Think four Ds as threats to effective farm businesses

(File photo by Catrina Rawson)

Working with farm operations across the U.S. and Canada provides perspective and insight to consistent messages and issues farmers face.

We see common themes while working through a farm SWOT analysis or Strengths, Weaknesses, Opportunities and Threats. Four threats to effective farm businesses happen to start with the letter D. Those are death, divorce, disability and disaster.

Here are some key things to address and understand about your operation.

Death: If you got run over by a beer truck today, what happens to the farm operation? While this is a light-hearted way to address the question, the impacts are serious. Here are some ways you can mitigate the implications of your death or the death of a key member in the operation:

  • Have a will in place and update/review annually. Life changes at the speed of light. It needs to be updated frequently to make sure it still reflects your wishes. This is not fun and does not take priority day to day — do it anyway.
  • Clearly outline your estate planning and guidance. There is no room for ambiguity when it comes to land, buildings, equipment or otherwise. Fair is not always equal, and equal is not always fair. Clearly outline the direction.
  • Have the conversation before you pass. Families fall apart and break due to family members not facing hard conversations while alive. Don’t put others’ lives on hold because you don’t want to have a difficult conversation.

Divorce: This means divorce from a spouse or a business partner. It is a sensitive topic. No one plans on it happening, but it is a reality. Here are some things to consider:

  • Always start with an exit strategy. Whether investing in joint ventures or creating business structures, always have a plan of how both parties can effectively exit.
  • Clearly outline your expectations and communicate openly. We are not marriage counselors or psychiatrists, but we often see how destructive poor communication can be.

Disability: It is not always life or death. Injuries happen in agriculture and can sometimes be serious. Who can do what you do in the event of a serious injury or mental incapacitation? Things to consider:

  • Power of Attorney is a key document to make important business decisions if you are laid up. Don’t restrict your farming operation’s capable partners from keeping it running effectively by a lapse in paperwork. Update this as frequently as your will.
  • Disability insurance can be cheap. It’s not necessarily that you need the income or money if you break both legs, it’s the ability to pay some temporary help to fill in those roles and reduce the stress on your team.
  • Cross-training takes time but is crucial for continuity in the event of disability. Individuals responsible for certain areas of the business are important, but everyone should know enough to be dangerous in the event of a disability. It takes time and effort — do it anyway.

Disaster: This can be due to economics, management, weather or other factors. Here are key things to look for:

  • Are you adequately insured? Whether for an Iowa Derecho, severe drought or disability, do you have the proper coverage?
  • Do you have “doomsday” plans in place? Things such as fires, tornadoes and economic factors can totally disrupt your production or supply chain. What are your plans if this occurs? It can be overwhelming. Start small and have rough plans. These are better than nothing!

These four Ds impact everyone’s business. Some of the most successful operations we work with address these problems head on and make sure their operation is set up for success in the future. Feel free to email questions or comments to me at agronguy@gmail.com.

Shay Foulk works as a farm business consultant across the U.S. and Canada. He also farms in Marshall County and runs a regional seed business with his wife and father-in-law.