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It was not long ago when farmers were expected to be able to ‘do everything’ on their farms. Farmers' broad skill sets and abilities were directly connected to their strong sense of independence. Today, things are changing and while the foundation of multiple management skill sets still exists, it is far less common. There is a truism in business that applies to farming; a business typically outgrows its management.
The prevailing wisdom now is that commercial-scaled farmers cannot be all things to all aspects of managing their business. For most of us, it is pretty difficult to change the way we manage our businesses. It is even more challenging for farmers because of seasonal production pressures. Stress (weather, finance, family) influences farmers to revert to long-held management patterns, so it takes a lot of discipline to adopt new management practices.
Yet another obstacle to changing management behaviours lies in the subtleness of growth. Fairly obvious perhaps, but a farmer should not try to manage a 10,000 acre farm the same way they managed a 1,000 acre farm. There is no light switch that says when you move from 4,999 to 5,000 acres, you must do this or that. The requirement to introduce new management practices is more specific to the individual than it is to increasing acreage. Ideally, management upgrades should be aligned with the demands associated with growth. So, what should you do?
First, determine the areas of your business that could be better managed and commit to doing something about it. Make a list of all the current management resources that you use. Some resources, such as your accountant, will be in place because of external reporting requirements. Others resources will be more ad hoc.
Next, assess your own management strengths and weaknesses. This can be completed with the assistance of one of your resources (accountant or management consultant or a lender) or through self-assessment tools. A helpful tip is to think of the management of your farm broken down into four main areas: operations (production), marketing (suppliers and consumers), human resource management and finance. Within each of those areas, make a detailed list of the management activities which are happening and/or should be happening on your farm.
There will likely be a gap between what you are presently doing, what needs to be done and what could be done better. Examining the gaps will help you focus on what external management resources are needed and what personal skill set development is required.
There is no one correct approach for filling the different resources required. Some resources will already be in place, while others may not be being used effectively. Your relationships with resources may vary from casual, one-off interactions to regular and periodic. Management advisors can help you with identifying and selecting your appropriate resources.
Introducing accountability into the relationships will result in better outcomes. Accountability brings discipline, which is absolutely required to effect changes in management behaviour. The accountability can be in the form of:
When structuring your management resources, it is important to think beyond the traditional measures. What resources do you need, or will you need, as your business grows or is transitioned? Perhaps you can share your resources. An example of sharing a non-traditional resource exists in the Eastern United States. A small group of farmers have gotten together and hired an agriculture economist. The economist, among other things, provides them with information on domestic and global economies, on government policy (affects agriculture production, markets, environment and labour) and on the financial sector (affects interest rates and credit accessibility); information that they use when making management decisions on their farms.
An appropriately designed and functional resource team will help farm families realize goals, increase the likelihood of success and minimize stress.
Terry Betker is a partner with Meyers Norris Penny LLP, working out of the Winnipeg, Manitoba office. He is director of practice development in Agriculture – Government & Industry.
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