August 25, 2017
In part one of this series we shared advice on using a strategic plan to determine who should be on your farm’s ‘bus.’ In many cases, that means the farm leaders must determine the role of incoming family members.
Traditionally, farmers would hand the farm over to their sons or daughters and walk away. But with today’s complex operations, some family members simply may not be suited, says rancher and estate planning consultant Dick Wittman.
“The mistake people make is, you’re family so we want to make sure you get a chance to work here,” says Wittman. “But we don’t educate them on the responsibilities of being an owner. Sometimes you find out that they simply don’t like taking the risks of being an owner.
“It’s more than just ‘I want to be on the bus.’ There has to be an honest assessment of each person’s capacity to even get on the bus, whether you are a family member or not,” Wittman adds. “That assessment has to address a person’s skill sets and ability to provide capital, as well as interest and ability to provide labor and management to the business.”
It’s critical for a family business to have a defined employment policy that spells out what it is looking for in the people who work there. You may require advanced education and prior employment off the farm. Consider also developing a family business investment policy.
“It generates a really interesting discussion because people just don’t think about investing in the farm,” says Wittman. “Say you bring in a son or daughter-in-law to work, and you think someday you want them to be an investor. How do you define how it will happen, and what will be the criteria?
“You have to be open to the idea that sometimes people don’t want to be investors in the business but they want to work in the business,” he says. “Or sometimes they want the opposite and are willing to do the things investors are expected to do — provide capital and take risk and take profits.”
Values, vision, planning
If you really want to do a good job getting the right people on your team, look at values first, vision second, and strategic planning third, says certified financial planner Tim Schaefer. “Hire for values — what drives people. If they are in alignment with your farm business’s values, the odds go way up that you’ll be able to teach the skills they need,” he says.
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