This article was produced with the support of the GRDC and was presented at West Wyalong Farm Business Update 2022 and the GRDC Farm Business Livestream event March 2023
Farm businesses are growing in scale and complexity.
Growth is not just about adding hectares, labour and machinery, it’s about leadership, systems and strategy. We need to manage the growth of farming business as they move through the stages of business growth from sole owner operators through to much larger scale businesses.
We can reflect the best of corporate models of management and leadership whilst still maintaining all the great things about family farming operations. Solid systems and structures enhance family relationships.
Managing a farming businesses is a complex task. Most farm businesses have grown in the past 20 years. There are more hectares under management, more people involved and possibly less labour available per hectare. As farm businesses grow, the complexity of managing the farm business increases and it might not be as simple as it once was. Greater levels of market and seasonal uncertainly force us to scan constantly for opportunities and threats and we need to allocate more time to decision making. Skills shortages mean that the importance of the business owner as a machine operator is higher than it should be, leaving less time and capacity for important managerial tasks. Given these challenges, replicating the best of what is used in the corporate world can give family operated business more flexibility, higher levels of success and less stress.
Taking your business to the next level – strategies to consider
Simplification – Simplification of systems is a deliberate choice. Some farm businesses address this by eliminating the number of variables in their business. Examples of this include removing enterprises, removing fences, planting blocks of paddocks and reducing the number of grain varieties. Business managers also choose to do this when they replicate machinery brands or models or repeat previously successful strategies and decisions. Elimination of off farm work or off farm contracting also simplifies our operations. What have you already simplified in your business? What can be simplified further? What are the advantage and disadvantages of simplification?
Delegation – Now more than ever farming businesses need brain power to make good decisions in an environment of ever changing variables. We can make changes to how we structure responsibilities in our businesses to make the most of all the brains, and to spread the mental load. Does the business manager or farm owner have to make every business decision? Is it a realistic mental load to carry and does it make the best of everyone’s intellect? Empowering staff and other family members to take on day to day responsibility for tasks and contribute to longer term strategy can work well. It improves outcomes, reduces errors and builds job satisfaction. It contributes to successful succession and skill development and reduces key person risk.
Outsourcing – Delegating is passing on responsibility to someone within the business, outsourcing is getting someone outside the business to take on a role or responsibility. As the business owner/manager you retain full decision- making responsibility, but others can take on the main function of some roles. Typical aspects of the business to outsource include grain marketing, repairs and maintenance, staff recruitment, machinery acquisition, bookkeeping, taxation planning and agronomy. Could a PA or a VA be helpful? Trust is important, avoid the trap of outsourcing and also spending a lot of time monitoring. Don’t have a dog and bark.
The outsourcing does not have to stop at the house yard fence. Living in a rural location is different than living in an urban area. Some things are more difficult to outsource due to proximity (think take away meals, rubbish collection, light vehicle servicing, simple plumbing, building and electrical work). Because of this, and perhaps also because of necessity, lots of farm families have the skills to do it all, however acknowledge you may no longer have the time to do it all. What household tasks could you outsource to free up time for more worthwhile activities.
Allocating and articulating clear roles and responsibilities – In a sole operator business roles and responsibilities are simple, the one person does it all. In businesses with more family members or staff involved, there are often loose and poorly defined roles and responsibilities.
If your business has poorly defined roles you will find yourself saying things like “I thought she did it” “Why didn’t he do it” “Why did they leave it there” “Have you done it yet” “We both forgot to do it” or “We did it twice” Communication can overcome this, to a degree, but it is essentially inefficient for low level decision making. For simplistic tasks it is more efficient to allocate one person as the ‘boss’ of some jobs and to be able to rely on them to just get it done. For higher level task, allocating a person to a responsibility area who does the research, analysis the options and presents a recommendation to the “board” or the boss works really well. Good communication underpins the success of this and every business strategy.
Often responsibility transition is informal, but this leads to uncertainty for those inside and outside the business. Look at your business, write down what needs to be done each year and look for the links between activities and those that can stand alone.
Remember that allocation of roles and responsibilities does not have to be permanent, it is sometimes better if roles are rotated after a few years.
Communication – Business growth leads to higher levels of complexity, so we are required to plan and communicate more. What are your communication tools and rules? How do you receive information and relay information to others? Is it time to try something new? There is lots of technology available to assist in communicating minor details to ensure work flows smoothly. Meetings are important, but they serve different functions. Consider your meetings, are they operational, crisis or strategic in nature.
Planning – Short term goals in cropping businesses are pretty straightforward. We want to get the crop in, get it up and get it off. Medium to short term goals differ from business to business. What is it you want to achieve in the next 10 years. How old will you and other family members be in another decade. What do you want the farm to look like and how do you see yourself working in it? Moving your business plan from your head to a piece of paper allows you to share those ideas with the people around you, for them to make their own contribution and then work toward shared goals.
Management or Advisory Boards – Could a formal corporate style management structure suit your business, dissolve tension and lead to more professional decision making? Meeting a few times a year with an independent advisor or board member can enhance planning and decision making outcomes. Bringing the whole advisory team around the same table (agronomic, business, accounting and finance) can lead to a shared understanding of business constraints and vision.
We want to work on this in our business, what should we do next?
- Set time for formal face to face communication. Consider having two to three strategy meetings a year with all business owners. 10 monthly catch ups with management and key staff and weekly operational meetings with on the ground management and operational staff. You can work your change management strategy into this framework.
- Consciously schedule some brain down time. It’s ok for this to be in working hours. Turn your phone off and the radio on. Listen to podcasts or audio books that are not ag related. Schedule regular time off farm. See holidays as fuel for your brain and your body.
- Start with an operational calendar outlining all that needs to be done each year on farm and in the office.
- Use this as a starting point to have clear and deliberate discussions with those around you regarding roles in the business.
- Start small. An easy quick win is the best way to commence any change management.
Want to learn more, here are some suggestions;
- Crops People Money and You (2020) – By Kate Burke. Available at www.thinkagri.com.au. Audio book available at www.audible.com.au
- Farming the Business Manual (2019) by Mike Krause – A GRDC Publication. Available at www.grdc.com.au. Chapters on leadership as well as advisory boards
- Farm Business Focus – A free email group by AgriFocused. Sign up at www.agrifocused.com.au/farmbusiness for regular hints and tips
- Podcast growing Agri People – https://podcasts.apple.com/au/podcast/growing-agri-people/id1529845594
- Ag EDGE – Farm Advisory Boards www.agedge.com.au