What is it about “those” families? You know the ones I am taking about. Their business seems to strive, the family talks and gets along inside and outside of work, and overall, they seem happy (and profitable).
And just down the road, you encounter a very different ranch family. Money seems to leak from the business as debt load increases. Family member may live in the same yard, but past confrontations keep conversations to a minimum (or turn into full-blown rages). The next generation moved back, but isn’t getting paid for their labor and wonder how much longer they can afford to stay. The older generation can’t sell, because their retirement comes from the ranch. When an off-farm family member loses their town job, they move into the empty bunk house and work for the ranch.
Jolene Brown, family business consultant, says there are two kinds of family farms. The family-first business and the business-first family. Below is a summary of Brown’s articles on the two types.
Family-First Business: Bases decisions on emotions or what family members want to. Majority of the times, these decisions leads to problems, first within the family, then in the business.
Business-First Family: Decisions are grounded upon a mutual mission, written goals, legal documents, and quality communication. Family is honored and the business has the family’s best interest at heart.
“Remember when we put the business first because we care about the family. If we do the business well, we are more productive and more profitable and everyone more happy,” states Brown.
Brown says there are three steps to help transition.
1) Owner Willingness. Does the owner of assets really want to transition the business? It doesn’t matter if the next generation is ready. What is the intent of the owners and is it followed by action?
2) Money. Be strong with the assets of business. Is there enough money to bring back another family? Is there enough money for retirement? Or will the senior generation need to live until they die. The senior generation can’t turn over assets that they need. Workers (even family) need to be paid and compensated and is the cash flow there to do that. Is there a job available (does the team really need them)?
Hiring family members well, as it is hard to fire them. Business is not a birthright. Have you been invited and are you a worthy worker for a worthy job. The family business is not a place to rehabilitate members- if angry, lazy, addicted… use best business practices. If no one else will hire them, why should you? Genetic relationships do not equal good working relationships.
Communication. Commitment to have meetings that are ran well and do not waste time. Have productive meetings, so everyone can get back to work. Hold at least one formal meeting a year to look back on the business plan. Did we meet goals, what will we do differently, and how will jobs be assigned? Be professional and use courtesy to business members (family or not). After all, would you treat your banker, vet, or agronomist like you treat your family.
Write it down. Family business more must be in writing. When times get back, we can look at why we decided to do this in the first place. Reading your mission can help you remember the purpose for the business.
Families can be complex, so it is important to treat the business like a business. How complex? Interesting quotes Brown has heard include:
“As long as she doesn’t change anything, I’m flexible.” Older rancher commenting on his daughter returning.
“Work hard, someday this will all be yours.” Senior generation.
“How long do you have to be married to get to be family?” Daughter-in-law.
“Don’t worry about your brothers and sisters. They have jobs. They aren’t interested in the business.” Mom and Dad.
What would a good business have in writing to clarify future roles and needs. While you don’t owe your kids a business, transition is dependent on transparency and “wise experts.” Brown states “we owe our children morals and values, opportunity for an education, legal discussed revised plans, and a listing of details beyond the will.”
“Without communication, cooperation, and commitment, you can count on resistance, resentment, and revenge,” says Jolene Brown.
summarized by Bethany Johnston, NGLC Ranch Transition Task Manager
Articles by Jolene Brown
AgDaily. Jolene Brown: Family farm is a business, not a birthright.
Successful Farming. Putting Business First. J. Brown. https://www.agriculture.com/family/women-in-agriculture/putting-business-first_338-ar16711