Tape #304 - Whole Family Approach to Farm Business Planning

So, I thank you all for joining us this morning. I'll just give you a little information about myself before we begin. And, I do expect there might be people trickling in during the morning, some ladies who I know were going to be here but we were labeled incorrectly and I think they went off wandering, looking for us. So, we've changed our label at the door but anyway. We'll see what happens. As you can see, I'm Kathy Bowen, I'm from Western Australia and I'm from an area that we refer to as the wheat belt. We produce 40% of Australia's wheat and our wheat is the highest quality in the world. Our products are really our pride and joy. It's clean, it's green, it's good. For the last, well, I grew up on a farm, my husband is a fifth generation farmer, I'm a fourth generation farmer and between us we have four children. We believe we have a long-term future in agriculture in Australia. Some years ago, I began working for one of the universities there, the agricultural branch and within a matter of time, I became associated with family farm succession. The issue. Now, what I found was first of all, there were quite a few people who were partially informed in the professional sector offering advice on this issue but it wasn't solving the problems. So, for the last 10 years, I've worked fairly intensively and I've done, I've run seminars, I am invited to speak at seminars in our state and um, I then turned my work into a research program and I'm currently just commencing the PhD sector of my program into family farm transfer, family farm succession, whatever you'd like to call it. I've actually altered the title just a little and called it Family Business because regardless of the business, if family are involved, it doesn't matter if it's a farm or dealership of some sort or a company, if there are family involved, the problems are the same. So basically, over the last few years, I guess I've put a polish on my work with my research I've become far more informed and I have my contacts all over the world. So, I have a fairly good understanding of how it is in other countries for people. What their problems are, what the issues are, and I might add, they're all the same. So, I'm going to start today's work with a short talk and then we're going to back into a practical workshop session whereby you can learn what I believe is the crux of the problem for the people involved and I'll go into that and introduce it properly later on, so I won't say any more about it at the moment. But I do believe that perhaps what I do is more of what we need rather than the more professional, not more professional, the legal or financial issues. We are not looking at those. And I might add, that was incorrectly sort of worded too in the brochure. Never mind. All right, the complex process of transferring a family business within a family becomes a focal point of any family business in terms of it's long-term survival. There are a spectrum of different processes involved and the principal factors of succession become not just succession but two issues, succession and inheritance, and out of those, we again, have two sections. We have in fact, what becomes the transfer of management and control which is only one part of it and the other part which is the transfer of ownership and associated assets. But difficulties arise as we know during this procedure and they are generally associated with things that are not necessarily legal or financial. Generally, they are associated with family relationship issues and this is where I'm focusing my research. In fact, taking care of the transfer of management and ownership is generally, not sufficient in itself. A family business means that a family occupation is being transferred or inherited and that the process becomes complex and multi-disciplinary. There are many issues involved. That does not mean that not all of you here are not able to actually take that process in hand and that's what we'll look at today. How you can actually manage it yourself.

In Australia, and these are 1997 figures, as many as one in five founding families find succession a very stressful experience. The fundamental obstacle that most family's fights involves communication and interpersonal skills. Now, the communication is no surprise I'm sure to most of you and I'm surprised still at the number of studies conducted that find out that communication is a problem. We know it is a problem and I don't why they keep having studies to find it out again and again. It remains a problem. It's not going to go away. These types of figures may not seem too significant in themselves, however, the nature of finding in Australia is dominated by family ownership and only about .4 percent of Australian farms are owned by corporations. So, it still very much remains the realm of the family and that's why it becomes significant. Where families farm together, there is an average of 2.5 partners per farm and if you add these figures to the average age of the Australian farmer which is about 60 years old, then you realize where there's an emerging crisis. If our farmers are getting older then obviously the issue of transfer is becoming, really sent to front stage. So, the next 10 to 15 years in Australia there's going to be a lot of land exchanged whether it's within families or elsewhere. My experience has shown that most families who share a business do want to hand down that business successfully to their family and they do want to be fair or equitable about that hand-over. But they also need to take care of many future fundamental issues so you can't just hand it on and then not look after your own future, if you are for example 50 or 60 or 70. There are still many years where you have many many needs of your own. But how and where does the process start and that becomes one of the main questions that I get asked of people and if there is dissention in the family, if there is conflict, then what on earth do you do because if you've got two brothers who will not speak, how can you get them to start planning? If you've got a sister and a brother who just want to [cutting sound], then how are you going to sit them down at a table together. And that's my work. I just want to show you a couple of overheads. All right. Farm succession at a glance. Transferring a farm from one generation to another can be made easier if all family members take time to talk about their needs, their wants and their concerns. You can change that concerns to fears, if you like, that's the word I use at a formal meeting. But once again, how do you get the family there? Making a plan for a farm transfer and involving all family members can prevent enormous future heartache. It can prevent marriage breakdown, relationship destruction. It can prevent the loss of your farm or your family business. So, it cannot be dismissed. It's no good saying we don't have a problem while there are people there will be problems. They are not always negative and there are many many success stories. So, please don't think that I'm preaching gloom and doom. Be fair and consider all family members and their needs including those not on the farm and that is yet another issue. How do we take care of the people who are not involved in the family business? Are they equal to an equal share? Should we just give them their education and leave it at that? And then what happens when the Will, 10 or 15 or 20 years down the track is challenged by people who haven't been in the farm or business for 10, 15 or 20 years? What happens? Big problems. Review your succession plans and that's what our work today will show you why and how it is really quite simple and easy to do. Involve and respect all new family members, they have so much to offer. And of course here, whether we like it or not, the focus comes back time and again to the women who marry into the family so we've got daughter-in-laws who have no role, have no face in the family. Who are considered a bit of a question mark. You know what's going to happen to that marriage? And then of course, everyone wonders why five or ten years down the track when she does go, just why, you know, how did she get involved? We always knew she wasn't right. And finally, the bottom line for transferring the family farm is to involve everyone in the planning. A professional advisor is a wonderful asset but, and it's a big but. People say yes, we are getting our accountant. Yes, we are getting our farm consultant. We've got a really good solicitor. I don't think it's enough. I think they are only part of the jigsaw and if you're _________ just on one, then beware. Beware. My role over the years has become helping families to sort out the dispute to improve family relationships, to look at that longevity of the family business and to actually acknowledge how important it is that family business impacts on the viability and productivity of your business. If you haven't got people with that ownership ethic up here, they are not going to be doing the best for their business. And we'll talk about that too. That becomes really part and powerful of the whole process of your family planning. Um, look can I add, I see people writing notes flat out.

Participant: I was going to ask, do you have a copy of your presentation that you will hand out?

Lecturer: I've got a copy of the workshop section. These initial notes are on here and I can get them copied for you and I can get left at the Director's room. They've been doing a wonderful job with all the photocopying.

Okay. I believe very very strongly that most families have the capacity to resolve their own problems and issues. They simply need guidance, sometimes an outside umpire and that person must have no bias. And that, you will find becomes a problem because if you have a family accountant and that accountant is working for the owner of the property, it is his professional job in his eyes or her eyes to work to meet the needs of the property owner. That doesn't mean that generation two who may be 30 years of age, is having their needs met and that's why things come unstuck. It's not sufficient to rely on just one professional. My research is designed to explore the issues involved in family conflict. I do focus on the conflict. That's where the destruction lies. Put forth options for solutions and make this information readily available to farmers and so, I'm fairly noisy in our state. These overheads will be in your notes. Okay, they've been written out for you.

Over the years, I've been guided a lot by what people have spoken about, not sometimes immediately after a seminar, but also, the phone calls when in private they can ring up. And I've had calls from all over Australia and not ten minute calls, they'll talk for an hour and a half. I mean it's really unnerving sometimes. However, these are some of the most quoted lines that I get. Okay. Things were okay until the women came into it. Since then, our son's don't get on and there's tension and stress. We can guess at the problems but no one is willing to discuss them. The senior farm partner or partners won't talk about the future of the farm, so what chance have we got to do anything about it? Our son's or daughter's marriage is of concern to us. Do we stand to lose our life's work through divorce proceedings? Big issue in Australia. Everywhere. I have no clear idea of my role in this farming family. I have no say in decisions that will affect my future. I have no real understanding of what happens if my spouse dies? What about me and our children? Where do I stand? As brothers, we have always had our differences. How can we ever talk about dividing our farm if we can't agree on next year's program? One of my biggest fears is that my brother or sister who lives in the city will one day expect an equal share of the farm. It's just not possible. But Mom insists on it and has written it into her Will. How can we possibly to pay Mom and Dad out when we've got two away at boarding school and two still at home? Our housing is old and deteriorating and our parents have no other security than the farm itself. Grandad wants us to have the farm when he's gone but the way things are going, we'll have lost everything before then and Dad hasn't had his turn yet. So, we have two, three, four generations on one farm. Okay, and just quickly some of the most common questions. There are the quotes that I've put up. Some of the most common questions. When is the best time to begin planning? How do we begin planning? How do we tackle this issue when our family is already in a state of conflict or dispute? The men won't talk. How can we encourage them to start talking? Who can provide us with guidance and advice as we work through the process of sorting out the family problems and then tackling the farm issues? So, those questions are unintentionally have basically become the framework of my research and that's where we're leading today. I had an overhead of um, that's escaped me at the moment. Okay, we'll leave it. Basically, it lists, uh, here it is. It lists the facts that we'll cover today.

Fact 1 - Good family business practice must consider the needs of every family member involved. Good family business management must consider all of the family. If the family member is in any way affected by the farm, be they on the farm, and if you don't mind I'll just refer to farm, but I do mean as I said, family business. So, if the family member is affected by that family business whether they're with the business or outside the business, if they feel that they have some part in it, they must be included in the long-term planning. So, the advice is, of course, include them now so that they don't push their way in later. And even if they have no part in the day-to-day running of that business, where multiple generations of the one family work together, there is an enormous requirement for understanding and awareness of the people factor and that's sort of the topic of my work. The people factor. Time and again, especially in farming we hear terms such as risk factor, sustainability, forward planning, maintenance and repair, livestock husbandry, but none of these terms are ever applied to the family. They are applied to the business but not the family. And yet, we find that families have to work together, live together, save together, cooperate together and survive together. So, these terms are relevant. This can be very very difficult and very stressful because we find that individuals have their livelihoods determined by the financial planning of someone in the family, the work skills of someone else affects their livelihood in that family, the commitment of yet another party in the family also affects their livelihood and very often all of these are limited in themselves because as a family we haven't searched out who is the best financial management person. Where are the best skills and how do we best use them? What does every family member have to offer? Because quite often, we sort of take on these roles over the years without actually planning to. So, some family business decisions can only be made effectively and sustainably if they take into account a spectrum of needs of the family members involved. It must include future security, plans, hopes and aspirations and it must be part of a large family picture. But how can most of us who have had no training in any of this, how can we work it out? How can it be done? Where do we start? That takes us onto our next fact.

Fact 2 - No business can even hope to work without a constructive planning system in place. Australian figures 1997 show that as many as 50% of farming families don't seek professional advice in terms of planning for the business transfer of that farm or whatever. And those that do have a measure of planning, do rely fairly, solely on the accountant or their solicitor and not much else. This is a start and I'm not saying that these people are not necessary, but, as I said, they are only part of the jigsaw, they are not the answer in itself.

We've already mentioned communication. Fact 3 - Communication and planning cannot be separated, they must go hand-in-hand. Of the families who found stress to be a real problem within their families in terms of taxing this issue, they found that it was extremely or very stressful when there was no communication in the family. So, in other words, as the communication broke down, everything just go worse. In fact, in almost all situations where there was a communication problem, plans that are put in place are more likely to be made on the basis of misunderstanding and false expectations. The longer the discussions are delayed, the fewer the options each family has. So, you begin early is basically the message. And personalities will always get in the way. Always. But that's human nature and if we didn't have our different personalities, how boring it would be. However, planning allows us to step around personality issues if we do it properly and for anyone who's ever looked at conflict management one of the golden rules is separate the problem from the personality. So, by all means, walk out the door and have a bust up. But inside, the personalities don't come into it, it's business.

Family business and family tensions. Tensions with any family will emerge other different issues. This is from an American study. So, who does what? These are just little things but they become the big issues. Who does what? Living with tight money doesn't it get worrisome. Fears of displacement by a younger generation. A real issue for the older generations. And discontentment of apparent lack of progress. The frustration of going on year after year after year. There is no progress. There is no improvement. We are not getting a better wage. Our car is still old. The house roof is getting worse. There is just no improvement. We must have a reward. It is a primary element of any human resource management program. So, for multi-generation families, family relationship issues become the biggest stress contributors. The financial can be handled. The legal issues can be handled. But first and foremost, if you haven't handled the family relationship issues, they are the source of it all. Within this area of concern, the sons and their wives experience more stress than the older generation and the mothers and daughters-in-law experience more stress than the fathers and sons.

Farms and productivity. If only the men would listen, they would take on this so much more, wouldn't they? [someone talking in the background] Stress and the confusion of roles for family members. Different generations work together. Confusion in that parent, adult, child working relationship. It's the old question of when is the child the adult? Some say it's not really until the older generation has moved on. However, this confusion will interfere with productivity, management, and any extended family relationship. The confusion of roles often adds further stress to the planning and the decision-making. So, once again, it's this relationship factor. Confusion of roles. Add to this, the stress involved in sibling rivalry and the poor adjustment to the needs and ages of the different generations and planning and productivity are further impaired on the family farm. As these different issues crowd family business, so too, do the people involved get caught up in their own family needs and this is where I'll introduce the graph and then I'm going to hand out some notes and we can work through the rest of this together. So, let me show you my graph. I'm very proud of this. It's very simple.

This actually makes men look which is really quite astounding because it's so simple. Uh, can I just move it up so the heading is gone? Okay, it's called attitude to security risk and independence and you will all get one in just a moment. Just let me show you how it works. Down the vertical access, we are talking about years, okay, we're going up in five year sections so from usually from about 20 up to 80 on the horizontal axis the same in years from 20 up to what was meant to be 80, don't lose sight of the education costs. That's important. That little line down at the bottom. And we have three different lines here. Okay, so we have our blue line which is our security needs. Can you see? And if you have a look at it you will find that as we increase with age so too, does our security needs rise. So, as we get older, we need to take care of the security factors more and more. We can't say they become less. If we look at our pink line here, we are looking at preparedness to take on risk or view new ideas, you know, new ideas, in general. Basically, what we are looking at here is that younger people are always hell bent on new ideas, innovations, wonderful money making schemes, and anything that will, that they've learned or the guy down the road tried and that worked, or the lady next door she's just made a fortune overnight, and so, we have this preparedness to take on new ideas. But if you look at your pink line, as we approach the late 50's and 60's, our preparedness to take on new ideas is diminishing sharply. We are concerned more with that blue, that security line. Okay. So, within a family where we have a 70 year old who's looking at blue security lines and we've got a 35 year old who's willing to and wanting to expand immediately, we have a very simple and obvious clash of goals, needs, relationships. Okay. Now have a look at our orange line, the independence one. We are going to link it up with our ages and you will see once again, that our need for independence which is just part of our human make-up, we all have it, also peaks in those years of anywhere between 25 to 45 or 50, that graph, I might add, was really hurried the day before I left Australia. So, it's a little bit inaccurate, but you can use your imagination so you can work it out. So, our need for independence is also significant, but link it up with our blue line and you will see that security dominates as our need for independence will decrease, but those younger people, they have a paramount need for independence. It's important, it's significant if you've done any kind of psychological reading Laslo's Hierarchy, if anyone's heard of it, it's all that, it's wonderful stuff. Okay. That ______ section is not meant to have any lines. No one's taught me how to take those lines out but that is the age of expansion. They are the years when we do want to invest, we want to increase our holdings, we want to do all of that. Okay, and down below, of course, is the education costs and where they peak and that too, is in that era. So, you can see, is that better? higher? How's that? You can see how all of those things are clashing. Independence, the need, the wish or desire to expand and education costs are all happening at the same time but our security is rising, our security needs are rising and so, the clashes begin. Now, I'll just stop there and I'll give you all one of these graphs and then we'll commence the workshop section. Your graph isn't in color so your going to either color it yourself or just remember which is which.

Participant: Your education costs. Is that education on farm education because, you know, I have a lot of kids going to the universities and it starts very close to 19 and 20?

Lecturer: The education costs are referring to the people who have to meet those costs, all right? So, at 35 you've got a 15 year old son, for example, or daughter, and your starting to have to think of higher education and for many of us in Australia, we have 12 years of schooling. So, we can go up to year ten and very often send our children away for years 11 and 12 for the more remote people. So, that means that they need to consider a minimum of say $10,000.00 a year for each child boarding and it's usually _______ than that it's usually 12 and up, that's not referring to the child but the person who must cope with the financial expense. And of course, you know, they can have children at boarding school right up to 60.

Participant: I don't know if I'm the only one here but my kids have actually done a lot of earning the money for their education and getting scholarships and that kind of thing. With seven kids I couldn't have afforded, you know, education.

Lecturer: Um, yes, we do have that type of thing available in Australia but scholarships are very hard to get, it's very competitive. They're just really, I mean, they're a dream.

[someone talking in background - inaudible]

Now, I just explained the second sheet you're receiving. What I've put on the, you'll see page 12, page 12 shows you a copy of the headings because I wasn't certain when I left Australia what my photocopying facilities would be here, so I really felt, well, if you've got the headings then at least you may be able to remember what we talked about as it is you have got the notes as well. And page 13 is the workshop we'll be working through. If you skip over that quickly and from page 4 down, these are the notes we will cover during this workshop. So, my introductory piece of a few moments ago, I haven't actually put in here. Okay, but that's the part I will make available for you, if you wish. So, what I'd like you to do first of all, is just on the back of one of your sheets and is there anyone who doesn't have something to write with? We are referring to page 13. Now, you don't have to include every single member because quite often it can go into 10 or 15 people but if you could quickly, so we're working off page 13, okay? If you list the different members of your family involved in the family business. So, just use initials or something. This is just a little working exercise to guide you through the process and it's useful and it's relevant so, if you could quickly list, if not all, then a good portion of the people involved in your family business. There's six up here. Actively working in your family business. They are there every day or part thereof. And, you should put beside that person their age. For those who have only a few to list, you can move straight onto Point 2, which is listing family members not involved but who must be considered in the planning. And once again, include their ages. Including your in-laws, if they have a partner, not that they are part of your family business planning as such. It's just you must acknowledge their age as well. Okay, because if you've got a son of 40 and he's taken on say a 25 year old bride, um, there's a good chance that he may sort of pass away before her so, I mean, there could be a need there that we need to acknowledge. You can't wake up ten years down the track and say, well, we forgot about that bid. All right now. As I said, this is just an exercise to get you started in your thinking. So, if not everyone is included at this stage, I'll move you on nevertheless. What I'd like you to do now is take your graph and using, most of you only have one colored _______ or pencil, I realize. You should ideally use two colors. Go back to your list of people involved in the day-to-day business running of your family. Go to your graph and draw lines listing each person. So, you may have a 20 year old, you may have an 18 year old, you may have a 30 year old, and then there could be a 60, 62 and there could be an 80. All right? Initially, just do the ones who are in the family business day-to-day. Okay? Now, as soon as, well I'll give you another minute or two there. If in your listing you've got for example, you might have say, a 40 year old son or daughter on your property and they may have a child of 10, then include those as well. So, your going into a third generation or even a fourth, that's fine. Now, with your non, I call them non-farming members. That doesn't mean their not family. It simply means they're non-farming. So, ideally, a different color or a different shaped line or something and do a similar thing just draw a line linking them up so we've got a 40 year old here, who's in the city. You've got a lot a children I might add here. And you might have 35 year old as well. Take them right through, right up to the top of that graph. And there could be something such as um, say, a retired on-the-farm uncle or something like that who, you know, who's been involved all his life but is a bachelor or something like that, so they might be 70. So, that's his spot. He has to be taken care of because he's worked on the farm all of his life. He's not part of the micro-family but his needs have to be considered. Okay. I'll move you on quickly if you don't mind. What I'd like you to do now is once again, just on the back of one of those pages, I want you to draw up a simple little take. I'd like you to put name, needs, wants, and fears. Now as I said earlier, it could be concerns. All right. It doesn't necessary have to be a fear as such. Okay. So, um, my name is Joan and I can put my age if I like. I'm 48 and what is my need? I need security, you can list as many as you like. Okay. I'm just doing Joan. So, Joan is 48, has security. What does she want? Retire one day, um, to near her daughter. Okay. Near the daughter in, um, where is the daughter. Is the daughter at the coast or the city? Let's say she's coast. Oh, I just committed an enormous crime. That's all right, here's my own, I did bring them. So, near the coast. This one does rub off. What is my fear? My fear is my son's marriage. Okay. Now you can list anything there, anything at all. The one question that people put to me is, what is the difference between a need and a want? And it's a really important question. And one that ideally every single member of that family should be set down and made to analyze. It's very easy to analyze. You ask why? So she doesn't get it. Okay. My sister's not having it. I'm having it. I must have it. Why? Because she's not getting it. Ultimately, it tells me it's not a real need. I would like to have it but it's not a need. I will get by without it. So, it really is worth your time to question your whys. That's why, don't analyze this too carefully, don't puzzle over it. List them as you think they are and then analyze each one individually. So, for example, for Joan, she said security is a need. You might find that it links up over here, the son is in line to take over the farm. Her security is a problem because his marriage is an issue. So, you can see how they link and interlink. All right. It's really a simple but so worth while exercise. Okay. Sorry, question.

Participant: Now, at home we'd be doing this with our family. So each family member would answer their own?

Lecturer: At home you would be doing that except that your son thinks that Mom is just always going on about this and I'm sick and tired of it and she can do what she likes but I'm not going to part of it. So what do you do? And one of the daughters-in-law has a lot of influence over her spouse and she's very bitter because she hasn't been treated well. So, how do you make them sit down and become part of it? Give me a few moments.

All right. On your notes, page 4, down the bottom, 4.5. Just casting your eyes momentarily at the graph. Some very good reasons why you should consider business planning. And I'll go through these quite rapidly because you have the notes. We're working from different perspectives, with different motivators and different needs. We need to concern ourselves with all of the concerns and planning allows us to do that. We can help to identify talent and performance. We can focus on leadership. We can help to identify what our future skills may be. So, are if we are going to expand our business, does that mean in fact that we need someone in the family focusing on just being the business manager who's in the office and that is their task. And could it well be that it's your youngest daughter who is best, not the oldest son. It helps us to identify where we are now and where we want to go and that's the crux of any kind of planning in business. Where we are now, where we want to go, just like a road map. Okay. You can't start traveling unless you have a direction and a destination. It allows us and this is so important, to prepare for life changes. Marriage, death, divorce, health crisis, change of personal direction, retirement. Any one of those things will happen not always in order and not when we expect them. And things like a sudden health crisis can absolutely throw everything in chaos. So, the planning, it can never ever solve all of the issues but it can help us to prepare up here which is where it has to be done. Moving onto page 5, and Fact 5. All right. It's Fact 4, sorry. There's a little bit of a mistake there. Okay. Having good ideas is wonderful but if you haven't got management support then you're not going anywhere. You must have management support. And how many people have I met where the 80 year olds are not going to do anything. They are not going to be involved and it's their farm and they'll be out in a box one day but until then that's what it is. So, you must gain management support. How can you do it? Present a case for change and how. Change is the one thing that remains constant in business. You move on or you get left behind. And all businesses, regardless of shape and size, have common problems, so it is not just your family and always remember that. There a people who have worked through these processes whether it's a bank, whether it's a major corporation, whether it's the local accountant business partnership. Okay. But you must have cooperation from the management and without it, you won't get very far at all.

Participant: That leads me to a question. Do you have any strategies for people who are 70 or 80 years old and their strategy is nothing is happening until they go out in a box?

So, before you begin planning, beware of the following. You need management support if you are not supported at the top, your planning will fail. You need participation from all family members affected by the business. And sometimes, you can use the opportunity of inviting someone to participate in the planning or inviting them to take care of one issue of planning and that actually sort of coerces a little bit of cooperation. Always remember, reward is the primary motivating factor in all human relationships. Reward. Reward and recognition. You must learn to hold meetings and they are difficult because some people don't want to meet and some don't want to talk if they do meet. So, you've got, this will come into it a little bit later on. When they do start happening then they must be business-like and they must be regular. It's no good having a good idea and then only doing it once a year because that's not good enough. Your average business in the city has a business meeting sometimes once a week. That's a bit hard for farming, I think. But once a quarter, by all means. It must suit different family time needs. So, if the youngest daughter-in-law has got babies who are not well, you must consider those sorts of things. You must have good leadership and it's not necessarily the person who owns the place who is the leader. The meetings must encourage better family communications and in terms of a business tool, a meeting will actually encourage communication. People sort of have to talk, especially if you have an outsider in there helping you. They will draw them out, a very good way of doing it. You must have good record keeping. It must be regular. It must be business-like. It must be fair and every single person must be involved and informed. And nothing, but nothing takes place of good preparation. It's my overriding rule to basically everything I teach. Prepare, prepare, prepare. An action plan. This is page 6. Changing the culture of any business is very difficult for anybody at any time. To change the culture means you have to change the thinking and if it's entrenched for 20 or 30 years, how on earth are you going to do that? Remember, well, you may need to use a variety of approaches or different options where after persuading people. Remember, you have to make others want to change. Therefore, your planning must be attractive to others and it should offer a promise of something. Reward and recognize. So, consider, and I've listed five there and this comes out of any strategic planning material that you care to look up, it is strategic planning. Okay. You can use a visionary approach. Anticipate future needs. So, that particular son or daughter or parent, if you like, who's in a house that really does need work, offer it. Offer it as, you know, look, we'll get the house renovated this year. We will take out a special loan or we'll start on the roof or we'll build that extra room. So, anticipate future needs of the family business especially in terms of leadership, special skills and practical needs such as, housing, holidays, education or use a problem-solving approach. Seek suggestions from families in terms of potential and/or existing problems. Career-driven approach. Plan in advance for your educational needs of children and adults. If all of you are not at some stage into going some kind of courses, be they computer work, business organization, anything at all, you really should be. That's part of your role as women in this industry. Try the competitive approach. Suggest the need for your business to stay on top. Find similar ones that are successful and ask those people how and why they are doing better and take it home. Most people who are successful are more than happy to talk about what they've done. It's sort of honing in on the ego. You just don't tell them that. Or use a strategic approach. Create a picture of what you would like to see and then work backwards from there. So, this is where I would like to be ten years from now or five years from now or a year from now and then work backwards and that will allow you to find out how to get there. That's just another way of doing it. Fact 6. People factor planning should always work towards continued leadership and talent doting. And it's listed as number 5 here. Do the groundwork first. Assess you first and then the practices and problems of your own business. You may need in order to get this groundwork going, to gain agreement and commitment and support from others in the family. Be prepared to seek advice and ask for help. And once again, and the question came up yesterday in the inheritance talk. Who do you go to? Where do you find out? There's nothing straightforward in this business. You keep in touch with farming journals, with farming organizations. You find out someone who's done it well and ask them who is your advisor. Where did you find this information out? That's really where you get these answers. They won't be written up and put up on the poster for you. You've got to really sort of nut and ferret it out yourself. You should assess other similar businesses. Find those more successful than yours. This is referred to in the business-world as benchmarking and this compares your business performance against the best in the field. It's a really good way of determining a goal. Pool your ideas, develop a rough plan of how your business could tackle your problem areas. List guidelines with small positive goals. Don't go for the big ones. Go for the tiny little ones. It may be we're going to have another meeting before the end of the month. That is in some way an enormous goal. To achieve it is very very good. Okay, and it also allows people, the skeptics, to think about things. So, establish a valid need and concrete benefits. Once again, need and benefits, reward, recognize. Okay, Fact 6 on the overhead. You must consider the differing needs, wants and fears of the family members and that's where you come back to your child. Establish a need for solutions. If you use the above angles that we've just had a look at then, you can help to examine your own family business practices and you will gradually see it's not going to come up in a blinding flash of light, it's a gradual process. You'll gradually see where you need to move in terms of gathering support for change, but again, take care of those needs, wants and fears of the family members and use those to help structure your family business goals. So, that's answering the question of how do we sort of start this process, that is the best way to start because it allows people to identify what they need. And you'll often find that some people don't even want to be in the family business. They just felt obliged to be there. They thought Dad just wanted it. That will tell you that they don't want to be there. So, it's so important...[someone talking]...and that may change.

Participant: Those wants and needs are even though they may not want to be there, five years from now that's where they will want to be or they might be. So, what do we do about that?

Lecturer: Okay, this type of thing allows for it does cater for some future, no, it does cater for some future. So, see Joan at 48. She wants some security, she wants to retire. Okay, so, you will find that people will forecast in it, yes. You will find that the 30 year old offspring on the farm is saying I want to own this by the time I'm 50 or I want some title to it not own it, but I do want some ownership. You will find that they will say I need to know where I stand. That's one of the most common phrases you will hear. We need to know where we stand. You will hear time and again, we're living in limbo, we don't know where we are. These will come up over and over, and that, as I said, sometimes you have to leave that with people and let them just add to it over a month and say, right we'll come back in a month and we'll look at it all. People have to be very honest and you've got to make sure that that honesty is respected and not abused. So, if they say, well, you know, I want to buy out a neighbor next door and Dad leans over in true Aussie style, "Don't be bloody ridiculous." It still has to remain as a goal or as a want for that person. Document how you business operates now. If things appear to be running smoothly, that doesn't mean they are running well. Gather information about past and present problems and identify if you can, how the farm was passed on in the generations before you. That, we all find very often dictates what happens to you. I don't want to make that a hard and fast rule but by heavens sake, it happens over and over again. Um, so, identify where you could improve. Independently interview family members and list those for yourself. Some people need you to do that for them because they are too insecure really, I guess to do it themselves. They really don't want to be exposed and be vulnerable. That makes you very vulnerable. Okay, so sometimes it does help to just quietly wander around the family and get those and jot them down as a beginning. It will never be an ending list and it will change because Joan having made that list, might die tomorrow and then everything's changed again. That why planning must be continuous. Also, ask family members what problems they see with current leadership. Now, they could turn around and say well, if you stop dominating we'd do better. So, you've got to be prepared to wear that. If you want honesty, wear it. It'll be painful and stressful for some but it will open doors. What ideas do they have for better organization in the business? What do they consider the key positions within the business? And are they recognized as such? So, if for example, an Australian farm, if a key position is managing the shape or the wool production, is the right person doing it? Or are they just doing it because when they came home from school that was what they started doing and they are still doing it but they are not doing it, you know, in that really sort of active way that will make it better and improve it. So, again, you will tread on toes and it will start a few sparks. That's okay. Anger is actually a positive emotion. It's not always negative, it can be positive. What do individuals say will happen if the current leadership need replacing. So, if Joan does die and she happens to be the title holder of that property, what does the family say will happen, so assess those things. What talent skills or employment remains untapped within the family. And this of course, is where we focus so often on the women, the untapped resources in our families. How are the different members best motivated and what do they see as reward for their work? That takes us on very quickly to our last point, which is Fact 7 on the overhead, Fact 8 on there. In any human resource planning scheme reward remains one of the biggest motivating factors and it always will. How can I persuade the family to accept and commit themselves to these new ideas. To gain commitment and acceptance, your plans for better business performance and practice could consider some of the following points. Provide clear and concise information about the planning procedure and it's importance. And if it's too big a job, then rake in a few others to help you. Get those girls or sons or the younger people, you know, the 17 and 18 year olds, they are so capable. Bring them in and get them to handle parts of it for you. Be prepared to listen. Listening is one of the biggest communication weaknesses in our culture. We are not good listeners. Listen to the questions and the criticisms but let the family resolve the answers. We have the capacity to solve our own problems and take that with you and never ever forget it. It's not the solicitor, it's not the accountant, who will solve your family problems. It's us, it's our problem, we create it, we solve it. Use diagrams to show your family business, to show where it is now and where it can go. And remember that always, we are very visual people that if we can actually see a picture of something apart from everything else, we retain that far more than we will every retain a message. We're visual people. So, do use a map. I call it, I use what I call time lines and I've shown people how to create a time line for their family in terms of, you know, this is where we are now and so, this is 1998 and say this is 2000, so here regardless of what happens, Joan is getting a reward because she so badly wants to go to Sydney to the Olympics. So, we've put her here in 1999 but we've decided to put it there but we are going to put that finance aside for Joan right then and there because that is what our family time line is showing us we have to do. And once again, of course, subject to review but you must even those things, the rewards, the goals. That has been a goal for Joan, she's worked for it, she's saved for it and the farm has said yes, regardless of what happens, you are going to the Olympics. Okay, so once again, motivate and reward.

Participant: I think the idea of diagrams is really good even going past the time line. I think I'm okay, can everybody hear me? I also think that if you ask the family to diagram out how they see the operation, what's involved in it then ask them to put where they see themselves in it you will have a completely different diagram even though they are all working on the same operation. They are all going to look different and that really gives you an idea of how they see the operation and how they see themselves in that operation and it's very very, you know, visual for them and they feel like, okay, you know, here's the dairy and it seems like I'm in the dairy but if they have a big sheep-type of thing over here, you kind of know that that's where they'd really like to be, but you know I'm over here in the dairy and one of the things I see a lot is the daughter-in-laws, they will put the operation there and they'll put themselves way out here outside the operation. And I think for a lot family members if you can share those diagrams with each other it's real eye-opening for the other people in the operation to see where they place themselves there. I think that's one idea.

Yes, I thank you for that. Did everyone hear that? Using diagrams. Another way of describing exactly what Deb has said is described in sort of planning work as rich pictures, it's a rich picture and they do, that's exactly what they do, they say draw the picture, so, if you've got your page or a circle, if you like, draw the picture, draw the shape, draw the school, draw the something or other, draw this, put all those down and make sure that you place you somewhere there. It is really really useful psychologically, yeah and as Deb indicated, it tells us all sorts of things and really until the different family members know where you stand and where their siblings stand, they can't help with the planning because do they know that Joan desperately wants to go to the Olympics if she hasn't actually told people and told them why it was so important. You know, you really have to be sort of honest and visual. It really does help a lot. And I've lost my notes. All right. So, we are onto page 8. And very quickly, some people like to use a mission statement, most businesses that are active have a mission statement. There is no reason why your business should not have one and you can find out about them quite easily. Go into a bank and say, what is your mission statement? Go into a machinery dealership, what is your business statement. Go into a car dealership, they've all got them, they are plastered up on the wall in a frame. Aim for a more attractive organizational environment. I believe very firmly that a good organization, a good office at home or a good desk at home is the basis for good planning anyway. So, let people know that that information is there, it's filed, it's available to everyone. It shouldn't be locked away. Provide opportunity to take advantage of opportunity and don't be discouraged when it doesn't pay off. So, if you do see the opportunity for someone to take a trip to the women in a conference because, you know, there are some really good ideas that come out of that and home she comes and wow, I had a great time. What did you learn? Well, I met all these wonderful people, yeah, but how does it improve our business? And so on. So, there may not be a bouquet that comes back and says look, this is what I've gathered. But it's an opportunity. So, be prepared to take the opportunity, to take advantage of opportunity. Make sure every person sees where they fit, e.g., the pictures, ensure your advisors and employees are good at their jobs. So, is your accountant doing his best for your whole family or is he just answering the needs of the checkbook holder? That's how I refer to it in Australia. The person who signs the checkbook is the power broker in your family whether you like it or not. Build in a support system that caters for the families, for the unexpected. And I've had women turn around and say in response to a daughter-in-law who said well, you know, I'm just really frightened if something happens to my spouse. I've got nothing. And I've seen a woman turn around and say well, get yourself insured. But that's just a slap in the face, you know, and I really did...but anyway. It's not enough, it's not sufficient, insurance of course, is a necessity and it's a financial necessity, it comes under that heading of financials, but it is not enough for our relationships. Maintain your meeting schedules, keep the feedback for everyone. Where there are personality clashes, make it clear that especially during work meetings and in the work place separate the personality from the problem. Focus on your best effort, recognize and reward bits and pieces of success. You won't have any dramatic overnight wonders, bits and pieces of success is usually all we can hope for. So, that brings me to my conclusion. I'm just checking I didn't leave out an overhead there. Assessing our own families in the businesses we run is never easy. It really is not an easy thing to do, you have to be brave and strong. You've got to have faith, patience, hope, tolerance, you've got to be pretty thick-skinned. To remain objective while self-analyzing can create all sorts of upheavals. You will feel offended, others will too. However, at some stage of our family business, our main task as title holders or as the leaders, or as management personnel, is to have a business we can hand on, it must be a healthy, it must have a healthy management structure and we need to be able to hand that on to the incoming management team. That is what a family business is all about. That's why we are striving every day to be successful. Why hand on something that's broken, bruised, falling apart. Your thinking needs to be proactive. Your goals should be clear. There must be motivation. There must be room and opportunity for every person to taste reward, to have a win for family businesses very often it's the emotional or relationship issues that make or break your partnership. However, whoever the participants may be, it becomes the small things that beat us and very often they're relationship-based. The complexity of the process and multi-disciplinary nature of the task can be not just overwhelming but hugely overwhelming, but it's not impossible. I have seen it work. I have always maintained that families have within themselves the skills, the knowledge and experience to work their ways through the difficulties but to remain in control of your business you must consider that people factor. Taking care of the people factor in your family business will ultimately determine your success and your happiness. So, I'll just stop there and ask if anyone has any questions. A question down the back now, I've been asked that we put this on tape, all the questions. So, I guess if you're going to ask a question it might pay to move forward a little to be prepared.

Participant: My question to you is, um, I am a 45 year old woman from the midwest of United States, I take a very active role in the day-to-day management of my farm. I have in-laws that we are working on this process with. I have four children and all of them, three of the four probably are interesting in a career in agriculture. Are you seeing women my age who have concerns about what their role on the farm will be in another ten years when that son or daughter returns home? I don't think in my situation, there's probably room for all of us because we're all pretty strong extroverts and strong leaders, so what I'm thinking is in five years, am I going to need a career change or am I going to need a new focus in my own personal life for my goals so that my farm can continue? Thank you.

Lecturer: Okay, once again. None of us have the crystal ball gazing capacities. I think it will come back to that because I heard quite a few maybe's and if's in your question. I guess what I'm saying is at this stage you can't be certain that they all will want to return home and after they have been away and for us being to university or whatever, you will find that those options will change. They may still want to come home but there could be a different angle to it. One might prefer to go out and do Agronomy or something and work in agriculture and ultimately return to the farm, but not yet. It might be another 15 or 20 years before he wants to come back or she and then of course, options have changed again. So, I guess that's why I use this as a basis of my planning for families. Because until you really really know where people are at, we can forecast and for sure, where do you stand in ten or 15 years time when you are 60? But when you are 60, do you want to be farming? You know, how is your health going to be? You know, these types of things, they will alter and they will change and I think we can forecast where we think we want to be but it's not a closed book.

Participant: [cannot hear very well - they didn't come to the microphone] Do you see a difference in it from my family _______ versus my mother and mother-in-law's generation of women because my personal situation I think of the women I see women that are my age take a more active role in the day-to-day management of the farm _______ than our mothers or mothers-in-law ________ the business portion and maybe we're much more intensely involved than they were at that level.

Lecturer: Most definitely. I found that with the older generation women and I don't want to insult anyone here, but I found that quite often that they were led by the needs of their spouse. Their needs weren't necessarily listed, it was the spouse needs that were listed and yeah, and the family and therefore, I mean the number of women I've met over the years who have said, look, I would have moved to the city years ago. Or I would have moved to my daughter in town years ago, I just want to be near my grandchildren, but he won't leave the farm. Okay, so, I think the difference between that generation and us is that I think we have more options now. We are allowed to express our own needs and opinions and not only that but um, what I find is that this could be wrong and it could be too narrow, but I find that women are kind of so active in their family businesses that quite often they activate themselves out of it. You know, they actually work their way out of it because they become so involved, they become so interested, that suddenly their priorities become, wow, we want this to succeed so come along kids take your role and all will just sort of..... [someone talking in background] yeah, and it's actually more like a balloon, it's kind of an expanding picture, not necessarily two balloons, it's the same balloon, it's just expanding. A lot of my work in Australia looks at pensions and how to make sure that people can stay on the farm and still be part of it all and yeah, and it takes care of often that spouse who just doesn't want to leave. He wants to be there. But, yeah, it still works. It still works. You've got to try it. Question.

Participant: Mine isn't necessarily a question. I have a response to that since I am 60 and I had to step aside and let my son and daughter-in-law, well, he was doing it, my husband became disabled so the son was doing most of the work and they wanted to build a house on the farm and we had a very large house on the farm and you don't need two. So, we asked if they would like to live in ours and yes, they'd be delighted to, so we said fine there's a place in town which was maybe a fourth of the price of our home but that's all I could afford so we're in town and I am working, you know, off the farm and don't think I don't miss it, but I still have an active role in it, you know, I'm here and I'm very active in wife and so, I take all of this sort of thing back to the farm and I'm involved in the way and of course, call to say, you know, has it rained and what's going on and so forth. But I'm still having to subsidize, you know. But this plan, I see, I see it being beneficial to us who have, I have five children, all right, you know, in the old days, we could just come into the business and it supported everybody, but now, not so, it does good to support one family. So, the other three sons who left the farm, one went into _______ work and one in insurance and doing pretty good, you know, they have a good paycheck and benefits and so forth but they all would love to be back on the farm. Well, in this planning, and it has concerned me so much that I don't want them to be left out and I don't want one son to have everything. I come from a family of six children and the youngest one who stayed home and farmed just like my scenario, kind of looks to me like he has it all but we want to keep that name on that farm so, he's the son so we, all the daughters just, it's his, you know, too bad. I hate to turn loose of my home, family farm, but I'm out of it. So, I didn't want that same thing to happen to my children. I want each and every one of my children and my grandchildren to be able to go onto that farm like it's theirs, they go duck hunting, they go deer hunting, squirrel hunting and I want them to feel like it's their home too and not the one son and then the daughter-in-law and her family comes in to it so it's kind of like, well, it won't be my name anymore, it's going to be hers because her family is already is already staying in this big house that we left, you know, I mean visiting well off and, so there's the problem there but I see with this planning because we do all get along very well. All the children get along well that we may be able to bring them back in somehow on still being part of all the planning process and what's going to happen and maybe adding, maybe their few dollars because these boys that aren't involved in the farm still are constantly buying little 10 and 20 acre plots to hunt and you know, very small, but maybe they could use those dollars to stay connected to the farm.

Lecturer: Thank you so much for that comment. I'll just pick out one point of it that is really really relevant and so many women do pick this up and was that what you said as the daughter you sort of, we won't say forced off, but there was no option for you to remain and then you see your sister-in-law coming in and taking over, I'm not being offensive I'm just saying she sort of moves in assumes that role of the lady of the farm, you know, it's her farm because she has married the son and a lot of women feel so displaced, they really do, especially if the sister has married and is living in sort of a lesser financial situation, so for example, she might marry the local mechanic and they're just getting by on wages and then her sister-in-law who's living in her home, her original home on her home place gets to, well for Australia she gets to Bali every year, you know, that's a real bonus. But you know, I mean she does, she lives so much better, their car is better, the kids are going to good schools and her house is lovely, there's beautiful appointments inside, many women feel displaced and I don't know if there's an answer for that. I think that's why you will find Will challenges emerge and in Australia it's a big big issue, it's another topic in itself but the inheritance act if that woman has married poorly, not poorly, if she's married, you know what I mean or if in fact, the marriage doesn't work and she divorces, yeah, in Australia, I have to say, look out because our inheritance act says that the offspring of the title holder must be catered for, I've forgotten the wording but it must be catered for in such a fashion that her needs and her educational needs and two or three other things must be actually looked after and they can use that to challenge the Will. They can use it.

Participant: How would you suggest when would planning on ____ two sons and a daughter and the farms have always been traditionally passed down to the sons? And I'm in a position there when my daughter is 16 and ready to go out to the work force and I really want to find a way where I provide sufficiently for her so that she doesn't feel that she's missed out if she doesn't get the farm and I find that really, my husband and I talked over it many many times but what can you give to the daughter that makes her feel that she has inherited as much as what the boys have inherited?

Lecturer: Well, I can answer that one because it's happened in our family. I'm the daughter-in-law, I was the daughter in our family farm during my school years but I'm the daughter-in-law. I've got a mother-in-law and a husband who have never got along. The mother-in-law decided that she would take out insurance and fortunately she was in good health, shortly afterwards she had a mild heart attack but she was in pretty good health and she was able to get insurance because of her health which pays out the daughters when she dies so it pays out what they would have inherited.

Participant: [inaudible - people talking over each other] Except that the boys inherit the farms earlier before the girls. In another similar situation with my husband's sister, she has to wait until my mother-in-laws dies before she gets her inheritance and yet we've had the farms 10, 15 years and that causes a real ________ in our family because they have to wait and their mother-in-law might take until 80 to die. [laughing] The daughter might die before the mother, you know, I've seen that happen.

Well, they're looking after themselves aren't they. So, that's the message.

Lecturer: Are you satisfied with that answer? Basically, yeah, farm or non-farming members, you must be able to cater for their needs too and that's what this planning allows for. You will find that if you put that up, your 16 year old daughter, okay, what are her immediate plans? Does she want to on to a university or does she want to go into training somewhere and then perhaps could she in fact have a deposit put down on a car, not a car, a house, it's got to be a substantial something or other and please remember and especially in Australia, I can only speak on Australia's part, document these things. As small as it may be, please document it because if there is a Will challenge in the future, you will find that things like that that have been documented are important. Because I have a really firm belief especially where sons are involved, if you've backed, for example, a son into a business such as an accountant business, it may have cost him by the time he's finished his university, it may have cost the farm ten or fifteen thousand dollars for those university years and it has held the farm back because that's a significant expense. It's held the farm back. They just missed out on that opportunity of perhaps expanding or whatever investing in something so that has to be acknowledged but more importantly, then if you say to him, okay, we're going to you've got a really good opportunity to buy into a partnership here, we will fund you $10,000.00 which is your deposit to get into this partnership. Now that fellow or daughter immediately goes into a wage that is secure, reliable, regular, all of those things. It's worth far more than that $10,000.00 figure. And ten years down the track when he's earned sixty or eighty thousand a year, what's that $10,000.00 worth to him who had no chance of buying into the partnership under his own steam, you know. So, I really think they've got to be documented and really you should put your thoughts beside it, I really really do push that hard.

Participant: I think that what you're saying is so important and the first thing that I hear you saying is involve them in the planning. That is so important. Many times it's not that they want the farm, they just want to be heard and they want to have people know that the farm means something to them. They may not want to take it away from the boys or the boys may not want it and the girl may want it, you need to ask them, that's the most important part. Yes, and do this, this is going to lead a whole lot more to I don't want to say non-conflict because there's always going to be some conflicts. Openness. Yes, openness, and then you can do things like she said throughout the years. They don't have to wait until they die. You know, you can gift them like in the United States right now, we can gift how much without, um, $10,000.00 a year. Each parent can gift it to their children and so, but the thing you need to watch is that you don't pull that farm apart at the end. That's very important. So, okay.

Participant: In the inheritance forum yesterday, you mentioned that you were going to talk a little bit about if you have children on a farm and non-farm and some different strategies to, we've sort of talked about it here but some other strategies to make it equal for, like I have three sons, one probably will never return to the farm and how to make it not [tape ended]