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Get to know the six dimensions of enterprising families

Jonathan Small for Progressive Dairyman Published on 30 September 2016

There is a saying that goes something like this: “When you are up to your ‘you-know-what’ in alligators, it is hard to remember that the original plan was just to drain the swamp.”

It is the same with farm succession. Working, as I do, with many farm families going through their transition, certain common features and challenges are apparent. One of these is: Everyone gets so fixated on the challenge of moving from one generation to the next that they lose sight of the big picture. Indeed, you might ask, if that isn’t the big picture, then what is?

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The answer is: There is a bigger opportunity to establish something that not only transfers between the two generations but also continues to generate family wealth and opportunity for many generations.

Most farming parents have, at one time or another, daydreamed about something that looks like that before the alligators closed in and just getting it to the next generation became the sole focus.

Picture, for a minute, your family farm as a broader thing – a family enterprise that might still be rural-based but which has grown and developed and is able to offer opportunities to develop personally, prosper, build equity and gain fulfillment to the family at large, even if some choose not to be farmers.

Given where your business is today, can it be the basis for something bolder and more imaginative that meets the aspirations of many in the future?

That goal requires a different way of viewing the business and its people. Two people, Joseph Pistrui and Tim Habbershom, hypothesized in an article that transgenerational wealth creation required a change in mindset. Along with Michael McGrann at Saint Joseph’s University in Philadelphia, they developed the idea of the Six Dimensions of Enterprising Families.

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It can seem like a challenge to apply this concept to a family farm, where the primary asset is regarded as a legacy asset, but applying the six dimensions concept to the way you look at your farm is a way to “self-assess” whether you are doing the right things to ensure long-term success.

Ideally, you are working on improving in all six dimensions at the same time in what might be likened to a balanced scorecard. Potentially, neglecting or failing in even one dimension could undermine success in all of the other five. So what are the six dimensions?

1. Leadership dimension

Farm families typically invest very little beyond “on-the-job” farm training. Indeed, the traditional approach – which is beginning to change – of choosing the future leaders by birth order or gender is a very poor way to secure not only the long-term future of the business but also the financial plan of the selection committee (Mom and Dad).

Leadership development has to be re-thought. It begins far earlier than you could ever imagine and is worth a lot more of your time and your money to get it right.

2. Relationship dimension

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This is really about effective communication and breaking out of the usually long-established and traditional roles of parent and child and progressing to the adult-to-adult communication needed between business partners as you start to own and operate a business together.

Changing the habits of literally a lifetime is a challenge for everyone during the “farming together” phase that is often the preamble to the kids taking over.

An even greater challenge for kids is: The moment they adopt a parental style with their siblings (because that’s all they have learned, having watched Mom and Dad run the business that way when they were small), the wheels come off the bus and the business splits. Indeed, the mere prospect of this has most kids (much less cousins) rejecting a sibling partnership altogether before discussions can even begin.

3. Performance dimension

Is your business performing at the level necessary to sustain the transition, much less to build truly long-term success and unlock the huge advantages enjoyed by family business over non-family business?

Sometimes it becomes apparent in the process (all too often at too late of a stage) that viability is an issue that supersedes the challenge of the transition itself. If the business viability isn’t attended to, succession becomes moot.

4. Vision dimension

The most common reason for family business breakups (and only 30 percent typically survive intact from generation to generation) is the lack of a common vision between the owners. Do you have a unifying vision of the future? Have you ever discussed that within the family, much less tried to get it down in writing?

Assumptions on this subject are your enemy, and you cannot afford to base your long-term plans on them. Owning and operating a business with people all pursuing but never sharing their goals and vision is futile and ultimately destructive.

5. Strategy dimension

Does the business know where it is going? Strategy can be described as your long-term plan that aligns with the goals of the owners. Try to imagine what you would like Forbes to say about you and your business in 20 or 30 years.

Ultimately, a strategic plan enables you to align your shorter-range planning along a common axis leading towards the strategic objectives and, above all, have everyone working on the same plan.

6. Governance dimension

This can seem an alien concept on a family farm being operated by Mom and Dad. After all, you are all the governance you need, right? However, paying attention to and establishing good governance, which will seem very formal, is a key secret of success of multigenerational family businesses.

By the time a family business starts to be owned by cousins, some form of professionalization at the governance level will be a critical success factor and will reward the family immensely.  end mark

Jonathan Small provides management consulting services to all types of family farms. Small spends about half of his time actively involved working with farm families and their transition plans. Email Jonathan Small.

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