Young farmers are often reluctant to clearly spell out their wants, needs and expectations from farming upon entering the business.
It might be out of respect for Mom and Dad, sometimes they feel intimidated, and sometimes, they simply don’t know what they want.
The most perplexing and pressing question for a farm entrant eyeing farming full time is “when is the right time to start?”
An Alberta-based farm adviser had some words of advice on that subject during Ag Days seminar here last week.
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First and foremost, never make the decision based only on the cultural gravitational pull of the farm and lifestyle, said Reg Shandro, owner of Farmacist Advisory Services Ltd. If you’re not cognizant of where the business is at, you and the farm will soon be in trouble, he said.
“If you’re going back to the farm because the outside world is an ugly place to be, that’s a threat.”
FINANCIAL OVER CULTURAL
Unfortunately, Shandro says he sees many instances where the cultural draw trumps sound business planning. He once asked a group of young farmers soon to take over whether they’d seen the farm financial statements.
“They hadn’t,” he told a packed Ag Days seminar. “You’ve got to step back from that and say ‘that’s insanity.’ You don’t buy a business without seeing the financial statements.”
Focus on the economic side of things when making the decision to go full-time farming, he stressed. Be well versed about the risks to the operation and know how you plan to deal with them. Understand the farm’s financial situation and its risks.
“First and foremost you’ve got to generate an income. If you can’t do it to the point of viability, then ask yourself what you’re doing.”
BUSINESS PLAN
One of the realities farm entrants must face up to is need for a business plan. And it can’t be just “in your head,” or you’ll get sidetracked. Have a written plan, he told the seminar. “If you’ve got nothing, it tells the tale.”
New entrants must also need to be clear about identifying their own key strengths and competitive advantage for advancing the business. The days of saying you’ll work hard, or harder than everyone else around you are over.
“Ask yourself, ‘what do I do better than anyone else?’ You need some type of competitive advantage. If you don’t have that one component, ask yourself how you’ll survive.”
Shandro also advises farm entrants first spend a few years – a minimum of three to five – living and working away from the farm. It helps them mature emotionally and settle questions they may have about what else life might offer.
GROWING UP
And they’ll be grown up enough to address those emotional issues and areas of conflict that invariably arise in a farm business. “If there’s personal conflict on the farm and you’re coming back, ask yourself, ‘will things be better and why?’ Those pieces need to be solved.”
Finally, farmers waiting in the wings need to carefully ask themselves, “what’s the hurry?” as time passes and they’re still not in. Many sense what he describes as an “opportunity clock” is ticking past, Shandro said.
“The successor needs to be patient,” he says. If you are, you may find out that there’s more to be gained to stay out longer, he adds.
That said, founders can’t keep the succeeding generation waiting forever either.
“Somewhere around the age of 35, the daughter-in-law is going to demand her own nest,” said Shandro. “If she doesn’t have it, there’s going to be some issues.”
“Most of the unsuccessful transitions of family farms are because of power and control of the founder and the roles they continue to play.”
