Imagine this scenario. Your college-age son will head to college in August. So far you’ve paid him a per-hour wage for working on the farm. He says he will come home and help most weekends. Should you continue paying him per hour, or should you start working him into the operation as some sort of partner?
All you know is that he wants to return home after college.
This is the type of question where seasoned veterans in farm management can provide valuable insight. The panel for Profit Planners includes David Erickson, farmer, Altoona, Ill.; Mark Evans, Purdue University Extension educator, Putnam County, Ind.; Steve Myers, farm manager, Busey Ag Resources, Leroy, Ill.; and Chris Parker, retired Purdue Extension educator, and forage and livestock producer, Morgan County, Ind.
Erickson: I would prefer that you continue to pay him for his work as provided, and let him build some savings to invest in buying his way into your operation in the future. It’s difficult to start from scratch on your own. Providing a way for him to invest in the current operation will help him experience the accomplishment of earning his way into the business. This is an experience too often missed by family members in a family business.
Evans: That is a tough question. What are the long-term goals? Your son leaving for college is still very much figuring out what he wants to do in life. While in college he might meet a girl, and/or gain an experience where he says he can make more in engineering, with a job paying great benefits. Get the picture? Entering your operation as a partner may not be the way to go at this time, as it may be premature.
Myers: Keep paying him for what he does on a day-to-day basis. Save the partnership for farther down the road postgraduation. Start the conversation now regarding your plans, goals and vision for the future — not only to share, but to ascertain what his plans, goals and vision are as well. Perhaps a “bonus” payment is the partnership upon graduation.
Parker: Continue paying him hourly through college, while making plans to bring him into the operation. How you do this depends upon your particular setup. Are you a single owner, partnership, corporation LLC? You should also have consultations with family, your accountant, your lawyer — you and your spouse and your son. There are so many options it would be hard to choose what is best for your situation without detailed knowledge of your enterprise.
Erickson: Work at it gradually, but develop a written plan that will outline progressive steps to future involvement. Help him rent some land, begin a livestock enterprise or add a complementary business venture. The experience will be filled with valuable teaching opportunities.
Evans: If your long-term goal is to make your son a partner, that is great and should be communicated. I believe with great communication and honesty, time is going to answer your question within the next one to three years. Then you will move in the direction you need to move.
Summing up: The panel is unanimous: Continue paying your son a wage and delay the partnership decision. However, begin focusing on your long-term goals, and encourage your son to do the same.