” ($68.45); a two-DVD set on farm management and succession ($48.95); and other books are available at familybusinessmgt.com.

Jolene Brown is a speaker, author, and family business consultant. Her tested business tools provide leadership and management solutions for people who feed, clothe, and fuel the world. jolenebrown.com

Myron Friesen is co-owner of Farm Financial Strategies in Osage, Iowa. During the past 15 years, he has worked exclusively with farm families across the Midwest to develop farm transition strategies. farmestate.com

 

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