A strategic resource team helps you to focus on your business. By surrounding your business with the right people, you can make profitable decisions. Many different people can comprise this team. Let’s look into the value proposition you should expect from five of these team members.
1. Family. Be sure to distinguish between family governance versus business governance. Non-active family members can derail a business that has no formalized communication structure. Common vision, shared core values, clearly defined decision rights, leadership responsibilities and documented roles (including an organizational chart) are all critical components to ensure the family involvement generates harmony instead of chaos.
2. Advisory Board. Shoot to include five to seven individuals who clearly understand your industry and operation from both macro and micro perspectives. The board should feel free to present both encouragement and constructive criticism.
When business issues arise, their third-party point of view creates an unbiased perspective that is generally impossible to achieve from within your own human resources.
3. Financial and Production Consultants. If you don’t measure it, you cannot improve it. An outside set of eyes analyzing your production costs for your business can definitely help you sharpen your saw, enabling you to cut out unwanted expenses or waste without cutting valuable inputs.
An outside look can also help you better analyze and separate your business into profit centers to clarify which entities are profit centers versus just expenses. Sometimes the profit centers we like the most are the least profitable, so confirmation from an outside consultant might just be the nudge needed to improve profitability over the long haul.
4. Lender. Access to capital, cash flow management, industry perspective, risk management and educational opportunities are the basics you should expect from a quality lender. Ask for comparative analysis annually from your lending institution to make sure you are at least on par with other producers in your area from a profitability perspective.
Always have access to an alternate lender in the event your current lender relationship rapidly dissolves.
5. CPA. The minimum expectations for your CPA are accounting accuracy and following all tax laws. Be sure your CPA firm has the capacity to handle your expected business growth. Your CPA should not be the person who advises you on when it’s time to trade equipment.
Also, it’s OK to pay some taxes as your business grows. Someday your business will be in wind-down mode. Planning and paying taxes along the way pays dividends when it comes time for the business to unwind.
Read Chris’ recent column outlining the 10 options for your farm's strategic resource team at AgWeb.com/resource-team
Chris Barron is director of operations and president of Carson and Barron Farms in Rowley, Iowa. He is also a national financial consultant for Ag View Solutions.