Road Warrior

Q&A: Introducing new family members to the farming operation

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While I was traveling in Canada conducting seminars, my standard operating procedure was to take only written questions from the participants. This technique works like a charm, since most questions are well thought out. The following question centered on transition management.

I farm 14,000 acres along with my son and three very good employees. My son is 37 years old. We together have a line of equipment to do the farming. The farm has been very profitable and my son does not want to entertain any changes. Things are going very well. The issue is that I have a daughter, 31 years old, who has her own business and a son-in-law, also 31, who has a very good job with a successful telecommunications company. How do I go about introducing my daughter and son-in-law into the operation?

Response:

First, I would recommend that all individuals involved, including the dad, his spouse and their children and spouses write down their business, family, and personal goals, and then discuss them, or have a third-party facilitator compile the results. This way, one can discover each party’s goals, what is in common, and any inconsistencies which would require negotiating. This is particularly critical for the 37-year-old son who is resistant to change.

Next, conduct a skill assessment of all potential stakeholders in the operation, along with an inventory of what they enjoy or the areas for which they have a passion, and what they would like to see changed. The daughter and son-in-law would have to bring in complementary skill sets to enhance the bottom line of the farm or ranch. A good set of written job descriptions will be essential in smooth business evolution, including job descriptions for dad, the son, and existing employees.

Another consideration is determining why the daughter and son-in-law are thinking about being involved in the family farm, because Dad indicates both are successful with their current employment. Is this an issue with work-life balance, being closer to family, the unique opportunities and challenges of agriculture, or are they looking at the recent good economic times in agriculture thru rose-colored glasses?

The bottom line must be considered. Can the new kids on the block generate additional net income? Do mom and dad want to phase out of management? What will their compensation be? The goals and futures of the three good employees must be considered in this process also because they will be very critical in the successful evolution and transition of this business.

Finally, a good facilitator and professionals including an accountant and lawyer are needed to ask the tough questions to maintain the focus and the direction. This is not only an introduction of his daughter and son-in-law into the business. Including all stakeholders using a team approach will be critical.

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Dave Kohl is an ag economist specializing in business management and ag finance. He can be reached at sullylab@vt.edu.

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