Recent issues of Dairy Herd Management have focused on how to successfully transfer the family business from one generation to the next. Unfortunately, less than 30 percent of the family business operations that I review have developed the agreements or done the planning suggested in these articles. Oftentimes, it is because there is a financial problem that needs to be solved first.
In my work, I am often called upon when there is a breakdown in communication among family members and when they feel they do not have the ability to resolve a conflict by themselves.
What can you do if your family business is in trouble?
Define the problem
The first step is to call a family meeting. The parties with concerns about the business should organize their thoughts and write them down prior to the meeting. Placing the problem on paper does three things:
1. It eliminates the "he said, she said" arguments that often arise.
2. A written document details the concerns in a non-emotional way.
3. Writing the concerns down forces the individuals to clearly define what they believe is the problem within the organization.
After distributing the defined written problem, it is time for the other family members to respond — also in writing. Their response should include their observations on the problem, as well as potential solutions.
Again, the power of the written word helps define the problem and solutions in a non-emotional setting. In about 20 percent of the cases that I have worked with, placing concerns in writing motivates the family members to focus on the problem and allows them to move forward. However, about 80 percent of families cannot resolve their own problems.
If your family is still unable to resolve its problems after a family meeting, you probably need to hire a mediator. Select a mediator who has not had previous dealings with the family. This eliminates any appearance that the mediator is taking sides, or for a disgruntled family member to say the mediator was biased.
To find a qualified mediator, consider contacting the American Society of Farm Managers and Rural Appraisers, as well as the Family Firm Institute. And through the Ag Executive Newsletter, my office maintains a list of agricultural consultants who are familiar with family business organization and mediation. (Phone numbers for those organizations are listed below.)
The role of the mediator is to assist the family in arriving at a mutual decision. The written request for a family meeting, as well as any written responses that were discussed earlier, can serve as an initial source of information for a mediator. The mediator can take an independent look at the problem and then suggest a number of alternatives for the family to resolve the conflict.
Preserve the family
A word to the wise: Don't let problems fester over a long period of time. A family business operation is made up of family members. Even if individuals cannot solve their problems, and decide to part company, handling the matter in a professional and non-emotional way will greatly improve the chances of the family remaining a family.
Darrell Dunteman is an agricultural financial consultant and accountant with offices in Bushnell, Ill.
Where to find help:
American Society of Farm Managers and Rural Appraisers
Family Firm Institute
Darrell Dunteman’s office:
Two helpful books on family problem-solving are: “How to manage conflict,” by Peg Pickering
“Can this partnership be saved?” by Dr. Peter Wylie & Dr. Marty Grothe
You can purchase these through Ag Executive by calling (309) 772-2168, or look for them at your local library.