Jim Casler
Jim Casler
North Coast Ag Advisors
Family Business Planning

231-218-7525

Know Your Numbers. 
Know Your Business.
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Get Organized & Delegate

9/27/2014

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Organizational_Management_Roles_Responsibility_Jim_Casler_Business_Management
We began our journey together in February 2013 with some broad and general topics of discussion about succession planning for family businesses, including personal finances, time horizons, on-farm and off-farm family concerns, generational differences, your planning team and some general steps of the planning process.  This past summer has been devoted to the key to long lasting family farms (and businesses in general) with introducing the concept of developing and maintaining a management system --  a way of doing business.  These discussions began with foundational items that explored your business philosophy, vision, mission, goals, etc and most recently finished-up with a communications platform for your family business, including a code of conduct, meeting schedules, conflict resolution and personal accountability
How Decisions Get Made and By Who
Now is a good time to move into another phase of your management system that explores the concept of how your family business is organized…how decisions get made and by whom?  There are multiple reasons why this is becoming increasingly more important in today’s modern agriculture.

A bigger and more diversified operation with multiple entities is commonplace in today’s agricultural world.  This is simply a matter of survival which requires growth to remain competitive.  Certainly growth can come in many forms, but suffice it to say that the capital intensity and high-tech nature of modern agriculture demands more and more skills than in years past.  As farms grow, more partners and owners work together.  This increased complexity requires a more defined organizational structure.
Today’s “Next Generation” has choices.  Years ago, a college education was not necessarily common on the family farm.  Today, college educated children, grandchildren, nieces and nephews are very common and have prepared them for many more opportunities other than simply “returning to the farm”.  That can no longer be assumed and successor generations can no longer be expected to come home to be laborers.  Your higher educated children want to apply these specialized skills, participate in management and decision-making and eventually participate in ownership in the family business, but only if the right opportunity exists in your family business.
career_choices_job_opportunities_business_manabement_consulting_jim_casler
The "Next Generation" of college educated farm heirs have career choices.

"Today’s successful farm managers 
are increasingly more skilled at managing people, resources, technology and information."
The evolution from a management system with a clearly defined boss and decision-maker to a system that defines specific roles, responsibilities and authority within your family business is key to being able to attract and retain today’s more educated and technically competent family members and employees.  Otherwise, they will go somewhere else.  While it is still a requirement to be a good producer, today’s successful farm managers are increasingly more skilled at managing people, resources, technology and information…not just crops or livestock.
Developing a process for improving your business planning including personal development plans for your team, standard operating procedures, setting policies and collecting, analyzing and responding to ever increasing record-keeping systems are a few additional areas to explore that will help further systematize your business in order to facilitate a management transition for your family business.  Once management is transitioned, ownership transition is within reach.  If you recall, the most successful transitions start with transferring responsibility, then management and eventually, ownership.  We’ll begin with a short segment for today and continue with this next phase of discussions in subsequent posts.

Transferring Responsibility - Delegation
To keep things simple, there are only a few questions that must be answered: 
  1. What are the main roles for each person in the business?
  2. Who makes the decisions in each area of responsibility? 

It has already been established that today’s agriculture is too complex for one person to be technically skilled to handle all areas of the business.  At the same time, making everyone responsible for everything is a fool’s theory.  So, we must specialize and divide areas of responsibility.  A common client question reasonably follows:  “How do we structure things and keep everyone happy?”

Well that’s the $64,000 question!
"I'm going from doing all of the work to having to delegate the work - which is almost harder for me than doing the work myself.  I'm a lousy delegator, but I'm learning."



- Alton Brown
One of the hardest skills to learn is that of delegation.  In general, today’s senior generation farmers were strong, do-it-themselves, sole operators most of their adult lives.  For management to transition smoothly, learning to delegate is some of the hardest work that these successful business men (and women) will ever need to perform.  It’s a skill that can be learned, just as any other.  So, if the will is there, it can be done.  A simple process for delegating duties is to:
  • Define job areas where decisions need to be made on a recurring basis, whether daily, weekly, monthly, etc.
  • Divide duties into groups of decisions that would require common skills and abilities (field operations, finance, marketing, livestock care, etc.)
  • Analyze individual qualifications and match them to the qualifications required for the various areas of responsibility.

Simply stated:  
  • Decide what decisions need to get made.  
  • Group “like-kind” decisions together.  
  • Find the right person to make those decisions.
Next time -- a discussion about the need for job descriptions, performance reviews, guidelines for future leadership and how to come up with a plan to transition management.


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Code of Conduct - Outside Activities

8/16/2014

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Code-of-conduct-behavior-communication-policy-family-business-jim-casler
A Communications Pledge helps everyone understand what behavior is expected and valued.
A Code of Expected Behavior (or Code or Conduct or Communication Pledge) is a starting point on how everyone wishes everyone would communicate with one another, what is expected and acceptable behavior and what is not.  

Your business has a standard of conduct, whether you know it or not.  One way or another your family business communicates its values, acceptable behavior and criteria for decision-making every day, whether it is in writing or not.  The way you and your teammates talk with each, how you share information and how decisions are made already exist.  Whether they are deliberately planned or just happen and whether they are desirable and productive are a matter of chance. 
When the family farm was owned by one family member, communication was generally “one-way” and therefore, fairly easy.  As more successors and/or partners join, or contemplate joining, the family farm business, communication and behaviors can get more complicated.  This Code of Conduct and the process of developing it helps increase the appreciation and recognition for everyone’s individuality.  It helps ensure that behaviors are something mutually agreed upon rather than imposed by senior leadership.  It provides a guideline for more constructive and productive interactions.

As with most things in life and business…things change.  Therefore, these things are not written in stone and can be edited as time marches on.  If you have been with us for a while, you know that this article is only about one component of your family farm’s communication platform, which in turn is an important part of creating a professional management system for your family business
"Circumstances are beyond human control, but our conduct is in our own power."

- Benjamin Disraeli


As with the foundational vision, mission and core values statements, a large benefit to creating this agreed upon Communication Platform is the time spent working with one another, learning more about your partners and future successors and helping keep each other accountable for what everyone states they want to accomplish (vision), how it will be accomplished (mission) and under what philosophical belief system (core values).  The key is that you work on this together and reach a consensus.  It builds trust.
expected-behavior-code-of-conduct-family-business-communications-platform-jim-casler
A Communications Pledge, or Code of Conduct, is also a reflection of your values in action.  Your behaviors reflect what you value.  By working with one another on this project, it offers team members a chance to develop a written collection of the rules, principles and expectations about behavior and relationships that they consider significant and fundamental to the successful operation of your family farm business.  Also known as a Code of Conduct, it can spell out these standards and help further systematize your professional management system.  How this is finally developed is up to you…it’s your family business.  To help get you started on this exercise,send me an email requesting a sample Code of Conduct, a Communication Pledge or both.


family-business-sharing-investment-opportunities-jim-casler
Outside Business Activities -- Another component to consider is your team’s policy in regard to individual owners’ (or potential owners) outside business activities, outside investments or their possibilities.  Ever thought about that?  How is that handled?  Ahhh…good question Grasshopper.

For example, is it acceptable that a successor in a senior management position takes on a major commitment in a voluntary role with an industry association?  Yes, no, maybe.  If it takes time away and significantly impacts job performance and the business, maybe not.  If the activity complements the business and leads to further education and networking opportunities and the business can handle the departure, then maybe it should be pursued.  

How about sharing in or simply disclosing outside investment opportunities?  Full and open disclosure among business partners seems prudent.  But, if you have never discussed it, how can everyone be on the same page?  You can’t be, necessarily.  

"The most successful multi-generation family businesses share outside business activity and investments with one another. "
The most successful multi-generation family businesses share outside business activity and investments with one another.  Oftentimes, they invest together.  Is that mandatory?  Of course not.   So, why is it important and generally a good practice?

How would you feel if your business partner invests in something, doesn’t share it with you, then makes a killing and now has millions and millions?  Of course you would be happy for him…but there might also be a little bitterness.  When big discrepancies in personal wealth develop between business partners, especially siblings and cousins, it can become more difficult to keep the team together.  There is also the trust-building factor that is accompanied with the sharing of outside investment opportunities.  Sharing helps create and foster the spirit of generosity, “team” and looking out for one another. 

These were some simple examples of outside business activities to be discussed and agreed upon.  If you put your mind to it, I am certain you could come up with a dozen other areas.  

So give it a whirl.  See what you and your family business team members come up in these two areas of your farm management system – A Code of Expected Behavior and an Outside Business Activity Guideline.  While doing so, try to pay attention to the benefits of the actual process, as much as the final prepared documents.  Because that is where the real value is derived…working together.  Good luck!

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End Boring Meetings

8/9/2014

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Last week we began a series of discussions about a Deliberate Communication Platform for your family business.  Namely... 

"A prearranged and agreed upon way in which information, ideas, opinions and decisions are shared among the various stakeholders in your family business.” 

Again....and why did I start that discussion?

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A Deliberate Communications Platform

8/2/2014

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A Deliberate Communications Platform.  
What the ...?

Family-Business-Communication-Planning-Jim-Casler
What is a “Deliberate Communication Platform”… Jim!  Let’s look at a dictionary definition to begin this discussion.  Actually, let’s begin with a thesaurus instead.
  • Deliberate also means Thoughtful, Slow, Unhurried, Measured, Considered, Methodical, Purposeful, Conscious, Intentional, Calculated or Planned.  
  • Communication is the exchange of thoughts, opinions or information by speech, writing or signs.
  • Platform also means Policy, Proposal or Program
Your Deliberate Communication Platform could then be described as “the policy or procedures by which your family business partners and team members share information and talk to one another”.  What the…?  “Just say it man!  What is all this mumbo-jumbo?”  I know, I know.  Seems rather academic doesn’t it? 

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What Is At Your Core?

7/19/2014

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Statement of Core Values or 
Philosophy of Operations Statement

The final component of developing the foundations of the management system for your family business surrounds the beliefs and behaviors that you intend to follow or keep sacred in managing your family farm business. Specifically, a Statement of Core Values or Philosophy of Operations Statement.

In order for your family business to ascend towards its vision, core values must be clearly identified and communicated.  A well-developed Statement of Core Values will make it clear to the reader and your team whether your future plans for growth are reserved and conservative or aggressive, whether your priorities are based on the “here and now” or whether you value “the long term”.  Your Statement of Core Values also answers the question or how members of your family business should behave toward one another and your customers and vendors. 

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Mission.  Impossible? Nah!

7/12/2014

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Your mission, if you choose to accept...

Vision-Mission-Core_Values_Statement_Business_Planning_Jim_Casler
Let’s begin with a quick review of the foundational elements of your family business management system; its vision statement, mission statement and core values.  We explored the reason your family farm exists and your “BIG WHY” with your vision statement that is Simple, Clear and Stimulating (SCS link).  

There are two remaining areas to explore and to help you develop the foundation to a long lasting family business and your management system:  Mission Statement and Core Values.  Let's explore mission statements a little further.

It is essential to understand how you are going to realize your family business purpose and attain your vision.  This is the function of your Mission Statement.  Many times, mission statements and vision statements are used interchangeably.  These are two distinct statements that serve two different requirements for your family farm. The mission statement clarifies and explains what the members of the organization will actually do to achieve the purpose and vision.

Carrying out the mission statement on a consistent basis helps your business achieve the purpose and pursue its vision.  I know it might be a little confusing, but your purpose, vision statement and mission statements all build upon each another and point everyone in the same direction.  There is a great amount of synergy that results by giving your team a clear sense about the principal role that they play.


"Outstanding people have one thing in common: An absolute sense of mission."

- Zig Ziglar


From a nuts and bolts standpoint, your mission statement is a clear and concise declaration about your business strategy that describes:

(a) the key products or services to be provided (the what), 
(b) the target market or primary customer (the who), 
(c) the primary business objective to be accomplished (the how) and,
(d) what value your are bringing.  
If your mission statement fails to describe these elements it can help create ambiguity about the basic purpose of your family business and what you hope to accomplish (vision).  Your company’s mission statement will most effective if it is written so your customers understand your purpose and how you provide value to them.
Additionally, and possibly most importantly, your mission statement ought to be the daily driver of action for your team and as such, it provides a “check and balance” for every goal, strategy and action plan that is undertaken.  If a business activity or decision conflicts with the mission statement, either the activity or decision is misguided or the mission statement is incorrect.
"If you have a family mission statement that clarifies what your purpose is, then you use that as the criterion by which you make the decisions."

- Stephen Covey



Your mission statement doesn’t have to look the same as everyone else’s.  Figure out what’s important to you and your clients and go from there.  Here are some examples of clear, concise and simple mission statements:

“At Chateau de Pahrump we grow grapes, make super-premium class wine and provide Northern Michigan hospitality with exemplary service from our one-of-a-kind site on Michigan’s Leelanau Peninsula.  As good stewards of resources, our goal is to operate a profitable and ethical business that utilizes new technology and provides enjoyable work conditions with opportunities for advancement and personal growth. “

“Our mission is to transform natural resources into high quality livestock for domestic and foreign customers in a way that will provide a fair rate of return to our owners, a safe and satisfying working environment and be capable of providing income for future generations.”

“Our mission is to help connect people who want to sell a business with people who want to buy a business. We provide business owners and brokers with flexible options for listing their business online. For buyers, we offer helpful tools such as our saved listings feature and customized email alerts to make finding the right business easier.”


After you have developed your family farm’s mission statement, you will be ready for the final part of the foundational elements for your family business, core values. 


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Got Reason?

6/21/2014

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Reason_For_Business_Existence_Purpose_Vision_Statement
So we talked about “Vision” last week and further explored the notion that your vision statement should answer the question, "Where do I see my business going in the future?”….what is the ultimate state of our family business in the future?

Before we further examine and put down on paper where your family business is going, let’s take a slight detour and first answer the reason why your family business exists in the first place.  You need to know why you exist before you can determine where you are going.  Does that make sense?  I hope so.
Is it that crystal clear to you, your family, employees, community, vendors, etc. why your business exists?  Is everyone on the same page…without hesitation?  I didn’t think so.  This is foundational stuff and takes a little thought and effort to seriously contemplate.

To help get you started, let’s look at the necessary first component required for developing your compelling vision statement for your family farm business.  The reason for your business.  Huh?  Remember, a well-crafted vision statement serves as a guide to help everyone and anyone to understand what business you are really in beyond just the product or service you provide.
The legendary Walt Disney certainly knew the reason for his theme parks when he began and developed a vision statement:  “To make people happy”.  All theme-park operations, people and training are with this idea of bringing happiness to millions of people around the world.

While the Walt Disney theme-park vision is short, it indeed let’s everyone know the reason this business exists.  When you work on creating your vision statement, start with a quick, simple, clear reason for the existence of your family business.  It does not have to be a lengthy and sophisticated statement that sounds all Madison Avenue.  Quite the contrary.  If you cannot do it in a relatively short statement, say 11-22 words, you’re doing it wrong.  Ha.  Think about the basics…the core meaning of your family business.  What do you think of this statement of purpose?


"If you don't know where you're going, it doesn't matter if your alarm doesn't go off in the morning."

- Denis Waitley 
“Enhancing your family’s well-being and the financial health of your business.”

Oh, I like it!   Wait.  It’s already taken.  It’s the purpose for my business advisory services.  Ha.  It’s pretty clear, short and sweet…don’t you agree?

So, what business are you really in and why does your family business exist?  Try not to just rush through this exercise for the sake of checking it off some list of things to do.  This is a core element in what will become your vision statement:  the foundation upon which your entire family-business operations, policies, decision-making, investments, etc. are all derived from.  Once you have clarified, on paper, the core reason for your family business’s existence, you will be ahead of 70% of your industry peers and developing a stronger foundation for your continually successful family business or family farm.


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