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The Right Advisor is A Game Changer When it Comes to Succession

04/12/2019


Most farmers are proud, fiercely independent people that may not always welcome outside advice. While admirable in many ways, this lone wolf attitude is preventing many of today’s farmers from achieving long-term success. Now may be a good time to re-evaluate your opinion of external advisors and professionals and consider that many do actually provide a valuable service.

If you’re still skeptical, consider this: How many successful farming businesses imploded, exploded or split apart in recent years after attempting to transition from one generation to the next? The reason, in many cases, is because these farm businesses were still trying to run along traditional lines, assuming what worked in the past would work in the future.

Farming has changed dramatically in recent years and it continues to do so. Without professional guidance or up-to-date information on current trends, these family businesses were essentially flying blind. And they paid the price.

The game has changed

A very good family advisor once used a sports analogy to describe the evolution of the family business. In this analogy, the founding generation starts by playing a game of tennis — a simple, two-person game. And for the most part, they’re very good at it. After a few matches, they learn the rules and how to keep score and things run rather smoothly.

But when the next generation comes onto the court and wants to play, they have too many people for a game of tennis, so the game has to change. Everyone agrees to switch to baseball — which allows for more players and a bigger pitch — but it requires trading in rackets for baseball bats and a tennis ball for a baseball. They also have to learn new rules.

And this is where an advisor can come in handy. Not only can they tell you what equipment you need to play the next type of game but they can coach you on the new rules and let you know when imminent rule changes are going to be introduced. They can teach you how to adjust your strategy to succeed and show you where to change your focus.

The value of the right advisor

More often than not, farm businesses in transition struggle with the concepts of governance, leadership, strategic planning and decision making. They’re challenged by the idea of creating legal agreements and they have difficulty assigning roles and responsibilities. Communication is a major stumbling block and — almost always — the issues of fairness and compensation are left unresolved. Financial management, inventory management, marketing and human resources all need a greater level of attention than the previous generation had to deal with. This is where outside help can prove valuable.

To effectively leverage outside help, however, you first need to understand the role of the advisor. Contrary to popular belief, the purpose of outside help isn’t to provide all the answers. If an advisor does that, then implementation will likely fail because, as with any good coach, they can’t play the game for you.

Instead, the purpose of an advisor is to provide guidance. True, there are some things that require an expert opinion but, for the most part, these aren’t the things family farms struggle with. What most family farms struggle with are the “soft skill” issues — and these require a collaborative approach with a skilled advisor who understands the concept.

As with all sports, finding the right coach — one who both understands you and is able to get the most out of you — is no easy task. But if you’re thinking about transitioning your farm in the not-too-distant future, it will be worth your while to start the recruiting process. Because going it alone? Well, that’s not an option anymore. The game is just too complicated for that.

To find out if one of our advisors is a good fit for your farming business, contact an MNP Business Advisor near you.