Dairy Excel/Channel: Working things out: Family businesses face challenges

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In recent months I have had the experience of working with several dairy farms as they struggled with family business issues.

It always amazes me when I encounter yet another of the wide variety of approaches to family relations and business that have evolved over the years.

The best organized, most efficient farming businesses I have encountered have been family businesses. (More than 90 percent of farms are family owned and managed).

The ones with the most problems were family businesses, too.

Bernie Erven. Much has been written and many workshops and seminars have been presented by such authorities as Bernie Erven, Ohio State University extension specialist in the agricultural, environmental and developmental economics department, on the topic of family relations in farm business.

It seems that those families most in need of the message are the least likely to hear it.

I think this is because they are so disorganized they do not have time to read newsletters or attend management conferences. They just keep on doing things the same way while hoping that some day the problems (or problem people) will die, or decide to just go away.

In other instances, I think the families truly do not know what to do or else they tire of always having their initiatives blocked or criticized and ignored.

Differing families. Farm families are some of the most cooperative, loving, supportive people I ever met.

On the other hand, other farm families are some of the meanest, most uncooperative, downright nasty people I have ever met.

I think the old adage applies: “You get what you pay for!”

If you treat your parent, child or sibling with contempt or disrespect, you can expect to be treated that way in return.

But usually, if you treat your business partner or associate (family member) with respect, you stand a better chance of receiving respect and cooperation in return.

Problems beget problems. Farm families have come to me at various times over the years (some more than once) for assistance in solving problems with their businesses.

Usually, these problems are family problems that are viewed as business problems because the families involved are in financial trouble.

The people involved either do not realize that family relationships lie at the root of their problems or they refuse to admit it.

In other cases, they genuinely want to put a stop to the fighting, bickering and second guessing and start to get along with their business partners (family members).

In still other instances, the family is facing a changing of the management team, due to retirement, divorce, death or other changes in the family structure.

Getting help. Usually, the reason I am asked to help is because there are communication problems within the family.

Someone feels ignored, someone feels intimidated, someone feels taken advantage of, abused, not respected, hated, etc.

In many of these cases, the above feelings are well-founded.

The 40-year-old “little brother” is still the little brother to the 45-year-old brother. The 45-year-old-son is still “the boy” to the 65-year-old father.

In many cases, kids only get one chance to prove themselves.

If that opportunity doesn’t turn out the best, they never get another chance to take over management of the farm until the parents are too old (and too near death) to make a smooth transfer of the business and management to the next generation.

Fear of change and fear of relinquishing control of the business are common factors holding parents back from delegating responsibility and authority to children.

Communication is key. Usually the problems will not go away until the family figures out a way to get together and work out solutions together, a difficult process when people have been feeling ignored or abused for years.

This process often requires the help of an impartial third party who can help the family reopen lines of communication and reestablish feelings of being valued and cared about.

In other cases, the scars are so deep that family members decide to leave the business entirely.

It takes great courage to admit that you have been unfair or inconsiderate to a sibling for the last 15 years.

How do you convince your dad that although you have argued bitterly for 20 years, you still value and care for him?

Fairness. Farm families often have a difficult struggle with how to treat various family members when it comes to wills and inheritance.

Let’s just admit it up front: Kids who have worked the farm and raised their families there have a larger stake in the success and future of the farm business than siblings who have left to pursue other careers or farm in other business entities.

Popular opinion is that it is fitting and appropriate to give the son or daughter who stayed with the farm more of a share of the business than those who have not materially contributed to it’s growth and success.

Parents who struggle with these decisions should step back and look at the farm business as an ongoing entity that is separate from their estate.

It would seem fair to divide the estate equally, but consider that the farm business is an ongoing thing and not part of the estate to be divided equally among farming partners and non-farming heirs.

It’s difficult enough to bring about the transfer of a dairy farm business from parents to children, considering the IRS rules on sales of business property and the tremendous investment required for a profitable dairy.

Difficult relationships. Sometimes a son or daughter really does not belong on the management team.

A difficult situation is to be forced to “let Johnny go” from the operation because he causes trouble, doesn’t have the necessary skills, or refuses to pull his share.

I have seen family relations improve dramatically after such an action, because “Johnny” is no longer causing a problem and the family doesn’t have to feel bad about it any more.

On the other hand, I know of instances where such an action has caused a permanent split in the family.

Family questions. When I work with families I try to get them to answer the following questions: What is more important to you, the farm or the family?

Are you willing to try to communicate more effectively in order to improve the health of your business?

Are you willing to treat one another with more respect and set aside times to be a family without discussing the business?

After this, I encourage each family member (including in-laws) to frankly discuss how he or she feels about the business and relationships with the rest of the family.

I ask them to say what bothers them as well as what they appreciate about the other family members.

Results. This can be difficult and even explosive, that’s why it is often better to have a mediator help you by setting ground rules for the discussion and be present to help enforce the rules.

The result of this activity usually is that the family resolves to try harder to communicate effectively.

The management team begins to separate farm management from family relations.

Often, grudges and hidden issues are brought to light that are easily explained or discussed and reconciled.

Usually family members walk away from these sessions feeling relieved but not always.

There is risk when you bare your feelings, but it almost always results in improvement in family relations, improved communication and management of the farm business.

I am not a trained psychologist or mediator. I’m just trying to help the people I care about.

You should feel free to solicit the help of a trained professional.

(The author is an agricultural extension agent in Columbiana County. Questions or comments can be sent in care of Farm and Dairy, P.O. Box 38, Salem, OH 44460.)

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