So what happens when “this will never happen to our family farm” suddenly does happen? What will happen next? Families often adopt the myth an unexpected change will never happen to their farm. The premise “our family operation has nothing to worry about” can spell failure for a farming business due to misunderstandings and eventual disputes between family members.
Few family operations ever survive an unexpected change to the farm’s organizational ownership structure and operational management, let alone a sudden crisis situation within the family. I like to refer to these unexpected changes as “shark attacks.” There are many potential shark attacks to a farm business, such as an unexpected death, sudden illness, a farming accident and disability, family or legal disputes, loss of a key employee, financial stress, communications breakdown or a divorce in the family.
Unfortunately, these issues are often never discussed and are usually avoided. But what if it does happen? What might happen next? What impacts could result to the farm or to the family? Has any of this even been discussed with family members? These are pertinent questions to address with contingency planning.
Most farm families realize the importance of implementing a contingency business plan for if and when something unexpected ever happens, but few families ever accomplish this management goal. No one wants to be in the shark tank and to be faced with these difficult and challenging questions.
Families make the unrealistic assumption they can always find a way to work through this when and if something ever happens. Avoiding this discussion now might spell trouble later. I have seen this happen many times with the families I have counseled.
What happens next?
My definition of contingency planning is very simple and direct. If an unexpected change happened today to the farm business, or to the family, does everyone in the entire family know and understand what happens tomorrow? Who takes over control? How do they take over? Does everyone agree as a family?
Developing and then implementing a business management plan to overcome unexpected changes to the ownership structure and management leadership is crucial for the continued success of the operation. This planning process prevents potential misunderstandings between family members and helps avoid possible family disputes. Can a farm business survive a potential shark attack and still continue as well as prosper?
An effective management strategy is to put yourself in the shark tank and begin addressing the difficult questions and situations that might arise from the uncertainties in farming. Striving to find answers as well as solutions is an effective strategy for success when initiating a business contingency plan in case the unexpected happens to the farm or family, or even both at once.
Contingency planning often results in a lot of emotional stress as well as potential conflict among some family members. The question becomes whether or not family members are willing to put a plan in place that protects their farm and ensures their farming legacy continues for future generations.
When a family begins their journey to work through and implement a contingency plan for their farming operation, potential disagreements are likely to surface between certain family members. These issues must be discussed by all family members involved and then eventually resolved to everyone’s agreement.
Failure to accomplish this often disrupts the farming operation due to these personal conflicts or even legal disputes. Without a well-laid-out contingency plan, there is too much opportunity for bickering and potential feuding within the family – thus ending a family farming legacy.
As a farm family begins developing a contingency plan for their business, I suggest four questions to include on their contingency planning checklist:
- Are all farm business and financial documents current and complete?
- Are these documents accessible to other family members?
- Are necessary power of attorney documents in order if the parents are unable to manage the farm business or no longer able to take care of themselves?
- Has the farm’s contingency plan been communicated with everyone in the family?
Remember: It is never too early to begin a contingency planning process. Just don’t make the mistake of waiting until it is actually too late and now nothing can be done. During stressful time-pressured situations or when faced with a family crisis is never the best time to make objective management decisions.
But that mistake happens all too often. This risks the farm being sold or even divided to settle disputes between family members, and lawyers might become involved in the situation since communications within the family have ceased. Can a farming operation afford these legal costs and still survive? Many times not.
I always remind my audiences contingency business planning is a time-consuming process. There are no short cuts or quick, easy answers to achieve this planning goal. The solution, as well as the secret for success, is to start your planning process now. Don’t wait. 
ILLUSTRATION: Getty Images.
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Ron Hanson
- Meeting Program Speaker and Founder
- PASSING ON THE FARM
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