For the younger generation of many family farming businesses, involvement with the farm may mean working without receiving any ‘real’ income. These family members often secure paid employment outside of the family business to enable them to provide for their immediate families in the short term.
While working outside of the family business is often a necessary reality for farmers, this can have serious implications for the operations of the family farming business, and cause frustration and miscommunication within the family. The good news is there are actions you can take to avoid these outcomes.
Transitioning a farming business to the next generation can be complex. Even with a comprehensive long-term succession plan in place, it’s important that the transition to the next generation does not come at the expense of either the farm’s short-term goals and operations, or the needs of individual family members.
Establishing the habit of regular ‘Toolbox’ meetings can be an effective tool to support your longer-term succession plan. Toolbox meetings help ensure that all family members have a ‘voice at the table’ and the aim is that individual needs can be accommodated within the overall operational requirements of the farming business. Toolbox meetings are an effective practice for keeping everyone updated and working towards the same goals. The benefits include:
#1 Identifying and managing operational priorities
Toolbox talks can be used to identify production priorities so farm operations can be managed in accordance with seasonal needs. This can maximise production outputs and avoid delays or slow progress. Regular meetings also help to create a more resilient business by creating the flexibility to respond to the many changing factors associated with agricultural businesses.
#2 Creating efficient operations
Thoughtful planning can help create economies of scale and avoid production issues or delays. Toolbox meetings can be used to plan work activities based on availability of workers. This can create efficiencies such as machine maintenance occurring during holiday periods or when family members are involved in paid work outside of the farm. The meetings can ensure the best use of staff to create efficiencies during peak production times.
#3 More effective decision making
Toolbox meetings help to establish the discipline of effective and operational decision making, which is vital for farm management and maximising seasonal outputs. Regular discussions enable the next generation of family members to be more involved in decision making. They also provide an opportunity for the older generation to pass on knowledge and keep the family informed of changes in priorities, such as the need to buy feed due or to postpone fencing due to lack of cash flow. The meetings are a way to promote problem solving, information sharing, as well as recognise the contributions of family members and can also provide a structure for all parties to agree on the short-term priorities for the business.
#4 Risk mitigation and safe operations
Toolbox meetings help to anticipate and/or deal with issues as they arise so risk can be mitigated more easily. The meetings can be used to outline safety requirements which can reduce accidents, including safe machine operation or preventative practices (for example, using chemicals or working in confined spaces), especially if you have new employees or an individual is performing a task for the first time.
#5 Maintaining open, two-way communication
The meetings should not just focus on the operations of the farm, they are also a valuable tool to help family members and employees. Just because you are a part of the farming business, it doesn’t mean you are aware of all the day-to-day operations of the business. Regular meetings to discuss the farm’s operations and priorities are an opportunity for open communication and feedback among all family members associated with farming operations. The meetings can be used to share ideas, hold everyone accountable for their actions and show appreciation to family and employed workers. Importantly they can also be used to check the health and well-being of family members.
Tips for effective Toolbox meetings
- Keep the meetings short (15-20 minutes at the most)
- Meet once a week at the start of the day or a time that suits all parties
- Meet more frequently during peak times (mustering or shearing)
- Involve all family members and employees
- Toolbox talks should be informal so meet at a work shed or at the back of a farm vehicle.
- Keep the focus on key work priorities and short-term goals. Outline the critical jobs that need to be done first and any changes to work priorities. Check that everyone at the meeting understands priorities clearly. (Save the longer term strategic goals for your quarterly review meetings.)
- Outline any safety issues that may affect work and report any concerns with machinery or equipment.
- Provide an overview of any new information since the last meeting, such as lack of rain and the impact on farm operations or changes in work priorities.
- Use the meetings to schedule machinery maintenance or other operational requirements.
- Ask everyone to bring a calendar to mark out key dates such as paid employment dates, holidays or seasonal events. This can help to manage workload and create flexibility for each family member’s needs and also make sure you have ‘all hands-on deck’ during peak harvesting or high-volume work times.
- Encourage brief feedback and discussion to ensure everyone feels valued and involved.
- Use a notice board to highlight key priorities and news for those who miss a meeting.
At Financial Services SA, we have a particular interest in helping farming businesses develop and implement practical and achievable succession plans. We have been helping primary producers, business owners, families and individuals in rural and remote locations for more than 30 years.
If you would like more information about transitioning your family farming business, I invite you to contact me today on 08 8253 2906 or email info@financialservicessa.com.au.
This advice is provided by Phillip Dibben under Financial Services SA rural business consulting services.
Phillip Dibben is an MFAA Approved Credit Adviser, including SMSF lending, and is an Authorised Credit Representative with Riverland Lending Services Pty Ltd, ABN 37 1415 814 080 ACL 391835, and is licensed to provide advice in all consumer and business loans including equipment finance. All loans are subject to lending and approval criteria.
Phillip Dibben is also a financial adviser at Active Financial Management. Active Financial Management and its advisers are Authorised Representatives of Fortnum Private Wealth Ltd ABN 54 139 889 535 AFSL 357306 trading as Fortnum Financial Advisers.
This information does not consider your personal circumstances (including taxation) and is of a general nature only. You should not act on the information provided without first obtaining advice specific to your circumstances.