In part one of this series we discussed the keys to better day-to-day operational communication. In part two, it was all about how to face conflicts within your farm team. Today we’ll look at the need to communicate for long term planning purposes.
It’s like going through the planter to gauge how things are holding up, replace what’s needed, and perform preventative maintenance like changing problem bearings.
This is a once or twice-a-year meeting that looks at the big picture. Typically, these agendas include:
Performance review: financial, yield, cost of gain, whatever metrics measure the performance of your farm.
Operations post-mortem: Take some time to identify what worked well and what didn’t. Make a list of what to Start doing, what to Stop doing, and what to Continue.
Strategic issues: Analyze and discuss big decisions that are pending. Are we going to buy or rent more land? Is it time to get out of an enterprise? Are we going to change tillage practices, and what investment is required to do so?
Goals: Set specific goals for all areas of the business: financial, operational, human capital, administration. Dr. Danny Klinefelter, ag economist at Texas A&M, has taught the 5% rule for years in our industry. A 5% increase in price received, a 5% decrease in costs, and a 5% increase in yield will often produce more than a 100% increase in net returns. The effect is cumulative, multiplicative and compounding. How might your goals result in 5% change?
Ownership check-in: How are we working together? Do we need to clarify any shared expectations? Are there any changes to roles needed? What is everyone’s satisfaction with status quo?
Estate and succession planning maintenance: Review estate plans and buy-sell agreements at least every five years, and more if the ownership situation or laws are changing.
Keep non-farming owners in the loop
If you have owners who do not work in the business, you may need to segment the agenda above. All owners, even those distant, should be included in performance review and perhaps strategic decisions; but they may not need to be involved in the nitty gritty of operational reviews and planning.
Some find it helpful to have their professional advisors participate in parts of this long term planning meeting. Consider if your banker, accountant, or attorney would be valuable. Some use a facilitator to keep the meeting on track.
Davon Cook is a family business consultant at K Coe Isom. Reach Davon at [email protected].
The opinions of the author are not necessarily those of Farm Futures or Farm Progress.
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