The words can be heard all across the country. “Our accountant, lawyer and bank manager are key players in decision-making on our farm,” says Luanne Lynn, who is currently past president of Canada’s Outstanding Young Farmers Program (she and husband Philip were Outstanding Young Farmers in 2005).
The Lynns have a cash crop operation in Ontario as well as a beef feedlot, cow-calf operation and grain farm in Saskatchewan. Not every farm is as complicated as theirs, but every farm today is complex, and making a team out of its farm business professionals is a key success factor.
That isn’t entirely new. Canadian farmers already know that professional expertise is important, and that they must find ways to import as much information and quality insight as possible.
What’s new, as Jeff Davies points out, is that the objectivity of the guidance is so critical.
The objectivity? Here’s how Davies, an agriculture transition specialist at Farm Credit Canada, explains it. Your farm, just like successful family businesses of every kind, should have a team of professionals that acts as a board, providing a buffer between business ownership and business management.
That’s where the objectivity comes in, helping farmers see their way past the distractions that can come with owning a family business so they make decisions based on business considerations.
It doesn’t mean it’s time to forget about the family. It doesn’t mean that at all.
“It’s the family’s responsibility to inform this board of the core values the family holds as the backbone to their operation,” Davies insists. “In turn, the board makes decisions in line with these values, and management reflects those decisions in their actions.”
Of course, one of those core values is independence, and few family farms would be willing to grant real power to a board or a team of advisors. It’s still the owner in the driver’s seat.
That can be good for the farm as long as the owner doesn’t make decisions based mainly on gut feelings or emotions, which is a danger with family ownership.
So, this is where a farm advisory team comes in, not only helping farmers make informed decisions, but also helping them take their emotions and biases out of the process.
It makes objectivity an integral part of running the operation, with enormous strategic value.
Forming your team
Creating an effective team of professionals to help you manage your farm business has to start with selecting appropriate individuals. Each team member should be willing and capable of collaboration with other experts, says Farm Management Council program manager Mathieu Lipari. Each must also be open to changing their approach to the group’s goals.
It’s also very important in Lipari’s view that the team be coherent. This means team members must be willing to actually sit down at one table to discuss the issues at hand, ready to learn and take into account the impact of each member’s advice on the other aspects of the farm business — which, as he points out, isn’t always obvious.
Davies adds that farmers should strive to find team members who don’t think alike. “In fact, seek out individuals who will think outside the box,” he says, “and stretch the conversation to maximize the synergies.”
And as tempting as it might be, Davies advises trying your best to avoid including a team member who is also a friend to someone on the farm, “such as Dad’s golfing buddy who is also his lawyer.” In other words, you don’t want someone who may not speak up because they are afraid of offending or annoying someone in the farm family.
For his part, Ken Worsley, account executive and vice-president of the agri-commercial division at Cowan Insurance Group in southern Ontario, cautions farmers not to overlook adding their insurance agent to the team. Decisions that require input from a lawyer or accountant should also include advice on the insurance angle. Whatever you are planning, whether it’s investment in a new barn or a new partnership, he says it likely has an insurance implication.
In terms of the selection process itself, Joerg Zimmermann, owner of Manitoba-based Global Ag Advisors, notes that finding people you trust and building a good team relationship “don’t come overnight, so start now.”
Nathan Stamp, farm operations and agronomy manager at Stamp Seeds in Enchant, Alta., also emphasizes the importance of establishing long-term team relationships. “If (your team members) know the history and goals of what we are trying to achieve, then everything goes a lot easier when looking to expand or diversify the farm,” Stamp says. “They know your track record and how the business is managed and you can rely on that consistency, even in the challenging years.”
How to communicate
While meetings in person may be needed at some points in time to effectively manage a farm business, many farmers such as Lynn and her husband use conference calls with their advisory team to discuss a major decision or change in operations. Conference calls are an effective way to accomplish the same things as at an in-person meeting, she notes — i.e. not only making sure everyone is on the same page and ensuring the discussion covers all aspects of a situation, but also developing a more personal relationship among team members.
Indeed, David Derwin, commodity and investment advisor at PI Financial in Winnipeg, advises farmers to become comfortable with conference calls if they already aren’t. He believes that while at least one meeting in person is important between the farmer and each member of a farmer’s farm business management team, a lot can be done over the phone, whether it’s clearing up details relating to setting up a trust or going through the process of incorporation.
“Maybe only two team members need to be on the call, and not the whole team,” Derwin notes, “but don’t be afraid to ask if someone else should be on the call.”
From the farmer perspective, Colin Penner advises that in team communications, farmers should remember that they, like everyone else, have personal biases and perspectives, and that in working with your advisory team, you need to recognize and likely set at least some of theses biases aside.
Penner is the co-chair of the Manitoba Young Farmers and he farms 3,600 acres near Elm Creek with his parents Cal and Gloria, his wife Lori and his brother and sister-in-law Scott and Andrea. He is also a farm management instructor in the ag diploma program at the University of Manitoba.
Reflecting on how biases have played out for him personally, Penner says “I have an idea of how I want things to work on my farm, but I also need to realize that these people are experts at what they do and I need to let the professionals do their jobs.”
Thomas Blonde, a partner at Baker Tilly GWD accounting firm who is based in Elora, Ont., goes a little further. He advises farmers to get a second opinion if there is a major transaction or decision in front of them. But it matters how you go about this.
Blonde recommends that after they have that second opinion, farmers should mention anything they learned afterwards to their team or a given team member in a diplomatic fashion. “You could say to the individual professional or at a team meeting that ‘I heard about this or that strategy from a friend, and can you please explain why that would or wouldn’t work?’” he explains. “That way your team members are respected but you get the information you need.”
Expect change, and adjust
Taking the long view, Davies cautions farmers to remember that their business advisory teams will change over time and grow, just like their farms. Farmers should therefore be open to changing the composition of their team or even to forming different teams specific to different purposes.
“As your team becomes more complex,” he adds, “it may become more difficult to bring out the best in everyone and utilize them to their fullest potential. At this stage, I would recommend hiring a professional to facilitate these meetings.” Lipari seconds the idea that it may be a good idea to hire an advisor who specializes in a multidisciplinary approach, in order to co-ordinate various experts on the team and help guide comprehensive decision-making.
Having this expert in place brings us back to the importance of objectivity, which Davies stresses as critical to business success. A meeting facilitator, he says, “will help maintain the focus of the meeting and steer the conversation towards the outcomes the team has stipulated. This person will also keep emotions from sabotaging your meeting or let someone’s personal agenda hijack the outcomes.”
Penner’s co-chair on the Manitoba Young Farmers board, Jake Ayre, agrees than an open mind is critical. Ayre farms 1,900 acres north of Minto with his parents Heather and Andrew, sister Caitlin and an employee. “If someone on your team gives you a new idea or piece of advice that may seem outside the proverbial box,” he says, “don’t shoot it down.”