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Lifecycle of a family farm businessLifecycle of a family farm business

Knowing where your business is at can help you manage growth, make better decisions.

Davon Cook

August 1, 2022

2 Min Read
Maksym Belchenko/Getty Images Plus

Family businesses often evolve along a continuum that we call the lifecycle. Thinking of your situation in this context can provide insight into growing pains you may be feeling or goals you want to set. I will describe the lifecycle with the caveat that this is a simplification; in reality, there may be overlap among the stages.

  1. We call the start-up mode Survival stage. You may be bootstrapping. Cash flow is tight. A small number of founders are pouring their time and likely life savings into it.

  2. The business matures to a more Stable phase. You’ve been consistently profitable. The business is growing. You have a few key employees and perhaps a second generation is joining.

  3. In the Professional stage, you’ve grown enough to need more formalized roles and policies. You may have a mix of family and non-family leaders that drive that need. Ownership has often spread to other family branches. The name is not intended to imply you are not behaving professionally in other stages, but rather points to an increased level of structure and systems typical of larger businesses.

  4. Some aspire to the Institutional stage, and some do not. The business may have non-family shareholders and could have non-family management. A fiduciary Board of Directors is typical.

We find that many of our farm clients are in some combination of the Stable and Professional stage; or they are trying to transition into the Professional stage. Growing pains often help you see the need for change. You realize you have 10, 20, or more employees and you need to better define who’s in charge of what. You can’t manage benefits and time off and policy decisions on a case-by-case basis anymore. You need to hire a very skilled (CFO, agronomist, you-name-it) and they will be part of the ‘executive’ management team. You now have four owners who are cousins and decisions aren’t made informally around the dinner table. All those complexities lead to a need for more definition and usually more intentional communication.

About the Author(s)

Davon Cook

Family business consultant, Pinion

Davon Cook is a family business consultant at Pinion (formerly K Coe Isom). She helps families work well together in the business and navigate transitions in leadership and ownership. She works with farmers and ranchers all day every day and is passionate about production ag. Davon has been specializing in this area since 2012, partnering with Lance Woodbury at Ag Progress and K Coe Isom. She facilitates peer groups covering a range of strategic and technical topics, so she understands the issues producers are managing every day. Her perspective is shaped by spending ten years working in her own family’s cotton business near Lubbock, Texas, and a career spanning the ag value chain from McKinsey to ConAgra to consulting with the Bill & Melinda Gates Foundation throughout Africa. She welcomes comments, questions, and conversation!

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