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September 2008 Archive for Leave a Legacy

RSS By: Kevin Spafford, Legacy Project

Kevin Spafford is Farm Journal’s succession planning expert for the Farm Journal Legacy Project.  He hosts the nationally-televised ‘Leave a Legacy’ TV, facilitates an ongoing series of workshops for farm families across the U.S., and is the author of Legacy by Design: Succession Planning for Agribusiness Owners.

Not Retaining Sufficient Capitalization

Sep 16, 2008

Continuing our look at the twelve most common mistakes agribusiness owners repeat, #8 covers the single most common mistake. 

Click here to review previous posts. 


The eighth of twelve most common mistakes agribusiness owners repeat:


The NUMBER ONE reason most family businesses fail is insufficient capitalization.

Capital is to business as water is to life.  It is required to sustain and grow a vibrant operation.  Cash reserves are necessary for managing the economic ups and downs of a normal business cycle, and for weathering the storms of an unforeseen crisis.

Our office sits on the shore of a picturesque lake.  Though not a large body of water, it’s big enough for small boats, windsurfers and the occasional fishing outing.  Helitak crews from the Department of Forestry use it as a source of water for local wildland fires.  Rejuvenated former military helicopters swoop in, hover just above the lake’s surface, and recharge their 324 gallon sky buckets.  We’ve watched this summer as, day after day, the copters scurry down from the foothills, fill their buckets and charge back to the fight. >>

Confusing Equal with Fair: Treatment for Active/Inactive Heirs

Sep 08, 2008

Continuing our look at the twelve most common mistakes agribusiness owners repeat, #7 addresses a common dilemma among parents: "How do we make the right choices for our actively farming kids and their non-farming siblings?"

Click here to review previous posts. 

The seventh of twelve most common mistakes agribusiness owners repeat:

The single biggest question I hear in my client consultations, columns, and live presentations concerns ‘equal versus fair’ for actively farming kids and their non-farming (non-active) siblings.

It’s asked in various ways - sometimes it’s framed as a simple comment like, “We don’t want to leave anyone out.”  Other instances are more forthright: “How do we make sure Joan is recognized for her work on the farm, but also give something to our son Frank, in Columbus?”

As a parent, your emotional tendency may be to state unequivocally that you want to treat all of your children fairly.  You may wish to divide ownership evenly, but doing so may have disastrous results.  You will trigger a family conflict that could potentially affect everything you hold dear.

You may think, “If I divide everything equally, isn’t that fair?” In fact, just the opposite is true. >>

Not Planning for Business Growth/Development

Sep 02, 2008
Continuing our look at the twelve most common mistakes agribusiness owners repeat, #6 addresses failing to plan for growth and development.

Click here to review previous posts. 



 
The two basic avenues of business development are:

Grow bigger – increase gross income by increasing the size and scope of the current business model. Then factor in a small net income bump for economies of scale.

Or, create a specialization – a niche – either vertically or horizontally integrating additional capabilities into the existing operation.

To grow in either direction requires a written business plan. Creating a detailed business plan will help an owner to decide which direction to grow, the best path to take, a budget of time and money for growth, and a realistic timeline for achievement. A business plan is comprised of ten basic parts.  >> 

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