I am curious to know your definition of success on your farm or ranch.

My definition of success would be families who are rich in relationships and experience profitability and growth, using all the talents of the family team.

As a farm family coach for over 3 decades, I have seen some common themes of successful folks who understand the importance of the culture of their family and business.

Peter Drucker, a well-known management advisor, said, “Culture eats strategy for breakfast.” He means that a company’s internal culture is more crucial to its success than any well-crafted strategic plan. I’ve changed that thought to “Culture beats strategy.”

The three key components of culture are: 

1. What the family believes in terms of their core values or cherished beliefs, their vision for growth, and how they communicate.
2. How the family behaves toward each other, whether they do conflict well by making quick repairs, and show respect for various roles and responsibilities of all ages of the farm team.
3. How the family makes decisions, creating solutions together with collaborative decision making and clearly defined roles.

Believe. Behave. Decide.

Successful families assess their values and personal styles, so they are clear which values – like respect, teamwork, honesty, wealth, and security – are aligned and where they need to navigate differences.

To find out about behavioural traits, they are eager to engage advisors and facilitators to help them get clear on the strengths of their team and create a great business plan and vision. Emotionally intelligent founders are happy to invite new ways of doing business when they ask the next generation to provide alternate business plans for growth.

Every voice counts in a culture where the non-farm heirs have input and communication with the farming heirs. There is appreciation for the roles played by the elders of the family, the founders, and the next generation. And new ideas and innovations are welcomed at the family business meetings.

These are different formalized meetings with two separate types of agendas:

1. Operational Meetings to plan and execute the running of the business day-to-day, with clear job descriptions and roles for each worker.
2. Strategic Meetings to discuss the vision for growth, incorporating more shareholders, and the structure of the business, as well as what the exit strategy is for the founders. Non-farm heirs are also part of these meetings.

Dr. David Kohl’s research at Virginia Tech in the late 90’s showed that the families who had regular farm business meetings were 21% more profitable than the families who did not meet and execute action steps in a formalized way.

Great communication for effective decision making requires the farm team to be able to embrace conflict quickly and not avoid it. They understand the need to express emotions respectfully and create solutions while reaching out and adapting to the needs of other family business members.

Successful family farms make quick repairs when conflict happens, and they have a language that is shared to solve issues in a timely fashion.

Getting to the Transition Table

Succession planning is embraced by families who want to create clarity of expectations and certainty of agreements for all members. The families who “seek to transfer not only assets but also capacity to manage” are the ones who get ahead well, according to Brent Turner, succession advisor and author of Peace of Land: What every farm and ranch family needs to know about legacy, land and letting go.

Older founders need to have security of income streams as they age in place on the ranch, and the younger farm heirs need security for their financial future with the opportunity to gain equity before 40 years of age.  The next generation of young farmers is likely generating some revenue off the farm and needs the ability to be compensated well on the farm, manage reasonable living expenses, and have some money to service debt. Disposable income for debt allows the next generation to buy into the farm and secure equity.

The ability of the founders to let go of power and control and share decision-making to train the next generation for great management is an intentional process. On ranches and farms, founders who are successful in transition are also flexible about housing choices and will find creative solutions to have the younger generation close to the cattle.

The most challenging part of the succession story for farm families is finding fairness in farm transition for all members of the family. This process is an ongoing journey of facilitation with outside advisors to help families be financially transparent, so everyone is clear about the viability of the operation and the number of families the business can support. There is openness about money scripts and workable expectations for cash flow and debt servicing. Compensation for each generation is based on skill and merit, with the ability to discuss both personal and business finances freely for the outcome of clear, workable expectations and communication.

Families who engage financial planners are successful in drawing income from their personal wealth bubble, as well as from the farm or ranch business. For those families who have put all their wealth into the business, there is a great challenge to find liquidity to navigate inheritance expectations of non-farm heirs, and family living for the founders as they age and may require health care funding.

Themes of success

1. Know your beliefs – what you truly value. Be aligned with what matters to you. 
2. Embrace conflict as a risk management strategy.
3. Talk openly and freely about money and debt. Engage financial planners.
4. Share decision-making and be collaborative in your approach.
5. Ask for help as needed from the family team and outside advisors.
6. Get clear about what a good day on the farm looks like to you as you age.
7. Celebrate your success and show heaps of appreciation along the way.
8. Model forgiveness while reaching out to create new solutions.
9. Block out time for family and be present.
10. Be intentional to protect your mental well-being – express your emotions.

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