Menu
Managing a family enterprise and farming business is highly fulfilling and it the same time challenging. It means to take leadership and decide well about input and output. It is a steady decision about resources, how to assure availability and where to put them the most efficient and effective way.
Business as usual should mean being busy and in agriculture it can of course mean seasonal peaks, but it should not and does not need to mean to be stressed throughout the whole year.
A well-managed business will allow the farmer and the farmers family to take their family time as well, during and aside the work done together.
The aim of this module is not to describe business management in detail.
It is about giving a basic approach to deal
The module will then focus on selected parts of business with significant chance to handle your daily business in a way promising the best possible chance to keep healthy as an entrepreneur.
To be able to make a meaningful and concrete outlook for the future you need to know your business today. This means you need to be able to describe your enterprise in 3-5 sentences, and you should be able to mention the basic numbers of your business ad hoc: numbers like annual turnover in a good year and in a bad year, profit in a good year and in a bad year.
If during peak season or just during any moment of the year strange feelings appear like: “I never see my children”, “I am on the farm 24/7”, “we do not have enough money”, “we will lose the farm”, etc. it is a first step to check the numbers for these issues:
Considering yourself an entrepreneur and not having a dashboard of the family enterprise in front of you (your brain, on paper, on screen) is not a good sign. Start to get in this situation of full information as soon as possible.
If data confirms your feelings, it will not be the end, but a good starting point based on real documents.
As soon as you know your basic, daily and seasonal situation and you can describe this situation in words and in numbers, then it will be possible to describe your goals and aims for the family enterprise as well. Think about naming numbers here as well: Return on sales, Cash Flow. Minimum Credit on your bank account. Sunday as family time.
To be able to build up a strategy you need to know where you want to go and where you start. You need the starting point and the goal.
To know where you stand today and where you want to be in some time in the future sets a good frame to work on the concept of how to get from the start to the end.
To decide about the tools, means and investments for your business development is a key role for the entrepreneur together with leading the daily business.
Within a concept you will describe step by step on how to move forward.
Agriculture is a business under uncertainty. There is chance and risk in all taken and omitted entrepreneurial actions. Farming perhaps is even a bit more unsecure than other sectors as it depends on the weather condition throughout the year.
Nevertheless, decisions have to be taken at some point in due judgement of input and output and the probability to reach success.
Depending on the complexity of the farm, its scale and of course as well depending on the organizational structure of the farm, the entrepreneur has to deal with various levels and qualities of decisions.
Every thought, word and action affect yourself and others.
Following Paracelsus – the dose makes the poison – the quantity as well as the quality of decisions to take affects the mental health both: positive and negative.
An important factor is experience in decision making and the result in decision taking.
The more decisions you already took the less afraid you are of the next one, if the next is within the usual frame of level and quality.
The more successful your decisions were in the past, the more self-confident you will be for the next decision.
Examples of daily life decisions in farming:
Problem identification.
🡪 what is the problem?
Information gathering.
🡪 what information do we have, where can we find consultancy?
Evaluation of alternatives.
🡪 how many options od we have? How can we compare?
Choice of the best option.
🡪 following our priorities and goals what choice is the best?
Implementation and monitoring.
🡪 once implemented, how is the real result? Are we above or beyond our planned figures?
rather than comparing alternatives. Determine the question you want to answer, define the criteria for success and evaluate the options based on their impact on achieving your vision. In this way you avoid the trap of comparing options for which there is a lack of information.
Uncertain situations are inherently ambiguous and ambivalent. Bringing together participants with different perspectives on the situation allows for a more comprehensive view. Expressing different opinions enriches the debate.
If you wait, the number of options available to you is reduced. If you decide quickly, you can act quickly and increase your chances of getting out of the uncertainty. Seek advice when you act.
Wanting more data is not a bad thing, as information can help us learn more about the situation and gain a fuller understanding. But waiting and collecting more data comes at a price, namely not deciding. Moreover, the information we need is often unavailable (we can access information about our experiences and our perceptions of outcomes, but uncertainty is necessarily unpredictable).
When making decisions quickly, there is a risk of making the wrong decision due to a lack of information. If you set out multiple options and determine the conditions for implementing them, you can switch from one decision to another as new information emerges.
Farming today offers all kind of possibilities to develop your business form a niche market approach with full added value chain to supplier of standardized commodity leading from the point of low production cost.
Depending on the whole situation, the market, the business, the family in some stages the one model may be more attractive in some stages the other.
However, once you made a bigger step in one or other direction usually you are “logged in” for a specific time.
Example 1: Once you built a stable for 120 cows and you need to pay back your bank it will be almost impossible to work with only 60 cows in the stable.
Example 2: once you established a farm-shop or other investments along added value chain like a bakery on farm you are “logged in” as well.
This does not need to scare you, but you need to be aware of that for all the planning in the surrounding.
Good to know, and bringing more relaxing situation is usually to have more than just one product and more than just one customer.
Example 1:
If beef prices are down this does not need to correlate with milk prices.
Example 2:
Using profit from farming for investment in real estate besides farming promises profits from renting space even in times when prices for agricultural products are low.
Financial planning is essential to the success of any business. It includes both long-term and short-term goals and strategies to achieve them.
Long-term goals are those that are set for a period of five or more years and are geared towards the financial stability of the business.
Short-term goals, on the other hand, are those set for a period of less than one year and are aimed at improving cash flow, reducing costs and increasing profits.
Strategic financial planning involves weighing the pros and cons of each type of goal and determining which is best for the business. Both long-term and short-term goals are important to ensure the financial health of the business, but it is important that businesses prioritise and focus on the goals that will serve them best in the long term.
Example:
It may be good for short term cash to sell half of the herd in the stable, but of course it is hard work to increase the herd then again. And of course, in mid-term you miss the monthly milk check.
Jenny Blake, in an article for the Harvard Business Review, suggests using the six T’s when delegating tasks:
Example, leaving your phone or tablet on the plane. Instead of spending all day on the phone with the airline, someone like your assistant could handle this.
There are clear advantages of delegation.
Again – like always – the entrepreneur needs to be clear in his mind, take good decisions and set up a good working structure.
This is a core question:
Every entrepreneur has to make experience here and growing adult the entrepreneur needs to take a stand: a clear position to various topics and a clear position about his people: his employees as well as his business partners.
Effective communication results in two or more people understanding information together. Such shared understanding is essential in a workplace if everyone is to work together to achieve organisational goals.
However, be aware, that this superficially easy circumstance is not easy to reach at all.
Consultants and supervisors play a key role in this by communicating information to the right people. By taking some tips on communicating with supervisors to heart, you can improve your contact with employees, achieve better work results and avoid mistakes.
To reach people effectively, you need to tailor your message to them. Are they younger employees or have they been with the company for years? What generation are they? Use language that is understood and make the message personally relevant to the recipients by answering their questions, “Why should I care?” and “How will this affect me?”
Collaboration in between families is special, and it is always very important, and it becomes crucial in family farming.
Let’s focus on some components to collaboration in between family:
It is very important to understand the family’s culture by all members. Yes, asking for clarification when needed, is good.
Be aware about your words and signs:
First step is to really set up a family conference or family business conference. It should be a regular meeting, each week, month or at least every half a year. It must be effective and require advance planning. In the busy and sometimes overwhelming schedule of family farms it is very important that for all the family the purpose of meetings and conferences is clear and explained.
By ongoing and regular steady communication, it is easier to avoid conflict and to maintain healthy relationships within the family.
Be aware, if family is not behind the business at some stage family will suffer or business will suffer. Both results are bad ones for a family farm.
Success in an ever-changing business world relies on our ability to predict potential risks and chances for success. Modern farmers need to define and determine how they can stay ahead of the curve and remain competitive. This involves a fundamental shift in mindset from analysing past performance with hindsight to unlocking creative potential through forward planning.
A business plan describes the fundamentals of your business, its leaders, its capabilities, the market in which it operates, the way it generates revenue and its financial projections.
A strategic plan assesses your current environment, both internally and externally. It sets out future goals and objectives and describes the strategies to achieve them.
In other words, a business plan describes an ongoing business or a specific new project. A strategic plan describes how you want to change your business in order to grow or be prepared for the future.
The points mentioned above can easily bring pressure. It is very important to use it in a constructive and creative way.
The tools and structures are not set to tell you how bad everything goes. It should far more enable you to face the facts of entrepreneurial development and therefor enable action in time.
Structure can be given – more or less challenging – but it is highly important to seek for intrinsic and/ or extrinsic motivation to move on with your entrepreneurial planning.
A clear problem-solving process includes:
Before any problem solving can take place, it is important to first understand the exact nature of the problem. If you do not understand the problem properly, your attempts to solve it will be wrong, inefficient or flawed.
The role of training in professional development may be underrepresented especially amongst entrepreneurs feeling like from whom to learn from if you are so special.
Even if it can be agreed that entrepreneurs overall and farmers are special people it is easy to see that there is high value in exchange of knowledge, capabilities and opinion as well as of experience.
Training can be used for technical issues.
Coaching can be very effective in the further development of the entrepreneur, the family enterprise and the generational decisions.
Basic for all kind of training, exchange and coaching process will be trust.
Basic for your partners you choose for exchange, especially for coaching, are:
Sharing experiences of work and life is a basic and handy tool for action in a family farm.
It is the first step to build up awareness and can lead to the building of support networks.
What steps can be taken in the topic to achieve the five ways to well-being.
Simple examples of behavior suitable for farmers
Funded by the European Union. Views and opinions expressed are however those of the author(s) only and do not necessarily reflect those of the European Union or the European Education and Culture Executive Agency (EACEA). Neither the European Union nor EACEA can be held responsible for them.