Business-First Operations Honor Families, Build Legacies

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Jolene Brown, an Iowa farmer and professional speaker, shared her expertise in agriculture and succession planning at FCSAmerica’s Women in Agriculture conference in Sioux Falls, South Dakota.

Which best describes how you manage your farm or ranch – family first or business first? The answer is key to the productivity and profitability of your operation.

Only hobbyists can afford to operate as family-first businesses, Jolene Brown told her multi-generational crowd of women. “Yet at least 95 to 97 percent of every phone call, email and conversation that I have originates from people operating as family-first. They run their business of hope, assumptions, habit, tradition and emotion.”

When these operations shift to business-first practices, she said, they actually serve and elevate the interests of their families: “What it says is, we love and honor this family so much, we better get the business right.“  

Brown has worked on management and succession issues with 400 families. Below are some of the best practices she has learned from business-first family operations:

  • Employment is not a birthright. Brown urges young people to work for a non-family boss for two to three years before returning to the family farm; parents should require consistently good job evaluations and/or promotions in the non-farm job before allowing a child to return to the farm. Be realistic about what it costs to bring someone into the business and make sure it fits with the operation’s cash flow.
  • Leaders are made rather than born for the job. Education, experience, character and personality determine who leads a business-first operation. Many families will find their best leaders among the younger generation, Brown says. Six families she currently works with have tapped daughters-in-law as head of the operation. For their part, she said, good leaders in a legacy business understand that their job is to replace themselves.
  • Build a strong advisory council. A good CPA or accountant, attorney, financial planner and family business consultant are critical. Beyond the traditional expectations of taxes and estate planning, hire CPAs who understand the financial ratios critical to a successful agricultural operation and attorneys who are experts in business structures that protect an operation and allow people to come in and out of the farm or ranch. Brown urges owners to work with a financial planner to derive 50 percent of their income from assets separate from the operation – otherwise they will never retire and fall into the trap of micromanaging the business to protect their financial well-being. And hire a family business consultant that keeps you pulling in the same direction, working through conflict and increases goodwill among all the business team.
  • Identify and work toward common goals. If your philosophy is “my way or the highway,” you should be an independent operator, Brown advises. Business-first families understand the importance of being interdependent. Everyone – family and non-family – is evaluated according to what he/she brings to the operation and the results they provide. Accordingly, pay is based on what the individual contributes to the operation’s objectives.

“When we operate as a business-first family, it affects everything we do, how we communicate and achieve our common goals. When we implement best management and leadership practices we increase productivity, profitability and peace of mind. This is how we honor our families. Only then can we build a legacy business and sit together happily at a holiday table.”

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