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The slices are bigger if the pie is growing

Mark Andrew Junkin for Progressive Dairyman Published on 11 December 2017
Growing the pie

They say in the software industry that it’s better to own a slice of the watermelon than the whole raisin. Yet these city people don’t think the same principles can apply to a farmer.

These hippies talk about the family farm as if it is a thing of the past. Sure, the family members might own shares in a farming corporation instead of one individual owning the whole thing. But the fact is: We’ve never had a generation where the term family farm is more relevant.

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A hundred years ago, a farmer owned 100 percent of his 100 acres. The days of one person owning everything are gone. It takes more than $2 million to get into farming and, unless you win the lottery, you’re not going to come up with that yourself.

You’ve got to take what your parents built then increase the value of that corporation, and as you increase the value – just like a software company – then you earn extra shares.

Instead of splitting a small pie and not having enough to eat, you’ve got to focus on growing the pie.

I’m not saying that at some point, you don’t split the corporation. I’m just saying: Do it at the same time you’ve got two viable business entities that can support themselves. Grow it to a $20 million company so you’ve got two $10 million companies that can stand on their own feet.

Everyone says, “Brothers can’t work together,” and you’ve got to split up the assets between siblings. Sure, your accountant might be able to cash-flow it on paper given the best-case scenarios, but reality is reality, and the fact is: In the next decade, you’re going to actually experience worst-case scenarios you can’t squeak by with that level of debt.

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The reality is: If you want to be farming in 20 years’ time, you’ve got to get past your family dramas and learn to make working with family from a weakness into a strength.

You’ve got to figure out a way to learn how to make a business partnership work with both your parents and your siblings without every day being a living hell.

The root problem isn’t in the ownership structure but in the dysfunctional way your family makes decisions together and the way you work together. This dysfunctionality creates dysfunctional families and dysfunctional family businesses.

You need to improve how you work together so farming with family goes from a weakness into a strength. This isn’t a strategic option; it’s an indisputable truth.  end mark

Mark Andrew Junkin improves how farm families make decisions together in the years prior to farm succession. Get his book, Farming with Family: Ain’t Always Easy! at Agriculture Strategy or call at (800) 474-2057.

Mark Andrew Junkin

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