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For the past 35 years, my wife and I have worked hard to build a progressive and financially strong farm operation. We have two adult children who want to come back to the farm. Our daughter is working for a seed company, and our son is graduating college this spring. To justify two more paychecks and benefits, my kids think I need to grow the business by renting more land and upgrading equipment. But then there’s my wife. She has been employed off the farm and is retiring next year. She also has worked by my side on the farm. She wants to reduce our workload, have less stress and debt, and travel. What am I supposed to do?
– Submitted by email from J.D.
Solution:
You are using a powerful word — “I,” not “we.” With both the business team and the marriage team involved, much is at stake. Do you know what you, your wife, your daughter, and your son really want? You all have much work to do before decisions are made.
Begin by utilizing good business plans: one that describes the current setup, and another that describes the future if your children are employed by the farm. Most business plans include a mission statement (core purpose of the business); brief history to give perspective and demonstrate stability; description of the business (a completed farm overview); current structure and detailed ownership; list of key players and their roles (leadership, management, labor, advisers); goals; risk protection and insurance; financial information and documents; and succession plan. The plans are based on accuracy and transparency, and on best- and worst-case scenarios.
Also, each family member must answer:
- Income needs: What is the actual amount of money needed annually for living?
- Source: How much of that need is expected to come from the farm business?
- Affordability: How does that fit into the current and projected cash flow?
- Debt: Is financial security provided for debt? • Retirement: Is financial security provided for the senior generation?
- Buy-in: Is everyone (dad, mom, daughter, son) 100%committed to the changes and working of the plan?
The answers are a first glimpse of the viability of supporting multiple family units.
All of this assumes the next generation has the character, personality, edu-cation, skills, and experience needed by the business. Remember, parents don’t “bring in the kids.” Owners, leaders, and managers hire worthy employees earning the right to labor, management, leadership, and potential ownership.
Then there’s your wife. She may be thinking, I’ve been providing income and benefits for this family and working by your side for 35 years. When is it my turn? Do you even hear what I want? Do you also want reduced workload, less debt and stress, and to travel?
If so, does expansion make sense? How does this reduce your day-to-day need to be at the farm? How are you reducing or transitioning personal debt commitment for business loans? Does the plan demonstrate financial stability for the goals important to both of you?
Before you rent more land or upgrade your equipment, tether yourself to the paperwork and advisers that will foster informed decisions and provide alternatives. Include your spouse, daughter, and son in the process. Remember, just because someone wants to join the farm, doesn’t mean someone gets to join.
