When I ask farm families to list what they value most, “family” usually makes it into the top three positions, if not the top.
However, mixing family and business can be tricky. It can be a strength and a weakness.
It is a strength because the support of family can help individuals and the business through difficult and stressful times.
With the resources it brings, family can also help capitalize on opportunities.
Family farms have changed, not so much with family but with the business. There’s generally more complexity in farm businesses: how ownership is structured, who the owners are and how the business is managed.
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It’s the latter point that needs the most attention.
This is tricky stuff because there is no one correct way of doing it, and family members often have differing opinions.
It helps to be able to separate business from emotion, but this can be challenging, depending on the issue.
Personal, family and business goals are important, as is a common interest or vision that defines what the farm and family are working toward. It’s also the rallying point when challenges arise.
It is just as important to set financial targets that represent what you aim to achieve or represent minimum threshold tolerances.
Being able to distil an issue down to numbers helps separate business from emotion in the decision-making process.
Family can be described as a system with a primary purpose of nurturing and developing self-esteem and sharing common values.
Each family operates with its own style, role relationships, rules and ways of dealing with stress and ex-pressing emotions.
In contrast, a business system’s primary purpose is to use resources to make a profit.
Combining a family with a business blurs the lines that distinguish one system from the other.
The exercise included with this column promotes discussion among family members about the family-business orientation. There are no right or wrong answers.
The family-first/business-first exercise is a scale with each end represented by the statements in the accompanying chart. It lists the characteristics of a family system versus a business system within several categories:
- membership — who belongs?
- income (compensation) — what are members paid?
- leadership or promotion — how are members chosen to be leaders or promoted?
- basis of operation — what underlying value drives operations?
- training — how do members decide what training they need?
Have everyone who is actively involved in the business complete the exercise by placing an X in the appropriate box beside the statement with which they most identify. Then get together to discuss the results.
The complexity of a family farm has advanced to where cousins and nephews or nieces are involved. There are more and different relationships to manage.
Perpetuating the Family Business by John L. Ward is a good book that discusses family business. It’s not about farm businesses, but the application can be easily made. The students I teach read this book in one of their assignments, and it gets great reviews.
