As we head into a season of lower commodity prices for grain producers,
concerns about financial margins can cause stress among owners in a closely
held business. A seemingly endless list of issues emerges: determining
financial priorities; challenging one another's assumptions about what the
business really needs; understanding the risks associated with certain
growth opportunities; communicating with nervous lenders, vendors or
landowners; responding to employee's requests for additional compensation
and more. The impact of all these, and others, can result in a feeling of
being overwhelmed. And when people feel overwhelmed, they tend to lash out
at those to whom they feel closest, which often means their family members.
Leaner profits can lead to stressful reactions in any family business.
Compiling good financials, prioritizing and developing contingency plans can
lessen problems.
To combat the tendency to beat up on your business partners, consider the
following three strategies for your family business meetings. Implementing
these ideas doesn't mean you will avoid differences of opinion, but it can
turn the contention into consensus. The resulting plan can help you weather
the financial turbulence you might experience.
COME WITH GOOD INFORMATION
Utilize historical data and financial projections to prevent conflict that
originates in false assumptions. I remember one family that was upset about
the general level of compensation paid to employees, but when we looked at
the actual numbers and the suggested increases in pay, the effect was not a
significant factor to the business. In another case, family members assumed
the family living draws didn't amount to much (they withdrew only what they
thought they needed), but when we added them up, we discovered that they
placed the business under significant financial pressure. When talking about
margins, expenses, investments or projections, having accurate numbers to
frame the discussion is important. Use your CPA or have someone spend time
generating good data for the discussion. Doing so begins to move the
discussion beyond opinions and assumptions to scenarios and plans and
decisions.
COME PREPARED TO DISCUSS PRIORITIES
Even with tighter margins, you will still need to invest in your business.
The question is where. What areas of your company are critical to your
short- and long-term success? Fertility may be top of the list, but a new
sprayer may not be. Investments in people are important to your effective
operation, and may warrant investment even in a down year if it helps you
take on more acreage or business opportunities. Discussing rents with
certain landowners may be a necessity in some people's minds, and talking
through that strategy in a still-competitive market is critical to its
implementation. The point is, have each person think through what's most
important, so the discussion has some depth and rationality when negotiating
with family members about where to invest.
DEVELOP CONTINGENCY PLANS TOGETHER
Years ago, with a family business in a different industry, we spent time
talking through "what-if" scenarios around a declining market. Within a
year, the market did indeed begin to decline and, because of our
discussions, we had most of the game plan figured out. As a group, the
family had worked through some of the tough decisions prior to their actual
need, and as a result they were able to execute quickly. From an
agricultural standpoint, you can develop plans for equipment, land
improvements, marketing, overhead expenses, employee changes, and
less-profitable ground before the actual need to cut is upon you. You can
also spend time brainstorming revenue generating ideas that may prove
valuable.
When family members are stressed, they tend either to shut down or explode.
Communicate more often by committing to regular "check-in" discussions,
which can provide a relief valve for the anxiety that builds when margins
are tight. Yes, it takes time to communicate and can at times feel
inefficient, but the dividends can be seen in more consensus, less conflict,
quicker decisions when critical issues emerge and ultimately a tighter
family unit.
Editor's Note: Lance Woodbury writes for both DTN and our sister
publication, The Progressive Farmer. He is a Garden City, Kan., author,
consultant and professional mediator specializing in agriculture and
closely-held businesses. Over his two-decade career, he has guided many
families through inter-generational farm transfers as well as mentored
successors. Contact him at lance@lancewoodbury.com
http://www.dtnprogressivefarmer.com/dtnag/common/link.do?symbolicName=/free/
news/template1&paneContentId=5&paneParentId=70104&product=/ag/news/topstorie
s&vendorReference=b88006fa-b53c-4980-88e5-e3a4e3a4d33e&pagination_num=2
concerns about financial margins can cause stress among owners in a closely
held business. A seemingly endless list of issues emerges: determining
financial priorities; challenging one another's assumptions about what the
business really needs; understanding the risks associated with certain
growth opportunities; communicating with nervous lenders, vendors or
landowners; responding to employee's requests for additional compensation
and more. The impact of all these, and others, can result in a feeling of
being overwhelmed. And when people feel overwhelmed, they tend to lash out
at those to whom they feel closest, which often means their family members.
Leaner profits can lead to stressful reactions in any family business.
Compiling good financials, prioritizing and developing contingency plans can
lessen problems.
To combat the tendency to beat up on your business partners, consider the
following three strategies for your family business meetings. Implementing
these ideas doesn't mean you will avoid differences of opinion, but it can
turn the contention into consensus. The resulting plan can help you weather
the financial turbulence you might experience.
COME WITH GOOD INFORMATION
Utilize historical data and financial projections to prevent conflict that
originates in false assumptions. I remember one family that was upset about
the general level of compensation paid to employees, but when we looked at
the actual numbers and the suggested increases in pay, the effect was not a
significant factor to the business. In another case, family members assumed
the family living draws didn't amount to much (they withdrew only what they
thought they needed), but when we added them up, we discovered that they
placed the business under significant financial pressure. When talking about
margins, expenses, investments or projections, having accurate numbers to
frame the discussion is important. Use your CPA or have someone spend time
generating good data for the discussion. Doing so begins to move the
discussion beyond opinions and assumptions to scenarios and plans and
decisions.
COME PREPARED TO DISCUSS PRIORITIES
Even with tighter margins, you will still need to invest in your business.
The question is where. What areas of your company are critical to your
short- and long-term success? Fertility may be top of the list, but a new
sprayer may not be. Investments in people are important to your effective
operation, and may warrant investment even in a down year if it helps you
take on more acreage or business opportunities. Discussing rents with
certain landowners may be a necessity in some people's minds, and talking
through that strategy in a still-competitive market is critical to its
implementation. The point is, have each person think through what's most
important, so the discussion has some depth and rationality when negotiating
with family members about where to invest.
DEVELOP CONTINGENCY PLANS TOGETHER
Years ago, with a family business in a different industry, we spent time
talking through "what-if" scenarios around a declining market. Within a
year, the market did indeed begin to decline and, because of our
discussions, we had most of the game plan figured out. As a group, the
family had worked through some of the tough decisions prior to their actual
need, and as a result they were able to execute quickly. From an
agricultural standpoint, you can develop plans for equipment, land
improvements, marketing, overhead expenses, employee changes, and
less-profitable ground before the actual need to cut is upon you. You can
also spend time brainstorming revenue generating ideas that may prove
valuable.
When family members are stressed, they tend either to shut down or explode.
Communicate more often by committing to regular "check-in" discussions,
which can provide a relief valve for the anxiety that builds when margins
are tight. Yes, it takes time to communicate and can at times feel
inefficient, but the dividends can be seen in more consensus, less conflict,
quicker decisions when critical issues emerge and ultimately a tighter
family unit.
Editor's Note: Lance Woodbury writes for both DTN and our sister
publication, The Progressive Farmer. He is a Garden City, Kan., author,
consultant and professional mediator specializing in agriculture and
closely-held businesses. Over his two-decade career, he has guided many
families through inter-generational farm transfers as well as mentored
successors. Contact him at lance@lancewoodbury.com
http://www.dtnprogressivefarmer.com/dtnag/common/link.do?symbolicName=/free/
news/template1&paneContentId=5&paneParentId=70104&product=/ag/news/topstorie
s&vendorReference=b88006fa-b53c-4980-88e5-e3a4e3a4d33e&pagination_num=2
Comentarios
Publicar un comentario