Business interests can’t be dictated by family interests

Protecting both family and business interests can only be accomplished 
through prudent planning and ongoing dialogue

Ask Jolene Brown when the best time to start planning for farm succession is and you get a one-word answer.

“Yesterday,” said the professional speaker and Iowa grain farmer. “It is never too soon to begin planning for the future.”

Without a plan, the death of a parent can leave siblings fighting on the way to the funeral home as each tries to eke out their share of the inheritance, she said, followed by years of legal wrangling and empty holiday tables.

“Believe me, I’ve seen it happen many times,” she told producers gathered at Dairy Farmers of Manitoba’s annual conference in Winnipeg last month.

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She went on to cite the three most common lies farmers tell when it comes to farm succession — lies that are told even when people don’t intend to deceive anyone.

“One day this will all be yours; I’m going to retire; and don’t worry about your siblings… they’re not interested in the business,” she said as participants nodded. “I know you’ve heard people say these things.”

The best way to stave off “wealth harvesters” and prevent disappointment is to be prepared, Brown said. Succession arrangements must be in place long before they are needed, along with wills, business plans and standard operating procedures, if a farm business is going to survive and thrive.

“To do this, you must be a business-first family, not a family-first business,” she said. “I see what happens when farms operate as a family-first business where they do things for the sake of the family or don’t do something that needs to be done because they don’t want to upset the family, or say, well we can’t bring that up because we’re family, or we’ll all just get along because we’re family, and it’s not pretty.”

But being a business-first family is not about relegating family to a back-seat role, it’s about separating family and business, so at the end of a workday everyone can sit down around the table together as a family, she emphasized.

Some families Brown has worked with go so far as to rent a hotel conference room or hall to hold quarterly or annual meetings, just to create some space and reinforce that what they are engaged in, is in fact, a business.

“If you can’t find that separation at the kitchen table, leave the kitchen table, go out to the shop and sit around a piece of plywood if you have to,” said Brown. “If you really can’t make that transition that we are doing business, in a business manner at a kitchen table then you better find somewhere else to go.”

Farm business meetings also need to have structure and defined time limits. Don’t try to fit everything you’ve been meaning to discuss for the last 10 years into your first business meeting, she said. Start the process by picking one or two issues to discuss and setting aside half an hour.

And while it might not be the first issue a farm business tackles, Brown said having a code of conduct that has been voted on and added to your operation’s bylaws is key to setting the bar where everyone can see and reach it.

When meetings are routine and effective, succession plans can be developed and then updated as needed. Brown said those plans should include when people will retire, what their involvement will be after retirement, what non-farming siblings will receive and how sweat equity will be rewarded.

“Sweat equity must be rewarded every year, not at time of death and not at the reading of the will,” said Brown, adding that a huge impediment to enacting succession plans is the concept of fair and equal.

“The idea that what is equitable, that what is fair, is also equal, just isn’t the case,” she said, pointing to examples where siblings who provided no sweat equity believed they should receive an asset share equal to siblings who did provide sweat equity.

“But by far, the biggest reason people don’t plan is that they’ve let perfect be the enemy of really good,” Brown said. “If you haven’t started planning, if you aren’t a business-first family, you need to start now. Everything might not be perfect, yes there will be changes… but don’t let those things stop you from signing what you need to sign. When something is really good — unless it is irrevocable — it can always be adjusted.”

About the author

Reporter

Shannon VanRaes is a journalist and photojournalist at the Manitoba Co-operator. She also writes a weekly urban affairs column for Metro Winnipeg, and has previously reported for the Winnipeg Sun, Outwords Magazine and the Portage Daily Graphic.

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