A few years ago, Harvey Aberhart came to a family farm meeting looking stressed out. Like many farmers across the country, he wanted the family to find their way to a healthy, forward-looking succession plan, but the night before the meeting, he had been kept up all through the early hours by thoughts of a worst-case succession scenario he feared might be insoluble.
With son Terry and daughter-in-law Lichelle, Harvey and Debbie Aberhart run a 15,000-acre grain operation near Langenburg, Sask., a few minutes from the Manitoba border.
Harvey’s worry left the four shareholders sobered and unsure how to proceed.
It’s a feeling other farms are familiar with. “It was a hard thing to talk about,” Terry recalls. “For us to discuss it internally would have been a challenge.”
Then the Aberharts did something unusual. At least, it would be unusual on many Canadian farms. “We decided to table it and bring it up with our advisory team,” Terry says
The Aberhart family had set up their advisory team a decade earlier. Terry had worked as an agronomy consultant with Agri-Trend, and the company held annual strategy meetings with their management team that he found engaging and motivating.
“From those meetings, I realized the value of working with people who have specific skills, whether it’s a marketing coach or an agronomist or your accountant, and the value of having advisors,” he says.
Back on the farm, at the family’s February annual meeting, the advisory team discussed the issue. One team member raised a few questions to clarify what was at stake, and in just a few moments the team had created a strategy to manage the risk and move on to the next item on the agenda.
In the end, says Terry Aberhart, the solution was “very clear and commonsense, and we were able to deal with it in a straightforward way.”
It was a relief, but it was also exactly what the advisory team had been structured to do. The Aberharts also saw it as vindication that their decision to follow their own thinking about how to put together an advisory team had been the right choice.
In a break from a typical farm advisory team structure — in which the farmer brings together the farm’s lawyer, accountant and agronomist, for example — the Aberharts decided to push the envelope for the farm’s long-term business strategy, and they stacked their team with experienced entrepreneurs, none of whom are farmers themselves.
Terry recruited Agri-Trend agrologist Robert Saik, who drew on his own experience with Agri-Trend’s advisory boards to help the Aberharts structure theirs. Entrepreneurs Craig Senchuk (High-Tech Installations), Rick Pattison (Pattison Liquid Systems), Bryce Field (Pryme Concrete Construction) and Joerg Zimmermann (GlobalAgAdvisors) round out the team.
“We wanted to have a balance of people who are more aggressive or quick-starts, and those who are more conservative. We wanted to ensure we had a wide range of experience and expertise to create a really good balance of skillsets,” says Aberhart.
Aberhart hesitates at using the term “advisory board” because most people connect it with formal compensation and voting control. These days, team members do receive an annual honorarium and the Aberharts pay for travel expenses. But initially there was no compensation. Each member was happy to sign on simply for the experience.
“I think there’s mutual creativity and learning. Now, our business has really grown and become more successful and stable in large part due to having this team around us. All these people are very successful, but they’re not doing it for the money,” he says.
For Aberhart, the biggest benefit of the advisory team — among many — is the fact that they exist to help solve problems that would be hard for the Aberharts to address on their own, either because they lack the tools or information, or because they unavoidably approach them with emotion.
“We try to run things as much like a business as possible but at the end of the day it’s still family with family members involved. Even if there aren’t, you’re pretty passionate and emotional about the business you run as an entrepreneur. At times that can cloud your decision-making,” he says.
“Do your best, hire the rest”
Dan Hawkins, a senior marketing advisor with FarmLink and member of the Canadian Association of Farm Advisors, says he’s started to recommend farm advisory teams as a best practice for farmers.
Together with an MNP farm advisor with joint clients, as well as a farm financial advisor and agronomist, Hawkins now sits on at least three farm boards.
“I pitched it to my clients from the standpoint that they’re already paying for that information, but if you think about a lot of farm operations, the farmer is the hub of the wheel, and there are all these advisors outside. We were trying to get efficiencies going, so each advisor could provide smarter answers faster,” he says.
“We sit down twice a year for a couple of hours and at the end of the meeting all the questions have been answered, and the farmer can have a complete plan for the next growing season as far as agronomy, marketing, cash flow, and any tax issues goes. To my mind, it’s a very wise investment of time,” he says.
For most of Hawkins’ farm clients, the appeal of the board structure is in the outsourcing of troublesome areas of farm management.
He says farmers considering putting together a farm advisory team should first decide what they already do well, identify what they dislike doing or admit they don’t do well, and finally look to the three pillars of a farming business — production, marketing and finance — to decide which areas could use support.
“There’s no one-size-fits-all — don’t think you need to stay inside the box. It’s your farm,” he says.
Do you need an advisory team?
Patti Durand, an agricultural transition specialist for Farm Credit Canada, says she likes to challenge her clients to think about how they can “turn the dial” on their current situation.
Sometimes, this means looking to fill the gaps in terms of professional expertise rather than trying to build a board from scratch.
“Creating a full advisory board is a big leap for a lot of farmers. I hesitate to suggest ideas that are out of reach for many people. Instead I ask, ‘What would up the game for your situation?’”
Especially when it comes to transition planning, there’s a lot of power in connecting farm advisors, she says, particularly if farmers find themselves in the middle trying to provide accounting information to lawyers and vice versa. “Connecting the two advisors is a step that can really save time,” she says.
Durand has seen advisory boards in action and the multiplier effect between so many brains at the table can be amazing, she says, but it can take time to build such a structure.
“I’d rather have fewer people you’re confident in than a full palette of expertise. I think those voices and seats at the table needed to be pre-qualified and earned. Do they have your best interests in mind? Do they have the right expertise? That might change over time too,” she says.
Many farmers are concerned about confidentiality surrounding farm management decisions. It’s important to recognize that professionals with designation have to adhere to a code of ethics around confidentiality agreements, but if the farmer is bringing on advisors without that background they should be clear on expectations, says Durand.
Farmers should also recognize that not every professional is the right fit. “You deserve to be comfortable, and you deserve to be comfortable asking questions,” she says.
But she adds that farmers need to overcome the tradition of “holding their cards close.” This applies whether farmers are considering hiring an expert from off the farm or joining a peer group.
“It’s a difficult but important conversation, when a farmer realizes that in order to take the farm to the next level they have needs they need to fill,” Durand says. “To say it’s easy is not true — to say it’s worth it is true.” Heather Watson is executive director of Farm Management Canada. She says there’s been an increase in the number of farmers willing to reach out for help or advice with their businesses.
But there’s still a way to go. She points to 2015 Ipsos Agriculture and Animal Health research showing that only 32 per cent of Canada’s farmers seek help from business advisors and consultants, even though using outside professionals means real gains for farmers.
“Our research shows first and foremost farmers turn to their accountants and lawyers, followed by their bankers and lenders. However, this tends to happen as required or as needed, so we see farmers meeting with their accountants, for example, once a year during tax season,” she says.
Tax season is the busiest time of year for accountants. A better alternative, she says, is for farmers to consider dedicating a separate meeting to discussions around long-term planning, growth, expansion and transition planning.
Watson likes to use a phrase she borrowed from New Brunswick consultant Cedric MacLeod in encouraging farmers to “do their best and hire the rest.”
There’s a huge range of advisors and consultants who can help promote farm businesses, she says, from consultants, lawyers, investment advisors, and business and personal coaches to mediators and psychologists. There’s no one-size-fits all, and farmers can even consider hiring a business advisor to “play quarterback” and bring together an effective team.
“It’s not just the bona fide ‘professionals’ who can benefit the farmer — we are seeing many farmers start to get involved in peer advisory groups with fellow farmers and business managers to exchange insights, best practices and lessons learned, collectively raising the bar for everyone’s benefit,” she adds.
If what’s holding a farmer back from reaching out to professional advisors is the cost, Durand cautions that not having advisors is just as expensive in the long-term.
“Very frequently, once you’ve worked with an advisor they won’t have to justify themselves any longer because you know the value that they’re bringing to your operation,” she says. “Imagine if you could spend time just on what you do best. If you could get rid of those jobs that you dislike or aren’t your strength. How much more efficient and positive could you be? How would that impact your attitude and ability to do good work?”
Aberhart echoes this sentiment. Sometimes, he says, farmers have the mindset that if they have to pay a consultant to help them farm, they aren’t very good farmers. But he believes the opposite is true.
“The most successful, the smartest farmers are most comfortable with outside advice and paying for it because they understand the value of it,” he says.
“When you put three or four people in a room that you highly respect and who are there for the sole purpose of making you successful, you know they’re emotionally removed from the situation. Their only emotional engagement is their interest in helping you succeed. Sometimes their feedback is something you don’t like or agree with, but it helps you have a different perspective. Sometimes there are decisions you’re going to make, and when you run them by the team and they say, ‘Go do it,’ it helps you sleep better at night.”
On his operation, the value of the advisory board is unquestioned. But sometimes that value is realized in unexpected ways.
Take, for example, when the advisory team rejects one of Aberhart’s ideas.
“That’s probably the hardest part of having an advisory team, but that’s the part I like,” he says. “I have a very strong personality and I’m very passionate, and when I get on a track to do something it’s pretty hard to derail me. I’m good at convincing others to my own agenda. I need people in that room that I can’t do that to, people who, if they don’t believe in what I’m doing or if there’s a concern, they’re not afraid to say it,” he says.
“That’s what makes it valuable.”
On the table
A sample Aberhart Farms annual meeting agenda:
Item one: Review of 2019 on Aberhart Farms
Item two: Review of 2019 financials and 2020 projections
Item three: Panel discussion and feedback
A: Brainstorm strategic plan for 2020 and beyond
B: Human capital
D: Leadership review, performance feedback
Item four: Transition and succession review, research and development
A: Three- to five-year plan
B: Ten-year plan
C: What does leadership need to focus on more?
Item five: Advisory review and wrap-up
[Agenda courtesy of Terry Aberhart]