Building Effective Farm Management Systems

A toolkit for farm businesses to implement proven strategies to become a professionally managed farm business.

This guidebook, developed in workbook format, leads you systematically through implementation of key management applications. The guidebook mirrors the process I’ve discussed over the last 30 years in seminars on “Managing Business Relationships and Transitions on Family Farms.”

Each chapter contains:

  1. A conceptual discussion of key management concepts and how they apply to family farm management,
  2. Sample documents and case scenarios illustrating how these concepts have been implemented in a variety of farm environments, and
  3. Worksheets or templates designed to lead the user through an orderly process for implementing the concepts in day-to-day family farm management (including 23 template files and programs).

The application template files will help you jump start implementation by providing foundation material that can be molded, edited, and supplanted to create your own management system documents. Template files include Mission, Vision and Core Value Statements; Job Descriptions; Company Policies; Standard Operating Procedures; Planning Systems; Compensation Summaries; Control and Performance Evaluation Systems, and many more.

Why the Guidebook?

Countless books, media articles and speakers help raise awareness regarding problems related to family farms. My goal is not to simply discuss problems, but to equip family farm businesses to implement solutions..

This guidebook was developed to help you articulate where you want your family farm business to be and how to build a management system path to take you there. The process works, and those who plan to remain competitive and survive are finding they must incorporate these disciplines in their farm business.

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Preview Guidebook Contents

The purpose of this guidebook is to provide family farm business with an implementation path for building and maintaining a system of management that will:

  1. Ensure effective business and personal relationships,
  2. Enable the business to achieve its intended mission, philosophy and key objectives, and
  3. Successfully pass the farm to the next generation.

This guidebook is written to bridge the gap between Management Theory or “Principles” and the Application or “Practices” required to effectively manage the farm business.  It encapsulates long established basic business management theories and illustrates how they can be applied in daily practice in agricultural production businesses.  This guidebook is designed to serve as a key reference book for performing managing duties and collecting additional materials and strategies as time passes.

The intention is to develop a user-friendly text for working managers and owners of commercial size family farm businesses who are looking for effective strategies for managing people and providing a leadership roadmap for the farm.  The target audience for this text can encompass the family owned and/or managed operation that involves as few as two and as many as dozens of parties working together.

This guidebook can also serve the following audiences:

  • Farm Management Educators – Educators can use this text as a lab manual in a farm management class to teach students how to apply technical management concepts in a real world environment using a systems approach.
  • Consultants and Facilitators – This guidebook can be used to lead local constituents or clients through a systematic process of building a personalized management system.
  • Financial Services Vendors – Farm credit and financial services providers have a captive relationship with family farm businesses that allows them to see when a business has a serious need to advance skill levels or management practices.  This guidebook can be used to expand both customer and vendor awareness of systems approaches to farm management.  It can also be made available to clients looking for resources to improve their proficiencies in farm management.

The introductory comments define the benefits of parties working together and common problems that develop in family business relationships, and discusses general principles and considerations in developing a Farm Management System. The main text of the guidebook is divided into sections reflecting various stages of the management process. Each section includes three components:

  • A general discussion addressing concepts and how they apply to family farm management
  • Sample documents or case studies illustrating how these concepts have been put into practice by actual farm operations, and
  • Worksheets or templates designed to enable the user to develop a specific application of this component appropriate for his or her farm operation.

Some readers may swear that their home or shop has been bugged and documented in this book. Others, particularly former clients, may conclude I am divulging information discovered under confidential circumstances. However, no farm can lay individual claim to these problems. The problems described are general issues that have been witnessed repeatedly or experienced personally countless times in family businesses. If you see yourself or your business in this guidebook time and again, take comfort in the fact that you are not alone. By acknowledging this, you will find a peer close by who shares a similar challenge and a joint desire to work together to implement better farm management practices.

In proposing solutions there is some danger in committing actual practices or applications to paper. A farm manager may be tempted to look at some of these practices as “formulae” or “cookbook recipes” for applying practices in his or her operation. They then extract the practice nearly verbatim without participation from others involved in the business and use it without giving careful consideration to the principle behind the practice. Effective managers will conceptualize which of these principles are relevant to the operation, allow others affected by the process to participate in the design process, and finally, implement a set of practices suitable to the operation’s character and basic mission.

You can think of this guidebook as a John Deere or Case/IH Operations and Service Manual. The guidebook is designed to help you build a system from scratch, solve a specific management challenge, or do a major overhaul of your management process. You can read through the whole thing, or if you have a specific problem or concern, you can go directly to that chapter for help. You can be your own mechanic, or you can call in outside help if the “breakdown” is beyond your capacity to repair.

Chapter Synopsis

The following questions provide insight into what is covered in each chapter.

What is a Management System and how can it add value to my business?
How does a Management System differ from a Strategic Plan or Business Plan?

“People who don’t know history are bound to repeat it.” What are the key events that have shaped the history or our business? How can documentation of this history be used as an effective tool for our business team and audiences with whom we interface?

How can a Key Trends summary sheet be used to get a quick overview of my business?

What do these different terms mean and how can these “guidance documents” be used to provide direction and focus to our business efforts and team approach?

What techniques can be used to build these statements professionally so they represent our business, corporate culture, or image, not something that looks canned from some management model?

What are the various forms of planning that confuse, confound, and consume family farm managers’ time (production plans, marketing plans, financial plans, contingency plans, manpower plans, strategic plans, succession plans, retirement plans)?

How do we custom design or tap into proven models that allow us to do effective operational and strategic planning?

What are the Key Performance Areas we should be focusing on to measure our business success?

Why is goal setting so important in a family farm business, and what are some ways we can get personal and business goals committed to paper and communicated to appropriate audiences?

How do we describe reporting relationships, divide roles and write job descriptions for parties working in unique roles in a family business?

How do we decide who will be the manager or boss in transition situations, and what attributes will be expected from the leader of our family business team?

How does the concept of “career paths” relate to family farm businesses, and how does one know when it is time to turn over the wheel to a successor?

What are the critical areas in your business that need to have clear policy understandings to insure sound operating, financial and personnel practices are followed?

How do I write a set of policies and communicate them to those affected by the policy?

Several “land mine” topics are discussed that commonly are abused in family farm businesses. Information is offered that will guide farm managers through some of the considerations on how to build good policy structures. As an example of what you may learn in this chapter, ask yourself, “Do the members of our family business have a clear consensus on how to handle:

  • Housing and other benefits provided to those residing on the farm?
  • Setting compensation levels for owner/managers, employees and part-time help (both family and non-family)
  • Division of business earnings between those who own the business capital vs those who are providing the primary management and labor?
  • Withdrawals and contributions of capital
  • Inter-entity transactions where there are multiple entities and ownership arrangement involved?

Why are SOPs becoming increasingly important as a tool to insure consistent performance of duties?

What areas in my business can benefit from documented SOPs accessible to employees responsible for carrying out repetitious functions?

How do I develop SOPs and what is the best format to make sure employees can use these tools consistently?

How can we set up professional rules for communication, and why is this critically important to family farm survival?

What management “pieces of the puzzle” should be in place to have a quality communications atmosphere?

How do personality styles affect communication and teamwork? How can we learn more about identifying and managing personality style traits?

How do we use meetings to improve farm communications and efficiency instead of just wasting time and productive manpower?

What components make up a management control system?

Can and should performance evaluations be conducted among family members working together in a business? If we say “Probably, yes,” what proven strategies can we follow to implement this practice in our business?

What should our farm’s Management Information System look like, if we were to design the ideal set of information to support decision-making in our business?

What are proven strategies for creating, sharing and interpreting farm financial performance information for appropriate audiences (employees, managers, owners)?

Where do Ratio Analysis and Managerial Reporting fit into our management control system? Do we know how to define manageable segments of your business and track performance in each segment (i.e. cost of production for key profit centers)?

What are proven strategies for training and self-development?

What is the “bigger picture”? How do we integrate our Business Management System and Strategic Plans with other key focus areas of our life, such as faith development, family, community service, health, recreation, etc.?

What strategies can I use to access reliable resources to adopt better management practices and keep them current as our business grows, changes, and adapts?

What are some practical approaches for organizing Management System documentation, so it is accessible to appropriate members of our family farm business?

What are sensitive areas relatives and friends need to be aware of?

What are positive strategies that family farm businesses have put in place to:

  • Make the farm an inviting atmosphere for those away from the farm
  • Separate the emotions of selling the “farm heritage” from selling a “financial interest in farm assets?”

What are proven sites or sources of information that further adoption or utilization of good farm management practices and decision-making analysis models?

If I could access a model library of Family Farm Management topics, what “classics” would be in the library?

What examples or templates have already been built that I can use as a foundation to implement management concepts on our farm?

The guidebook contains real-world examples and working templates for implementing a number of concepts contains real-world examples and working templates for implementing a number of guidebook concepts. The Appendix includes a narrative summary of templates provided and special instructions on how to access or use each file.

Equip your family farm business for the future, today.

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