The farm had been losing money for years and only its rising land values had kept the bank complacent. The wife Ida laid down the law that either the farm started making money or else it was to be sold, even if she had to file for divorce. She loved her husband Jack, but she didn’t want to spend her retirement years penniless because her husband had an addiction to machinery and wouldn’t listen to their vet.
The problem? Jack felt that he knew more than the experts. He was a know it all, yet knew very little!
Jack had three kids whom were keen to come home to farm, yet one if not all of them were about ready to quit because none of their ideas where being considered. If the sons suggested black, Dad would insist on white; just to prove he was in charge. Sadly, to some extent this happens on a vast majority of family farms at various levels.
There are men whom you can’t tell them what to do. However, you can help them better organize their thoughts and hold them accountable to doing what they’d say they’d do.
I had a meeting with all of the parents, the three siblings that were involved in the farm. We also included their vet, nutritionist and agronomist. What I did was challenge the family to break down the business into different components and then identify the critical things within those components that were critical to profit. Then I challenged the family to increase profit in each component by 20%.
The format of the meeting was for the family to brainstorm themselves what they wanted to change. The nutritionist, agronomist and vet were there as information resources. My focus as meeting facilitator was to get Jack talking and for him to volunteer the ideas, not to tell him what to do. If Jack thought it was his ideas and he was in control of the process, then these ideas would be adapted.
The vet was skeptical of the process going into the meeting but within an hour was completely floored. Jack started to volunteer suggestions based on advice the Vet had recommended years before but Jack had dismissed. Yet when pushed in a positive format to improve farm profit by 10%, he became in favor of the ideas because they were his. The kids contributed to the ideas and within three hours, we had 7 realistic improvements to the farm operation that should have improved profit by at least 20% without costing more than $10,000 extra. It was as simple as picking dollars off the floor.
The real challenge was implementation. I knew that as soon as I left the operation that everyone would forget what was said and it would be business as usual. For this reason, I got the family to sign a one page family contract which:
Identified the dire nature of the situation and the need for change.
Listed the seven major points agreed upon and roughly how much money would be saved in 2014.
Who was responsible for their implementation and by when.
An accountability agreement whereby each person agreed to pay $5 for the first month each item didn’t get done and $50 each month thereafter.
An agreement to meet monthly at a set time to review implementation for the next year.
In the month following, I knew that half those tasks wouldn’t have gotten done. The farm got busy with day to day challenges like putting the corn in and taking off the hayledge. But then I sat down with them and helped them figure out how much potential profit they had lost because they hadn’t gotten those tasks done. It was over $20,000 and they quickly realized that was more than they had paid themselves that month. Little things like testing for Ketosis or changing the heifer’s feed ration, add up to big savings to the farm’s bottom line. Having an outsider hold the family accountable, made the family aware of the importance of follow through and got things done the next month!
A third party holding family members accountable also eliminated internal power struggles and disappointments when other family members let the team down!
The bigger thing was the introduction of metrics (measureable facts/numbers). What we did in the exercise was identify the critical things that determine farm profitability. We measured the things that influenced farm success, not the things that resulted in farm success. For instance, we measured % heifers pregnant at 14 months; not the number of heifers calving. From these metrics, we then created a dashboard from which we could monitor the farm’s success and monitored these numbers as part of our monthly meeting.
By me coming back, month after month to ask “where are you at with this metric” it got the family focused on the forest, not the trees. I forced them to put dollar bills into a jar for each metric that they didn’t achieve on target and fined them in proportion to the potential profit they were missing. For them having to dig change out of their pocket made them cognate that they were losing money as a result of their lack of action. It changed the culture of the family business from “fighting fires” to focusing on getting the critical things done right and done right on time!
With the family measuring themselves against self-set production targets, they became keen to make changes in order to achieve these targets instead of being opposed to change. They started actively listening to the advisors, instead of distrusting his advice. The reason why? Numbers don’t lie!
So what is the walk away message for any young farmer? Instead of telling a Dad WHAT TO DO, get the farmer to have an internal process that CHANGES HOW THEY DECIDE. Get the farm family to identify their top 10 weaknesses that affects profitability and then get the family to start measuring the factors which measure success. Then start using external resource of information (i.e. your vet) to help the family solve these issues. By the farm recognizing how much money they could make if they hit these goals (gap analysis), they’ll be motivated to take a second look at solutions they previously dismissed as too costly.
Most importantly, change your culture of accountability. Often family patriarch’s and family members don’t get things they’d say they do done and this costs the farm bundles. Instead nagging, giving the silent treatment or having power struggles, get an outsider to hold each family member equally accountable at a specific time each month. There will be things you forget to do as well and it’s only through a third party holding you accountable that you are going to change your habits.
Instead of “banging your head against the wall” find a door. Focus on changing the decision culture of your farm, rather than complaining about bad decisions.