Carr’s Capital: April 2011
Keeping up with a moving target can be a tricky business, especially when that target is your business.
Keeping up with a moving target can be a tricky business, especially when that target is your business.
As your farm business grows, it evolves and moves forward – and, as it does, expectations and plans often change. When plans don’t keep up with the growth of your business, often you will find that your intentions begin having an impact.
So, what do we mean by intention versus impact? Intention is a course of action that one plans to follow in order to achieve a goal. However, the decision to do so can yield a devastating impact that was not intended. We have all found, at times, that what we say or do has a completely different outcome than expected.
It has also been said that the road to disaster is paved with good intentions. But how does this happen? When a person sets out on a road, they often don’t consider that the road could be riddled with potholes. What really happens is that the road the person starts out on may look good at the time, but as they travel down their road they soon realize that their decision was not a wise one and they are now feeling its impact.
In your family farm business life, intention versus impact can have severe consequences. I have been asked many times by farm owners, “How do I look after the needs of my family and still have the family farm flourish and keep on growing?” My response is, “Are your plan or will or agreements applicable?” Do these documents actually line up with your goals and dreams? In other words, do they meet your intentions? If they don’t meet your intentions, then what is the impact that these documents will cause either positively or negatively?
An example of this is a buy-sell agreement that states your non-business children will receive an amount of money only to find out that there is no mechanism for this amount of money to be paid. This is a scenario that often occurs, and creates a negative impact.
Now, how could this situation have been avoided? With the proper documents, a schedule could have been developed on how this money could have been saved or injected into the company, so the company could actually meet this desired intention. Often, I find that these questions are not raised until we go from the buy-sell agreement to the estate and business plan. At this stage, the older person who is now reflecting on how to benefit his or her children and grandchildren is realizing that the mechanism to fulfil the intention does not exist or is inadequate.
In plain terms, the negative impact of this intention occurred because there wasn’t a proper process put in place to ensure that the intention could become a reality.
So what do we do about this? When you intend to implement a plan, whether it be in the form of a will, an agreement, or a conversation, ensure that your desires are written down and that you have a process in place that will ask the question, “How am I going to accomplish this?”
What are some of the items in this process that need to be considered? Ask your partners if they understand and agree with your wishes. Discuss with your partners or those taking over the farm if they understand how your intentions will be carried out. Identify through a written plan and a financial schedule where the proceeds will come from to fulfil the senior members’ wishes.
Ensure your wills and buy-sell agreements are current and reflect these wishes. Ensure that your financial statements are up to date. Don’t be making decisions on old data or your projections may miss your target by millions of dollars.
If you’ve made major purchases, or expanded your farm by buying more land or increasing your quota, make sure that these changes are updated in your current business plan.
If you do not have a plan or have not looked at your business plan in the past five years, then you may need to revisit your intentions. You need to make sure that your wishes are current and can actually be carried out. If your business has a value of one-third of what it is today, then your intentions are probably outdated. If you do not have a process that allows the business to answer a question that is asked of it, and do not include a timeline or a schedule to help answer these questions, then you have an intention, or a plan, that may have a negative impact.
If you would like more information about intention and impact and how they can affect your plan, feel free to drop us an e-mail at This e-mail address is being protected from spambots. You need JavaScript enabled to view it or to This e-mail address is being protected from spambots. You need JavaScript enabled to view it .
As your farm business grows, it evolves and moves forward – and, as it does, expectations and plans often change. When plans don’t keep up with the growth of your business, often you will find that your intentions begin having an impact.
So, what do we mean by intention versus impact? Intention is a course of action that one plans to follow in order to achieve a goal. However, the decision to do so can yield a devastating impact that was not intended. We have all found, at times, that what we say or do has a completely different outcome than expected.
It has also been said that the road to disaster is paved with good intentions. But how does this happen? When a person sets out on a road, they often don’t consider that the road could be riddled with potholes. What really happens is that the road the person starts out on may look good at the time, but as they travel down their road they soon realize that their decision was not a wise one and they are now feeling its impact.
In your family farm business life, intention versus impact can have severe consequences. I have been asked many times by farm owners, “How do I look after the needs of my family and still have the family farm flourish and keep on growing?” My response is, “Are your plan or will or agreements applicable?” Do these documents actually line up with your goals and dreams? In other words, do they meet your intentions? If they don’t meet your intentions, then what is the impact that these documents will cause either positively or negatively?
An example of this is a buy-sell agreement that states your non-business children will receive an amount of money only to find out that there is no mechanism for this amount of money to be paid. This is a scenario that often occurs, and creates a negative impact.
Now, how could this situation have been avoided? With the proper documents, a schedule could have been developed on how this money could have been saved or injected into the company, so the company could actually meet this desired intention. Often, I find that these questions are not raised until we go from the buy-sell agreement to the estate and business plan. At this stage, the older person who is now reflecting on how to benefit his or her children and grandchildren is realizing that the mechanism to fulfil the intention does not exist or is inadequate.
In plain terms, the negative impact of this intention occurred because there wasn’t a proper process put in place to ensure that the intention could become a reality.
So what do we do about this? When you intend to implement a plan, whether it be in the form of a will, an agreement, or a conversation, ensure that your desires are written down and that you have a process in place that will ask the question, “How am I going to accomplish this?”
What are some of the items in this process that need to be considered? Ask your partners if they understand and agree with your wishes. Discuss with your partners or those taking over the farm if they understand how your intentions will be carried out. Identify through a written plan and a financial schedule where the proceeds will come from to fulfil the senior members’ wishes.
Ensure your wills and buy-sell agreements are current and reflect these wishes. Ensure that your financial statements are up to date. Don’t be making decisions on old data or your projections may miss your target by millions of dollars.
If you’ve made major purchases, or expanded your farm by buying more land or increasing your quota, make sure that these changes are updated in your current business plan.
If you do not have a plan or have not looked at your business plan in the past five years, then you may need to revisit your intentions. You need to make sure that your wishes are current and can actually be carried out. If your business has a value of one-third of what it is today, then your intentions are probably outdated. If you do not have a process that allows the business to answer a question that is asked of it, and do not include a timeline or a schedule to help answer these questions, then you have an intention, or a plan, that may have a negative impact.
If you would like more information about intention and impact and how they can affect your plan, feel free to drop us an e-mail at This e-mail address is being protected from spambots. You need JavaScript enabled to view it or to This e-mail address is being protected from spambots. You need JavaScript enabled to view it .