“How many times do you get to practice farm succession? Once,” said Dick Wittman, an Idaho rancher and farm management consultant who led a day-long workshop during Commstock Investments’ Family Farm Masterclass in Des Moines earlier this year. “To keep a legacy alive, you have to figure out a strategy to get there.”

In farming, culture and tradition tend to be on a head-on collision with professional management, however.

“Managing a farm business has become a lot more complicated,” Wittman said.

That’s not just an Iowa issue. Farm transition planning is an international challenge.

-Messenger photo by Darcy Dougherty Maulsby
Dick Wittman, third from left, an Idaho rancher and farm management consultant, led a daylong workshop during Commstock Investments’ Family Farm Masterclass in Des Moines earlier this year. The workshop included lectures and small-group projects, including case studies.

“How many times does a transitional event become a terminal event?” asked Wittman, referring to major life changes like a heart attack, a major illness, a debilitating accident or retirement. “In our case, we’ve had 12 transitional events, but they’ve made us stronger.”

It’s possible to take the anxiety out of family business succession planning and set the business up for continued success, emphasized Wittman, a former banker who supervised Farm Credit operations in 17 states early in his career. “Proactive succession planning is a choice, and it helps you manage uncertainty.”

Wittman, who is now the board chair and former manager of a 20,000-acre dryland crop, cattle and timber business in northern Idaho, offered seven tips to make strategic planning and succession planning easier and more effective.

“I’ve worked with thousands of farms coast to coast,” Wittman said. “When I came home to farm and started my consulting business in the 1980s, I had to practice what I preach.”

1. Establish core values, a mission statement and vision statement. While all these things may sound a little touchy-feely, they are substantive issues that form the foundation of any successful business, Wittman said. Core values are the fundamental beliefs and principles that guide your behavior, decision-making and overall direction for the farm. Sometimes called non-negotiables, core values can include honesty, integrity, innovation, a commitment to professional management, open communication, environmentally-conscious farming methods, accountability, creativity and more. They influence the mission statement, which should concisely describe: (1) the key product or service the business offers, (2) the target market or primary customer, and (3) the primary business objective to be accomplished. “The mission statement can be a guiding torch to test the legitimacy of every goal, strategy and action plan implemented in the business,” Wittman said. “If any farm activity or decision appears in direct conflict with the mission statement, either the activity is ill-advised, or the mission statement is incorrectly stated.”

The vision statement defines where your business will be at the end of the journey, Wittman said. Every vision will be unique to the farm. “For many farm families, their vision is to be financially secure at retirement and position the business so potential successors are ready and willing to continue the legacy.”

2. Assess your farm’s culture. How do you measure how you’re doing? Try a culture audit, Wittman said. “One of the biggest changes I’ve seen in agriculture in the last 20 years is the importance of culture,” Wittman said. Workplace culture refers to the shared values, beliefs, attitudes and assumptions that team members within an organization hold, shaping how they interact and behave. Use three adjectives of your choice to describe the current culture in your farm business, Wittman said. They might be “tense,” “avoidance,” “confrontational,” “hostile,” “unprofessional,” “chaotic,” or “resentment” if things aren’t working well. Also select three adjectives you wish described your farm’s culture, like “collaboration,” “harmony,” “compassion,” “open-minded,” “focused,” “respectful,” “equal,” “communicating,” or “teamwork.” Score your farm business on “living it” versus “aspiring to” when it comes to culture. Have a team discussion on the results, as well as the causes of poor scores. Have an action plan to improve, Wittman said. Let your mission statement, vision statement and core values help guide the farm’s culture.

It’s also useful to have everyone involved in the farm business take a personality test, like the DISC behavioral assessment. This helps people understand their natural behavioral preferences and tendencies. Assessments like this can help improve teamwork, communication and productivity in the workplace, Wittman said. “A self-assessment tool can be much more helpful to show someone they’re not a manager than just telling them, ‘You’re not a manager,'” said Wittman, who noted that these tools can help determine the right role for each person in the farm business.

3. Define structures. Passing a family-owned business along to the next generation isn’t easy. The data show that half of family businesses fail to go to the second generation, and barely 10% pass to the third generation. Wittman noted there are often three stages of a family business, including 1.) owner-managed, 2.) sibling partnership, 3.) cousin collaboration. “What stage you’re in has a lot to do with building an optimal business structure,” Wittman said. “The journey of a family business begins with the founder in survival mode, followed by professional mode that might include some non-family management. That’s when a more formalized structure and job descriptions become more important.”

4. Use written job descriptions. You can’t delegate what you can’t define. Written job descriptions provide clarity and pinpoint accountability for team members. Job descriptions also help new hires focus on qualifications and skills. In addition, job descriptions double as a guide for training and work assignments, plus they provide a basis for performance appraisals, Wittman said.

For appraisals, consider using the “5 Lists” technique, where the supervisor and the employee(s) each answer these 5 questions: 1.) What strengths do you bring to this operation? 2.) In what areas do you need to improve? 3.) What can I (supervisor) do to help you do a better job? (Then the employee and supervisor should compare lists.) 4.) What personal development steps will you take to improve performance and skills? 5.) What are your key goals for the coming year?

Also, don’t forget to address financial compensation in a professional manner. Wages, crop-share arrangements and other payment arrangements are just one part of the equation. “Farmers often don’t account for ‘invisible’ compensation, like free lodging, free meals or the use of the farm pickup,” Wittman said. “Each dollar of these benefits is worth twice as much as W-2 dollars.”

5. Put things on paper. It’s not enough just to think or talk about these farm management topics. “Getting this stuff out of our heads and on paper is critical,” Wittman said. “If you don’t deal with this, I guarantee you’ll have conflict.”

6. Distinguish between strategic and operational planning. Farmers tend to be opportunists and reactionaries, whether that means reacting to the markets or the weather. While operational planning (specific, short-term activities) is important, so is long-term, strategic planning. “Do you have a clearly-defined strategy for growth?” Wittman asked. “Ask questions like, ‘How did the business get to this point?” and ‘Where do we want to go in the next three to five years?'”

7. Craft a policy to deal with your blessings. Proper business planning helps the farm generate profit. The profits beyond the budget are financial blessings, Wittman said. Instead of letting all that money sit in a bank account, have a plan for how to maximize that money, whether that’s through investments, charity or other options.

All these professional farm management strategies are more important than ever, Wittman stressed. “We’re in a world with totally different dynamics than 50 years ago. When you don’t get these farm management issues right, you may destroy a business, along with family ties and other important relationships. Professional management is a key to succeeding and getting the next generation involved in farming.”