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Family Business Matters 08/30 07:26

Family Business Matters 08/30 07:26

Prevent Fireworks

Attention to three areas can help keep people on the same page and prevent
deeper conflicts from tearing the fabric of family relationships.

By Lance Woodbury
DTN Farm Business Adviser

In helping families communicate about the future of their farm or ranch, we
often run into conflicts between family members. These conflicts come from a
variety of sources, such as past behavior or different expectations about how
situations should be handled.

A seemingly rude comment, the lack of an invitation to a business meeting or
family event, going around someone to get something done or changing plans
without notification are just a few examples of what can lead to fireworks in
the family business.

Conflicts also arise from misunderstandings, basic assumptions and different
visions about the future of the business. These conflicts can go deeper,
shaking the foundation of the entire family business partnership and sometimes
resulting in the unwinding of the enterprise.

Expecting there will never be such conflicts in a family business is naive.
However, attention to a few important topics sooner rather than later can help
prevent these deeper conflicts from tearing the fabric of family relationships.
Consider the following three areas that help keep people on the same page.


Family members in different parts of the business, such as crops, livestock
or the office, or even off-farm owners, have access to different levels of
information. Someone in the office might have information related to finances.
One or two people might be focused on grain marketing decisions. Someone
working outside may have better information on equipment needs or crop
conditions. Many people have some knowledge of a part of the family enterprise.

To work well together as partners, it is important that family members have
a common level of understanding about key issues affecting the business. Not
everyone needs to know every detail, but most current and future owners benefit
by having a grasp of key business issues, problems and projections. Taking time
to share that information helps reduce the information gap and builds a shared


Participating in a family farm or ranch offers a variety of vocational
rewards. Growing crops, feeding others, being outside, working with family and
caring for animals can be deeply satisfying. But, as a business, people also
expect some level of financial reward. A living wage, basic benefits, a return
on investment, growth of one's net worth and a balance of work and personal
time are a few of the expectations your partners may have.

With a family's desire to work together coupled with those intangible
rewards, many family businesses do not formalize the financial rewards or
expectations the same way a non-family business might. Because rewards are not
formally discussed, dissatisfaction grows, and a chasm develops between
expected and actual rewards. Spelling out wage, benefit, dividend and capital
distribution policies helps to prevent financial dissatisfaction from breaking
up the partnership.


There is often generational momentum to continue operating, or at least
owning, the family farm or ranch. But, as more people inherit ownership and the
number of partners grows, sparks can fly. Many of these new partners didn't
make the original decision to be in business together -- their parents made
them partners. It is helpful, every so often, to review the reasons you want to
continue in business together. If someone wants to exit, it is easier to bring
it up if there is a regular pattern of evaluation.

Partnerships are hard work, and many people try to avoid partnerships
altogether. But, family ties, the cost of land and the generational nature of
our industry make partnership maintenance an important activity. Sharing
information, clarifying rewards and reminding one another of the reasons for
your partnership will help prolong and enrich your family business partnership.


Editor's Note: Write Lance Woodbury at Family Business Matters, 2204
Lakeshore Dr., Suite 415, Birmingham, AL 35209, or email


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