Advisory boards yield better business results
Nathan and Sean Collins put together an advisory group for their operation and it’s already yielded huge benefits.
The Collins Family Partnership’s board of advisers consists of five members, all non-farmers although rooted in agriculture. The brothers’ father, who still works on the farm, also sits on the board.
The advisory council meets about once a year to help the partnership position itself for opportunities down the road. "We know how to run our business, but someone with an outside vantage point may see something we miss," Nathan says.
"It’s easy to sit in the cab of a tractor and listen to the radio and get so bullish that you can’t see straight. It’s good to get the outlook of someone else," Sean adds.
Here are five ways they use the advisory board to improve their farming operation.
Help with Estate Planning.One way Howard, Kan., producer Jim Perkins uses outside advisory boards is to help him with the challenging task of putting together an estate plan. "The board can ask leading questions," he says. "They can challenge me in ways my own family can’t get away with. That’s good for the business."
Advisers also have offered up timely information to Perkins. For example, in a recent meeting in which estate planning was discussed, one adviser who is an accountant pointed out a change in tax law that would benefit the farm, but there was only 60 days to get it done. "We got into gear and completed it," Perkins says.
Farmer Boards. Pat Duncanson has belonged to several all-farmer advisory boards. On one board, the producers live several states away from each other, which makes it easier to share detailed financial and production information. This would be tougher to share with neighbors, says the Mapleton, Minn., grain and livestock producer.
One benefit Duncanson sees in groups that consist of various crops and livestock operations is that the perspective is different. "Some of the operators grow sugar beets and their perspective really has value," he says.
While Duncanson says boards can take many forms and still be successful, he is firm on the need for an outside facilitator.
Production Benefits. Advisory groups have agronomic value as well. Based on one group’s field trials, Duncanson has increased his corn planting speed and reduced population. The group also found that changes in nitrogen application are necessary. "It saves us money by making us more efficient and weatherproof and reduces our environmental impact," Duncanson says.
Machinery or Bin? Bret Oelke, a University of Minnesota Extension educator in Fergus Falls, Minn., says that if a board is put together appropriately, feedback is valuable because it is unbiased.
For example, a producer on one of the boards he sits on asked if he should buy a new piece of machinery or a new bin. The board advised the producer to buy the bin. In the end, the producer found a way to split cash and a loan to do both, but it gave him something different to think about, Oelke says. Producers almost always favor machinery over everything else, so the group’s input was important.
Something else boards do is caution producers to think about the unexpected.
Splitting CFO Cost. "You need to populate your group with people who challenge you," says Danny Klinefelter, a Texas A&M ag economist. He advises producers not to put together advisory groups with more than 10 to 12 people, although some groups find that they can do the important activity of benchmarking with as few as five or six members. When groups get as large as 20, they lose their effectiveness, in Klinefelter’s experience.
One real advantage producer peer groups have, Klinefelter says, is that they can bring in national experts who would be too expensive for individual producers to engage.
Another benefit Klinefelter sees in advisory boards, regardless of type: "Challenging yourself, exposing yourself, even some of your weaknesses. People are free to ask questions." That is how producers become better managers, he adds.
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