Interactive session reviews challenges in business transition amongst families
Worland – University of Extension Educators Caleb Carter, John Hewlett and Jeremiah Vardiman spoke with producers at WESTI Ag Days in Worland about issues they face in their own operations related to the transfer of business management on Feb. 19.
Collecting anonymous answers from the group, the Extension team and audience looked at how opinions differ between older and younger generations.
The Extension team asked which families had regular discussions about financial information and bank statements, which families had an outlined process for conflict resolution, what the most important technologies are in irrigation and more.
“We often see that the founding generation believes they encourage family members to practice effective communication skills, but the next generation folks don’t necessarily agree,” commented Hewlett. “Just because we think it’s happening doesn’t mean those on the other side of the issue agree.”
Vardiman also reminded producers that stressful situations, such as a death in the family, can disrupt how well people communicate and how families work together to solve issues.
“The issues surrounding the transfer of the estate are one thing, but we should also be talking about the management responsibility and how to bring the next generation in to become more involved on a day-to-day or year-to-year basis,” Hewlett explained.
Individuals have their own perspectives on certain issues, while the family dynamic may not always align with those same wants and desires. The Extension team acknowledged how uncomfortable certain conversations can be.
“We may also have non-family members or more extended family who are involved and included in the business but not part of the close-knit family,” Hewlett added.
All of the interconnected relationships impact management on the operation and how business decisions are made.
“There are a lot of different connections to put together to decide who is where and what roles and responsibilities have been assumed versus those that everyone wants,” he continued.
Breaking down the issues into three different categories, the Extension team reviewed business issues, communication and production management.
Business issues relate to topics such as the formalized structure of management and how business transactions are conducted.
“Where is the checkbook at? What loans need to be paid and when?” Vardiman asked the group, inquiring how many family members would be able to answer those kinds of questions.
Communication topics included ways in which business information is shared amongst family members, while remaining sensitive to the varying perspectives across age, gender and roles within the business and family.
One of the audience members reminded the group that having a centralized location for all of the relevant paperwork and financial information is helpful. In her own experience, a family member who passed away had been the only one who knew about a particular piece of land that was still under a loan. Once he passed, no one knew there were payments that needed to be made.
“Communication at the business level happens at a different level then when we are talking one-on-one,” related Hewlett.
He also asked, “How many families support and encourage family members to improve and practice effective communication skills?”
Turning to production management, the Extension team asked the audience to consider who in their families manages specific tasks related to livestock, cropping, labor or other production activities.
“Who is personally involved in making management decisions on the operation?” Carter questioned.
Two-thirds of the older generation participating in the discussion indicated they were directly involved, while about 50 percent of the younger generation expressed they felt directly involved.
Carter then presented a series of questions about which management practices each individual preferred in the context of his or her farm or ranch.
For example, he asked, “What is the most important method for marketing calves under current conditions – the sale barn, video auctions, forward contracts or direct sales?”
The group was split almost by thirds amongst forward buying and direct sales, the sale barn and video auctions.
Carter encouraged family members to talk with each other about why they preferred certain methods, discussing which advantages and challenges they perceived for each option.
One of the audience members noted that when the older generation in a family opposes an idea, it isn’t always because they are stuck in their ways. Sometimes, she shared, they have experience that has persuaded them in a particular direction.
Carter echoed her comments saying, “We need to talk about why we do things a certain way and share what happened when we tried something that didn’t work.”
Hewlett reminded the group that going through a transition means letting go of some of the control and allowing new business managers to make mistakes. The goal, he said, is to let the incoming generation make some small mistakes instead of leaving them to make big mistakes that could jeopardize the whole business down the road.
“Transferring management responsibilities is a lot more likely to get done successfully if we plan for it,” he said.
Natasha Wheeler is editor of the Wyoming Livestock Roundup and can be contacted at email@example.com.