Hi friend. Have you heard about our group coaching program AgBiz Academy? It’s designed specifically for business owners in the ag industry. My team and I will help you achieve your goals of financial clarity, business prosperity and family harmony.
AgBiz Academy is opening again in December and we’d love to have you join us. If you’d like to learn more or apply, follow the link below.
LET’S TALK ABOUT FAMILY LEGACIES
I’m sharing a sneak peak into some of our AgBiz Academy content in this article. I hope you enjoy!
Have you wondered how you might ensure a family legacy in your farm, ranch or agribusiness? Today I’m going to break down the five essential steps to ensure your family business is around for the next generation. Based off the 5 F Framework, developed at Patten Bookkeeping & Consulting, I’m going to review the most important factors to consider. Utilizing this framework will help you achieve your business and personal goals.
Step 1: Foundation
You will need to create a firm foundation for your family business to ensure its lasting legacy. This is the time to decide an entity type and ownership of the business.
Action Items:
Choose Entity Type - LLC/ Corp/ DBA
Determine Initial Ownership - Who and how much
File Documents- Organizational Paperwork, EIN, etc.
Step 2: Fundamentals
During this stage in the framework, you'll ensure the fundamental business tasks are completed and that there is transparency and accountability in the financials of the business.
Action Items:
Determine Bookkeeping Systems - QuickBooks, Excel, Etc
Determine Bookkeeper(s)- Who does which bookkeeping tasks. Checks and balances are always a good thing.
Set a Financial Meeting Schedule (Monthly Recommended) - Keep it the same day each month for consistency.
Step 3: Formulate
This stage of the framework will help you and your family make business and strategic plans for the business. Also included in the formulate stage, is determining roles within the business and how each member is compensated.
Action Items:
Determine Values your Family Business Aspires To
Formulate a Mission Statement- What your business does in a paragraph. Include values, customers, prodcuts, etc.
Choose KPIs/ Financial Ratios to Track (Add to Financial Meeting) - I like this to be a combination of production values and financial values. Grazing, overhead, profit, etc.
Determine Roles & Compensation- Who does what and what are the7 paid? Is the compensation reasonable and fair? Don’t forget privileges like vehicles, gas, housing, grazing, groceries… these things add up quickly!
Set an Employee Review Schedule (Quarterly Recommended)- Are employees doing their part? Is their role changing? Is compensation still reasonable and fair?
Step 4: Follow Through
Potentially the most impactful stage in the framework, follow through is when you and your family members ensure that everyone is accountable for their actions and working toward shared goals.
Action Items:
Continually Review Values, Mission Statement & Strategic Plans - Update as needed. Things change, be flexible.
Set Leadership Meetings (Monthly or Quarterly Recommended) - Big picture planning
Step 5: Family Legacy
It's time to determine your family business' transition strategy. Without a solid plan and buy-in from everyone, you cannot guarantee what will happen when you are gone.
Action Items:
Determine Future Business Ownership - Who and how much
Determine Ownership Transfer Method- Gifts, sweat equity, upon death of a current owner, etc
Other Considerations - Life Insurance, etc.