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Oh my, I just inherited the farm!

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A high priority would be to develop a personal family living budget.

A participant on a recent webcast had just inherited the family farm, lock, stock, and barrel. This young farmer had been farming with his family for 15 years and was somewhat overwhelmed. He also recently married, and his wife had filed bankruptcy in the past. Life happens and if this sounds familiar, these situations are the reality of the times. Let’s discuss my recommendations for the young farmer.

The first step is for both him and his wife to fill out a business IQ assessment. This is a 15-question evaluation to size up business and financial management skills. I suggest each person complete it separately and to invite a lender or trusted mentor to conduct a third-party evaluation.

Through the assessment, find areas of strength to continue and items to prioritize for improvement. Both individuals will also need to conduct a goal assessment separately. Then, combine the analysis, determine what you have in common, and identify areas of difference to see if you are on the same page.

If you are
production minded, surrounding yourself with individuals who have a good agricultural management mindset or a financial advisor could be a useful step. However, education in these areas could vastly improve internal communications, interactions with key suppliers, and your overall understanding of how decisions influence business and financial outcomes.

A high priority would be to develop a personal family living budget and monitor the outcomes. There is an o
ld saying, “Easy come, easy go.” You want to preserve and grow your newfound wealth. On a side note, a buy-sell agreement and perhaps a prenuptial or postnuptial agreement might be a consideration.

In your attempt to increase your management
acumen, take baby steps and monitor your progress. Do not attempt to grow too fast. Build your working capital during the profitable years for economic shocks and to position the business for future opportunities.

When referring to multi-generational businesses, I have often heard,
“The first generation makes it, the second generation holds it, and the third generation loses it. This can be the result of a lack of focus on the business IQ. However, external events such as weather, disease, or supply and marketing chain disruptions can also lead to negative outcomes.

This individual has the correct attitude to succeed by reaching out for advice. Good luck to this young farmer!

Source: Dr. David Kohlwhich is solely responsible for the information provided and is wholly owned by the source. Informa Business Media and all its subsidiaries are not responsible for any of the content contained in this information asset. 

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