Outline for a successful family meeting

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Lack of communication is the leading complaint I hear from family business operations. 

A family meeting is the standard cure for this issue. However, a poorly planned family meeting provides no solutions. Family members need to be prepared to communicate and be able to provide input in the meeting if the communication process is to be successful.

Provoke thoughts

To begin, get your family members thinking. Provide them with information they need to understand the family business. Mail financial data and a tentative agenda to each family member at least two weeks before the meeting.

I subscribe to the theory that sometimes less is best. You can overwhelm with too much information. Your goal should be to provide a summary of the most important information, yet provide as much detail as some family members may require. Here is what I have seen be successful:

First, create a summary page. The summary page should be divided into three separate sections:

1. Technical.

2. Income information.

3. Balance sheet or net worth information.

The summary page should examine the trends that are occurring in the business. It should reveal the current position of the farm, as well as data from the previous three years.

Provide more detail

The technical section of the page should show crop yields, milk production and other livestock production data. This illustrates important technical trends that impact the business.

The income portion of the summary page should show the operation’s year-to-date income as well as the previous three years of income. This shows the business’ income trends. 

Calculate the net income of the business as earnings per share, or the percent of ownership, so each owner of the family business has the opportunity to see what his or her share earns. Remember, only the major income and expenses accounts are listed here. I also like to see the return on assets and return on equity calculated so each business owner can evaluate the return on his investment.

The balance sheet, or net worth portion of the summary page, illustrates the change in equity of the business. Calculate the net worth per share so each business owner can estimate the value of his ownership interest. Again, list only the major points of the financial position of the business.

Make detailed financial records available to any family member who wants to review them. The goal of the summary page is not to withhold information, but provide enough so that family members may make intelligent decisions.

Develop an agenda

Again, take time to create a preliminary business agenda to be mailed with this summary sheet prior to your meeting. Family members can use this preliminary agenda as a guide to submit their own items. 

Individual family members may feel uncomfortable about openly suggesting items of discussion. If that’s the case, set up an agenda box in the family shop or office so they can privately submit their agenda items. Or, agenda items could be mailed to the family secretary.

The final step in the process is actually holding the meeting. Hold meetings away from the dairy to avoid distractions that can occur. Consider using the community room at your local library or the boardroom of your local financial institution.

Take time today to improve the communication in your family business. Contact me if you would like a sample of the summary page described in this column.

Darrell L. Dunteman is a partner in Bonnett and Dunteman, Certified Public Accountants and Consultants in  Bushnell, Ill. Dunteman also edits the Farm and Ranch Tax Letter, a monthly agricultural tax publication. Contact Dunteman at: farmandranchtaxletter@earthlink.net.



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