Owning and managing a family business can be complicated because you have the added difficulty of managing family members with the day-to-day operations. However, it’s equally a rewarding opportunity when a family work together to build a business.
There can be extra pitfalls along the way if you are the one leading the operation. Sprout Agribusiness has
worked with many farming families, and we have found a successful leadership style that comes out of these five areas:
1) Have a plan.
As a family, agree on a plan that outlines the overall strategy of the farm. Suppose you want to grow the farm
over time, outline how it will be achieved. Typically, this plan will also include ownership of the farm and how
you will transition between generations. The plan must be realistic with these goals, which is why we recommend our clients draw up three-year plans with rolling cash flow forecasts. It is important the plan is communicated to and understood to the whole family.
2) Create a structure.
It is important to create a sound business structure for the family farm. This structure should include the
formalities like business structure (company, family trust etc.) and employment contracts that clearly outline
roles and responsibilities. There should also be a clear understanding of what happens if family members fail in their assigned responsibilities. A communication plan helps pull these factors together and articulates the overall farm strategy, so everyone is informed.
3) Communication.
Communication is a critical component of success and is an area we often talk about with our clients.
Intergenerational communication can be incredibly complicated because each generation has a different
communication style. As a leader, you should be open and encourage family members to speak up when they
have an issue. You should also be clear in your communication style, so people do not misinterpret what you say.
4) Manage Conflict.
Following communication, conflict management is often an issue we see time again on family farms. It is crucial everyone understands how to manage conflict and that problems are addressed early on. As a leader, it is your job to bring people to the table and get them talking through their issues.
5) Be Decisive.
Being decisive is an important part of leading a family business. This includes making a call on who should or
shouldn’t be involved in operational meetings. For example, when older family members ask a young non-working member at university to be part of weekly operation meetings. The result is tension because they’re
given equal say to those who work on the farm each day. You can work around these issues by creating sub-groups within the family who are responsible for making specific decisions about the business.
This is a summary to give you general information on leading a family farming business. We can help you create a structure and plan and to help you implement leadership in the farm business.
Sprout Agribusiness is a professional services firm for the Australian agricultural industry that has a whole business approach to succession planning. They pride themselves on helping many clients set up a succession plan that allows the family to grow the business into the future.
For more information, you can contact your local Sprout Agribusiness representative via their website below.