1.  Materials Originator: Dr. Patricia (Pat) Frishkoff Office: (541) 686-0885 Leadership In Family Enterprise, LLC, pat@patandpaul.com pat@patandpaul.com Founder and Former Director of Austin Family Business Program at Oregon State University Family-owned Farms: Challenges and Opportunities TRAIN-THE-TRAINER version

2. 2  Learning Objectives: –Define vision for your farm and family –Analyze challenges and opportunities –Develop plans that improve your chances of moving toward where you want to be in the future  Approximate time needed: –2 hours  AV Needs for this module: –Space for stand-up opening exercise –Laptop w/ PowerPoint and Windows Media, –LCD projector, screen –Advance prep, especially with e-clips –CD with presentations and e-clips Family-owned Farms

3. 3 Prelude Farms are in jeopardy for many reasons. That they are often family owned is both the good news and the bad. The link between family and farm can cause challenging situations and conflicts that folks often ignore or avoid. Please look at this behavior with compassionate eyes. It’s not that they don’t care, but rather that they care so very much. Our task, in this module, is to engage farmers and their families in addressing these family-farm issues. This version is for you, one of the workshop presenters. The person who has raised a hand courageously to guide this discussion. The “Managing for Success—Time for Change” organizers will provide a CD with files for both the presentation and also handouts, for your revision and use in your workshop.

4. 4 Module Structure: 10 Critical Decisions We’ve identified 10 decisions (yes, there probably are hundreds) that span the breadth of issues that a farmer must consider as s/he looks to the future of the family farm. That 10-decision format guides the discussion and forms the basis for plans and goals. Teaching objectives:  Describe the implications of each decision  Cover both farm and family perspectives  Make the participants squirm in their seats over the issues that most critically affect their situations  Lead them to determining, at the end of the module, what one decision is most critical and what action they will take as a result.

5. 5 What’s Most Important? Here’s the bottom line. Although there is lots of important content, and this could be an all-day session, in a 1.5 – 2.0 hour module, the impact will be greatest if you consider the following as most important: 1.PARTICIPANTS (not you) TALKING (OPENING EXERCISE) To one another Within their family (or to another farmer if they didn’t come with family) So – the opening exercise can be very effective, and should be allotted enough time. When they see an important issues or decision, they own it. They won’t act on it unless this happens. 2.CLOSING EXERCISE They choose ONE (1) decision and commit to action by a specific date. 3.IN BETWEEN Their learning will be enhanced by: Specific examples Stories Narrative that helps them to understand and see relevance about that decision Whatever decisions you stress more will be fine. You’re bringing your experience, and blending it with that of your audience. If you allow them to help teach, it will be both easier and better.

6. 6 Presenter: Title Slide LET’S BEGIN USING THOSE HANDOUT MATERIALS. 1. Briefly introduce yourself 2. Cover the objectives of the session, on this opening slide. Don’t take long on either of these steps. Move quickly into content.

7. Family-owned Farms: Challenges and Opportunities  Materials developed by: Dr. Patricia (Pat) Frishkoff Leadership In Family Enterprise, LLC Founder and Former Director of Austin Family Business Program at Oregon State University In this section, you will 1.Define vision for your farm and family 2.Analyze challenges and opportunities 3.Develop plans that improve your chances of moving toward where you want to be in the future.

8. 8 Presenter: Ten Critical Decisions  Stephen Covey advises: “Start with the end in mind.”  “This is a list of decisions critical to the future of your farm and family. We will discuss each. AND, at the end of my time, you will be asked to choose just one decision and then to specify a specific action you will take as a result of attending this session.”  “The last page of your handouts for this session contains another copy of this list of 10 decisions. Tear it off now and keep it next to you. As we proceed, circle the number of each decision that strikes home, but remember, you shouldn’t circle them all. We don’t want you to be so overwhelmed that you take the notebook home and do nothing. Circle only those few that strike you as exceptionally important, or that you know that you’ve been avoiding for a long time.”  Presenter – DON’T READ THE LIST OF QUESTIONS NOW. THEY LIKELY WILL HAVE AS YOU’VE BEE N TALKING. AND, YOU’RE GOING TO COVER THEM ONE AT A TIME ANYWAY.

9. 9 Ten Critical Decisions 1.What is your vision of the future in terms of continuing as a family farm business? 2.What actions are important to minimize risk by anticipating possible worst cases? 3.How will you groom young family members as part of your farm family? 4.What talents and experiences does the farm need for future success? 5.What employment opportunities will you offer to family members and what expectations will you have? 6.What will be the role of non-family employees, and what will they need to do their jobs? 7.Who will own the farm and farm business next, and how will ownership transfer? 8.Where might a strategy for selling come into play? 9.How will senior farmers move to sharing key decisions? 10.What will strengthen the family glue and keep you headed toward the future together?

10. 10 Presenter: Decision 1  “What is your vision of the future? Maybe you don’t know. Likely you do, though it’s less likely that you have it written down as part of your plan.”  “Let’s talk about it. “  Presenter – turn the page to the Opening Exercise.

11. 11 Decision 1 What is your vision of the future in terms of continuing as a family farm business? QUESTIONS TO CONSIDER :  How long do you plan to have your farm business last? Dr. Léon Danco once proposed that every business post this sign – “This business shall last forever.” Does this fit your situation?  Do you hope to transition the farm to the next generation? Hold a family meeting to discuss these questions. Start by having each family member write or draw something that captures a vision of the future.

12. 12 Presenter: Opening Exercise – page 1  Presenter – Participants aren’t alerted to this coming up. Just proceed.  Objectives (for presenter only) –Talk to each other –Get below the “chaff” –Glimpse a desired future  INSTRUCTIONS: 1.Count off by 2s (1,2,1,2, etc) (This breaks up families.) 2.“Please stand and line up in front of me, number 1s to my left and 2s to my right,. Ones line up so you face a partner in the twos line. (If there is an odd number, put in another presenter, or, if necessary, form a team of 3 at one end (though this works less well).) It doesn’t matter if you happen to be talking to someone in your family.” 3.“I’m going to provide a question for you to discuss. Please keep your introductions to a minimum and get to the question. When whoever speaks first is done, move directly to ask the other partner. You will be given only a couple of minutes for your answers.” 4.“A leader consultant once proposed that every family business have a sign that says ‘This business shall last forever.’ How long do you want your farm to last, in your family?” “Do you want to transition it to a next generation, and if so, what will it take?” 5.Don’t give them very long before you interrupt with ‘Why?’

13. 13 Presenter: Opening Exercise – Page 2 6.Interrupt to switch partners, as follows: “Everyone in this row on my left, take two steps to the left, moving two people to the left. Now would the person at the far end on my left, and near me here on my right, turn around to face the other line. Does everyone have a new partner? 7.Here’s a different question to discuss with this new partner. “What does the farm mean to you?” 8.Switch partners again. “We’ll switch partners one last time. What makes your family better because it has the farm?” 9.“Okay. Please head back to your seats.” 10.“In your notebook, there is a page labeled Decision 1, related to Vision. There’s some blank space in the middle of that page. Take a moment and jot down what came to mind or what you just learned about yourself.” 11.In your handouts, we’ve included some exercises to do with your family after the workshop. Note the exercise and its symbol in the middle of the Decision 2 page, suggesting a family meeting and a possible way to proceed with this issue of vision. 12.“It’s important to have a sense of where you want to head – a vision. If you don’t know where you are going, any path will do.” 13.“Realize that your notes are just one perspective. A vision is not a one-person decision, but something developed with other stakeholders through a series of discussions. We’ll be asking you to take this further as homework after this session.”

14. 14 Presenter: Introducing e-clips and Dr. Pat Frishkoff  “I’m very fortunate. I have the ability to bring you advice from one of the world’s leading experts on family business. Dr. Pat Frishkoff (pronounced Frish-cough) founded and led the family business program at Oregon State University. She developed the 10-question list, and taught some of the early workshops. Cornell captured a workshop in a series of e-clips, available to me and to you (the site is listed in the resources at the end of your handouts).”  “Pat grew up on a family farm in western New York. Her family lost their small dairy farm after her father suffered a farm accident when Pat was a teenager. This experience laid the foundation for a passionate resource about family farms.”

15. 15 E-clip: Concept of Commitment

16. 16 Frishkoff e-clips – Part 1  Patricia Frishkoff Discusses Background and Need For Her Family To Sell The Family Farm Patricia Frishkoff Discusses Background and Need For Her Family To Sell The Family Farm  Patricia Frishkoff States Importance of Having a Long Term Vision For A Family Farm Patricia Frishkoff States Importance of Having a Long Term Vision For A Family Farm  Patricia Frishkoff Discusses Need For Family Farmers To Do Long Term Estate Planning Patricia Frishkoff Discusses Need For Family Farmers To Do Long Term Estate Planning  Patricia Frishkoff Discusses Concept of Commitment Related To Long Term Success of Family Farm Patricia Frishkoff Discusses Concept of Commitment Related To Long Term Success of Family Farm  Patricia Frishkoff States Long Term Plans Need To Be Updated Patricia Frishkoff States Long Term Plans Need To Be Updated  Patricia Frishkoff States Importance of Starting With a Vision Statement Patricia Frishkoff States Importance of Starting With a Vision Statement  Patricia Frishkoff States Plans Must Consider Worst-Case Scenarios Patricia Frishkoff States Plans Must Consider Worst-Case Scenarios  Patricia Frishkoff States Family Businesses Must Think About The Potential Impact of Divorce Patricia Frishkoff States Family Businesses Must Think About The Potential Impact of Divorce  Patricia Frishkoff States Importance of Outlining What Happens When Partnership Ends Patricia Frishkoff States Importance of Outlining What Happens When Partnership Ends  Patricia Frishkoff States Importance of Planning For Disability Patricia Frishkoff States Importance of Planning For Disability  Patricia Frishkoff States Importance of Understanding Impact of Death on Family Business Patricia Frishkoff States Importance of Understanding Impact of Death on Family Business  Patricia Frishkoff States Family Businesses Often Have Difficulty In Bringing Up Topic of Death Patricia Frishkoff States Family Businesses Often Have Difficulty In Bringing Up Topic of Death  Patricia Frishkoff States Often Death Issues Need To Be Brought Up By A Trusted Advisor Who Is Outside The Family Patricia Frishkoff States Often Death Issues Need To Be Brought Up By A Trusted Advisor Who Is Outside The Family  Patricia Frishkoff Discusses Concept of Chief Emotional Officer Patricia Frishkoff Discusses Concept of Chief Emotional Officer  Patricia Frishkoff States Chief Emotional Officer In a Family Business Is The One To Bring Conflict Out Into The Open Patricia Frishkoff States Chief Emotional Officer In a Family Business Is The One To Bring Conflict Out Into The Open  Patricia Frishkoff Discusses Challenge of Disagreements Within A Family Business Patricia Frishkoff Discusses Challenge of Disagreements Within A Family Business  Patricia Frishkoff States Negativity Around The Dinner Table Can Impact Future Employees Of A Family Business Patricia Frishkoff States Negativity Around The Dinner Table Can Impact Future Employees Of A Family Business  Patricia Frishkoff Discusses First Experience As An Entrepreneur As A Child Patricia Frishkoff Discusses First Experience As An Entrepreneur As A Child  Patricia Frishkoff Discusses How Children Learn About Family Business Patricia Frishkoff Discusses How Children Learn About Family Business  Patricia Frishkoff States Importance of Families Trying To Create An "Our" Farm Feeling Patricia Frishkoff States Importance of Families Trying To Create An "Our" Farm Feeling  Patricia Frishkoff Discusses Three Outcomes Of The Family Farm Patricia Frishkoff Discusses Three Outcomes Of The Family Farm

17. 17 Frishkoff e-clips Part 2  Patricia Frishkoff States Background is Work With Family Businesses - Specifically Family Farms Patricia Frishkoff States Background is Work With Family Businesses - Specifically Family Farms  Patricia Frishkoff States Family Members Have To Be Every Bit As Talented As Who You Would Hire From The Outside Patricia Frishkoff States Family Members Have To Be Every Bit As Talented As Who You Would Hire From The Outside  Patricia Frishkoff States In A Family Focused Farm, All Members Must Have Opportunities Patricia Frishkoff States In A Family Focused Farm, All Members Must Have Opportunities  Patricia Frishkoff Discusses Challenges Of Having A Business Focus On A Family Farm Patricia Frishkoff Discusses Challenges Of Having A Business Focus On A Family Farm  Patricia Frishkoff Shares Anecdote From Forestry Family Patricia Frishkoff Shares Anecdote From Forestry Family  Patricia Frishkoff States More Sustainable Farms Will Err On The Business Model Side Patricia Frishkoff States More Sustainable Farms Will Err On The Business Model Side  Patricia Frishkoff States Implementation Of Business Models Helps Make Decisions Less Personal Patricia Frishkoff States Implementation Of Business Models Helps Make Decisions Less Personal  Patricia Frishkoff Discusses Communication Challenges In A Family Business Patricia Frishkoff Discusses Communication Challenges In A Family Business  Patricia Frishkoff Discusses Need For Clear Boundaries When Non-Family People Work On The Family Farm Patricia Frishkoff Discusses Need For Clear Boundaries When Non-Family People Work On The Family Farm  Patricia Frishkoff Discusses Ownership Planning For a Family Business Patricia Frishkoff Discusses Ownership Planning For a Family Business  Patricia Frishkoff Discusses Problems In Equitable Distribution Of Assets Patricia Frishkoff Discusses Problems In Equitable Distribution Of Assets  Patricia Frishkoff States Estate Planning Helps Equity Issues Patricia Frishkoff States Estate Planning Helps Equity Issues  Patricia Frishkoff Discusses Importance of Having A Selling Strategy Patricia Frishkoff Discusses Importance of Having A Selling Strategy  Patricia Frishkoff States Importance of Discussing Changes That Would Need To Be Made Prior To Selling Patricia Frishkoff States Importance of Discussing Changes That Would Need To Be Made Prior To Selling  Patricia Frishkoff Discusses Importance of A Transition Plan Patricia Frishkoff Discusses Importance of A Transition Plan  Patricia Frishkoff Discusses Difference Between Surviving And Thriving Patricia Frishkoff Discusses Difference Between Surviving And Thriving  Patricia Frishkoff States Importance of Letting Younger Generation Take Charge Patricia Frishkoff States Importance of Letting Younger Generation Take Charge  Patricia Frishkoff States Importance of Slow and Gradual Transition Process Patricia Frishkoff States Importance of Slow and Gradual Transition Process  Patricia Frishkoff States Best Learning Comes By Doing Patricia Frishkoff States Best Learning Comes By Doing  Patricia Frishkoff States Importance of Communication Throughout The Family Patricia Frishkoff States Importance of Communication Throughout The Family  Patricia Frishkoff Discusses Advantage Of Including a Facilitator In Family Meetings Patricia Frishkoff Discusses Advantage Of Including a Facilitator In Family Meetings  Patricia Frishkoff Discusses Situations Where You Should Get Others Involved In The Family Farm Patricia Frishkoff Discusses Situations Where You Should Get Others Involved In The Family Farm  Patricia Frishkoff States Family Farm Can Strengthen Family Ties Patricia Frishkoff States Family Farm Can Strengthen Family Ties

18. 18 Presenter: Questions for Presenter about E- clips  Make notes here about which decisions are hardest for you to teach about.  How many E-clips do you want to use, or what amount of total time? Show e-clip “Concept of Commitment.”

19. 19 Vision – “golden opportunities” and your commitment OPPORTUNITIES  What does the farm mean to you and your family?  What legacy do you want to preserve?  What makes the farm business better because it is run by your family?  What makes the family better because it has a farm business? Include these questions in a family meeting, making a long list of the opportunities. Make copies for everyone. Bring the list out, on a regular basis and especially when conflict arises. COMMITMENT  How much would you be willing to commit of these resources, in the next year, to pursue what you want for the future? –$$$ –Time

20. 20 Presenter: Decision 2 – Minimizing Risk  Open with e-clip: Worst-Case Scenarios. Sets the stage for discussion.  Ask participants for D words. You’ll want an example or story with each –Divorce. “Do you really want to be at meetings with your ex-daughter- in-law? You must make decisions about involvement of in-laws, preferably before anyone falls in love. Otherwise, if any spouse is excluded, it WILL be taken personally.” –Disability. Insert E-clip Planning for Disability – tells more about what happened after Pat Frishkoff’s father was hurt. –Death. Often hard to discuss. You can use two e-clips, which inject humor to look at how hard it is to raise. Clips: Understanding Impact of Death, followed by Difficulty in Bringing Up Topic of Death. –Fourth word – I usually use Disagreements, but any other that they bring up is fine. Conflict is stressed in another module. For now, the main message is to assure them that all families have conflict, and that the most important thing is dealing with it – not sweeping it under the rug.  Writing exercise. Give them about a half minute to write down a risky situation on their farm, and what action should be taken. Pretty private, so I wouldn’t have them share these responses.  Remind them to be circling decisions on their list of 10, when the issue seems critical to their farm situation.

21. 21 Decision 2: What actions are important to minimize risk? It is important to stop here and be honest about risks. List some of the situations that could create “worst-case” scenarios and, unlike the weather, can somewhat be managed. Consider the four D’s as part of your list. D_____ D_______ D________ D_________ Risky Situation Action ______________________________________________  Once you fill in the blanks, next to each response list the one action that is most important in order for you to protect the farm and your family. This will help you minimize possible risk.

22. 22 Presenter: Decision 3 – Grooming  A good lead in to this decision is to ask for examples for things that made them love the farm, or taught them positive lessons that they have used throughout their lives. (Pat’s was growing and selling sweet corn.)  Then ask – “when do kids start to learn about the farm?” Usually it’s a mother who gets it right – “When they learn to talk – about age 2.”  E-clip: “Negativity around the dinner table.”  Ask: “What do you want the kids to learn?”  Mini-lecture. “You can’t really promise young people anything, and you don’t want to lure too hard with the carrot. At the same time, you want to provide every opportunity for farm involvement, or for them to have an entrepreneurial spirit.” Pat recommends: “Intentional teaching” – “creating situations, even when they are young, that help them obtain these qualities. You may need to work a bit harder than your parents did, because the kids are so bombarded with other activities and with things like iPods and video games” See the given list at bottom of page for examples, but only refer to them if you aren’t getting answers from participants

23. 23 Decision 3 How will you groom young family members as part of your farm family? Your children will grow up as part of your farm family, whether they ever become employees or owners. These actions could help them embrace the farm as part of their heritage, as well as yours. You, as family members, teach intentionally by helping them create opportunities to:  Be helpful in ways that develop skills  Play, in activities that promote learning  Invent, plan, undertake and finish projects  Weigh options, make decisions, and understand consequences  Build leadership and independence as well as team focus

24. 24 Presenter: Decision 4 – Talents and Experiences  “It’s a business. If you were looking only to the outside for the next leadership, you’d determine what talents and experiences are needed. You should do this even if it’s your hope to have it continue under family leadership. A good exercise is to write a want ad, as suggested in the paragraph at the bottom of the slide/page.”  Rather than spending a lot of time here, move quickly to Decision 5, which compares a Family approach to Business approach.  “Wearing multiple hats, especially those of parent and boss, inevitably means that there are two sides to issues.  Consider this story that Pat tells.” –Insert e-clip “Communication Challenges in a Family Business”, which talks about a parent sabotaging a best-case situation with his son.

25. 25 Decision 4 What talents and experiences does the farm need for future success?  What is needed in the next generation?  What abilities will be needed that the senior generation didn’t need to know or that they learned later in life?  How will you ensure that the younger generation is smart enough? Consider drafting the want ad that you would place in the appropriate local or industry publication. This exercise will help you define your expectations, in terms of skills and experiences. These criteria should be applied equally whether non-family or family are employed.

26. 26 Presenter: Decision 5 – Employment Opportunities for Family  “Most of you hope to have another generation run the farm. We are going to consider two approaches for bringing that next generation on board – one that stresses family and one that stresses business. Your first decision is which of these approaches most closely fits what you have in mind.”  “Family Approach -- creates opportunities for as many family members as possible, treating everyone pretty much the same. This approach depends heavily on teamwork and everyone pitching in to the best of their abilities.”  “Business Approach – this focuses more on what the farm needs and who brings the strongest talents to the tables. It provides different opportunities for employment, depending on the education, experience and skill of family members.”  “Circle either family or business on your page that best reflects your views.:  “Each viewpoint has its pluses and minuses. Let’s look specifically at the challenges. On the family side, you’ll have to decide who is family. Does it include in-laws? What about step-kids? And, what if someone just doesn’t pull his or her weight? On the business side, it’s important to let the next generation know the rules of the game. What education and experience are required? In other words, what will you hire, pay and promote based upon?”  If you lack good discussion, or it’s time to involve them – move to Phone Call from Son case, which will help them sort through their priorities.

27. 27 Decision 5 What employment opportunities will you offer to family members and what expectations will you have for them? Family Family Focus  Invitation to all children  Including their spouses?  Create jobs that fit their skills and experience  Grandkids, too  Step-kids, too?  Work toward equal compensation after a long period of time  Evaluate ability to work as a cohesive team Business Business Focus  Expectations, set when kids are teens, about: –Education –Experience –Coming and going  Clarity about in-laws –Employment? –Ownership?  Hire only those who add value to the farm, and who meet the expectations  Compensation –Based on position, skills and experience –Retention and raises based on performance Option s Which focus best describes your plan? Or is it a blend? Check all small boxes where you need to define specifics.

28. 28 Presenter: Discussion Phone Call  The case only takes a few minutes to read.  A simple approach – “What would you do and why?” – works well.  You don’t need to spend long.  Bottom line messages –Be clear with expectations –Sometimes failure is the best lesson –Making decisions as a parent is pretty hard, but rescuing a child isn’t always the best approach. Nurture them to mature.

29. 29 Discussion – Phone Call from Son Your older son called late in the first semester of his sophomore year, to let you know that he wasn’t making it in college. You suspect too much focus on girls and parties. “Could he come back to the farm?” he asked? You and your wife had met at the same college and were married soon after graduation. You had told all three of your children that you expected them to get college degrees. What are your options? What action would you take were this your family?

30. 30 Presenter: Decision 6 – Non-family employees  “We recognize that finding and keeping good employees is a challenge for many farms.”  “Employees often like working for families, and are very loyal to them. On the other hand, getting caught in the middle in family situations can be very stressful for non- family employees. Such as, Dad tells an employee what to do today, and Mom says something else.”  What employees most need (you can ask them, or (quicker) list a few): –What their job is –Who their boss is –What they will be evaluated on –What they can’t or shouldn’t do –And, if they supervise family employees, how far their authority goes –Freedom to do their job, and feedback about performance  Remind them to be circling decisions on their list of 10, when the issue seems critical to their farm situation.

31. 31 Decision 6 What will be the role of non-family employees, and what will they need to do their jobs?  Establish a realistic budget for human resources, including family employees.  Clearly distinguish from among the roles: owner, employee, family member – for both family and non- family folks.  Provide a clear organizational chart and detailed job descriptions. Have non-family employees understand their relationship to the family and vice versa.  Give all employees the guidance, leadership, information, and independence to do their jobs.  Do regular performance evaluations and build plans for personal development.  Think carefully before sharing ownership with anyone else, family and non-family alike.

32. 32 Presenter: Decision 7– Ownership  Pat Frishkoff looks at outcomes: new generation, selling, or running it into the ground, as a means to set the stage for ownership issues.  Two really critical bottom-line messages: –Ownership decisions can be hard, since they involve creating a balance between equity and equality. So, if you have more than one child, and especially if their involvement on the farm is different, you must make some choices. –What’s most important is to start, wade through, and finish a plan. Fewer than half of the business owners in the U.S. even have a recently updated will. –(At this point, if it seems like a receptive audience, I have them close their eyes, and ask how many have a will that has been updated in the last three years. I do a count, and then give them the results. It’s almost always less than half. I don’t mince words in this section, but use a bit of “scare tactic,” hoping to engage them.)  E-clip: Ownership Planning (Don’t start in an attorney’s office.)  Equity vs. equal: –(I use humor on this one. Ask if anyone has 10 children. “Let’s look at that situation. When you and your spouse are gone, each child gets one place setting of china, 1/10 of the family dog, a one-tenth time-share on the family home, and a tenth of the farm – and you assume, of course, that they’ll get along just fine, when in your heart you know they won’t.” –Or use E-clips of Pat about this: Problems in Equitable Distribution of Assets 1 and 2

33. 33 Decision 7 Who will own the farm and farm business next and how will ownership transfer?  Who can own in the next generation, and who can’t? –Do your legal documents support your wishes? Will Shareholders’ agreement (buy-sell)  Will your ownership strategy aim toward? –Equality – everything divided equally –Equity – giving more of business assets so as to have those leading the businesses have decision-making control, through outright ownership or voting strength (such as general partnership position, or trustees for a trust)

34. 34 Presenter: Ownership -- continued  What’s most important? –You and your spouse – write these two lists, before you invest a lot of time in advisors, 1.Your main goals – only a few. What you want to do, not necessarily how. 2.Questions you must answer as part of the ownership planning process. –Find good advisors Best way is to ask other producers in your area. Make sure the professionals you chose specialize in agriculture and the type of legal documents you need (example trusts, estate planning, etc)  Ownership and estate planning is complicated, and takes special advisors. You, as the workshop facilitator, don’t want to get caught in complex, technical issues unique to one farm, but rather to move the planning process along. So this is a more general, not specific solutions, discussion.

35. 35 Who will own the farm and farm business next and how will ownership transfer? - continued Estate planning is essential to the survival of the farm; otherwise, the government and the lawyers end up as winners. Determining future ownership, of the land and of the farm business, are among the hardest decisions you’ll have to make. Critical steps are:  finding good advisors  asking important (sometimes emotional) questions  making decisions early  communicating decisions clearly  putting formal financial and legal plans in place Which of the steps listed above is most likely to stop or slow your planning?

36. 36 Presenter: Who Owns Next Discussion  You may not have time to use this case, although it can be substituted for quite a bit of the discussion because it includes the equity-equality issues, and the dilemmas that parents face in making hard ownership decisions.  Issues in the case: –Equity –Fairness –Gender, including women having babies and not being able to commit as much time –Communication! This is always a big issue, including related to ownership. –Sustaining the legacy of the farm –Doing something, making choices, even if hard, is also a key issue. (Many farmers will choose to do nothing, which is not a better choice. It just avoids the issue. It does not avoid the conflict.)

37. 37 Discussion -- Who Owns Next? Mom and Dad met earlier this week with their three children, Cindy (36), Todd (33), and Nancy (31), and their lawyer, to explain the decisions just finalized to transfer the farm land. Last night the girls came by and asked to talk to their parents, quickly expressing anger and disappointment with the plan. It seems that Mom and Dad divided the land so that Todd would get the land that houses the operations, including the barns and stables, plus the original homestead land. The girls get similar acreage, from properties added fairly recently; each property has a similar-sized house on it. All three children have worked actively in the business. Todd has been full-time; the girls have been part-time, staying home when possible to raise children. What are the issues? What’s your advice? And, what aspect of ownership might challenge your family?

38. 38 Presenter: Decision 8 – Conditions for Selling  Open with E-clip: “ Importance of Having a Selling Strategy”  Then ask for an idea or two on what they would change.  Follow that with – “why would you not do that even if you didn’t plan to sell?”  Suggest having a family meeting to look at conditions under which they might sell.  And close with “it’s likely that many of you will decide that you don’t want to sell under any circumstances – then I say to you ‘what are you willing to do so that you get what you want?’ For example, the absence of a complete estate plan sometimes forces sale to pay taxes. If you are going to sell, you don’t want to do it in a forced sale situation. Not wanting to sell is a clear goal. It points toward your vision. AND, it necessitates a comprehensive action plan.”

39. 39 Decision 8: Where might a strategy for selling come into play?  Under what conditions would you sell? List at least two here. ________________  What would you change if you knew that you might sell?

40. 40 Presenter: Decision 9 –Letting Go  Most successions happen at a funeral. Obviously not the right time. “Hearses don’t have e-mail.” Succession should happen during the lifetime of the senior generation, not at death. Insert E-clip: “Importance of a Transition Plan” Be sure to point to the statement in italics that stresses the rights of the senior generation. NOT letting go sabotages the success of the business. “If Dad and Mom head to a warm spot in the winter, and, upon return, start criticizing everything that’s happened while they were gone, that doesn’t bode well for a smooth transition to the younger generation, who will forever think that what they do isn’t good enough.”  Must have something to retire to: What works best are: –Volunteering -- some travel and leisure – starting another business, preferably not in competition with the kids  Younger folks need to make their mark, without raising the angst of the senior generation. Take on a worthy project, and do a bang-up job. Show willingness for hard work and ability to make sound decisions.  Possible E-clip: “Slow and Gradual Transition Process”

41. 41 Decision 9 How will senior farmers move to sharing key decisions? Research shows that the farm is more likely to succeed if the younger generation assumes decision making while they are in their prime, without having the senior generation meddle, and possibly sabotage the transition. What might the senior generation retire to?  What will it take for the senior generation to share decisions with others? Recognize that as principal owners, they have the right to make whatever decisions they want, for as long as they want.  Will they ever let go? If not, how will that affect younger generations? What must younger generation family members do to take charge?  What does the senior generation risk if they don’t let go and have others share in decision making?

42. 42 Presenter: Decision 10 –Family Glue  This is really one of the critical areas, though in the “soft” side. Topics will be further covered in 3 Cs: communication, change and conflict.  Ask “What strengthens your family glue? What makes you work better together?” Take a few of their answers.  If time, E-clip: “Importance of Communication Throughout the Family” (regular communications, make time, take time out)  Add, if not suggested: –Regular meetings of all stakeholders, family members whose lives are affected by having the farm. Every three to six months. –Off-site, on neutral space. Facilitator to help raise the difficult issues and guide discussion. –Not a decision-making time, but rather to share vision, perspectives, ideas, concerns. –Time for inclusion. Good stuff (funny stories, the legends, the good news) should outbalance the bad news. –Last bullet: “One way to strengthen glue is to show the same respect for family members as you would your best employee, best customer, best friend. We often take family for granted. Show respect. Say thank you. Be more positive than negative. Praise not nit-picking.”  Insert Frishkoff E-clip “Family Farm Can Strengthen Family Ties.”  But, YOU need to end the module, so plan what your last piece of advice will be here

43. 43 Decision 10 What will strengthen the family glue and keep you headed toward the future together?  Show respect, especially to those whom you love the most.  Regular meetings of the family, to talk about the farm. To keep folks current. And, to have everyone have a chance to be heard.  Provide opportunities even for those not actively involved on the farm.  Family time, absent farm talk (at least as much as possible).  Balance criticism and appreciation.  Record your history and celebrate the legacy.

44. 44 Presenter: Closing Exercise – Action Plan based on 10 Decisions  “First, look at your list of 10 decisions, that you’ve had at your side as we’ve gone through the discussion. Be sure you’ve circled the ones that seem most important.”  “Now I’m going to ask that you choose one, and only one. The one that’s most critical to the future of your farm. Addressing which one would get you closer to your vision? Would most clarify the situation for others? Would most move your planning along? Once you’ve chosen one, please go to the slide labeled YOUR ACTION PLAN, and circle the decision that you’ve chosen. “  “Then, at the bottom of the page, indicate what will be your FIRST STEP in dealing with this decision. Be specific. ‘Having a talk with Mom’ isn’t specific enough. At least specify about what.”  “And, finally, indicate by when you will take this step.”

45. 45 Getting What YOU Want: YOUR ACTION PLAN  Which decision is most critical to the success of your family farm?  Circle one question number only. 1.What is your vision of the future in terms of continuing as a family farm business? 2.What actions are important to minimize risk by anticipating possible worst cases? 3.How will you groom young family members as part of your farm family? 4.What talents and experiences does the farm need for future success? 5.What employment opportunities will you offer to family members and what expectations will you have? 6.What will be the role of non-family employees, and what will they need to do their jobs? 7.Who will own the farm and farm business next, and how will ownership transfer? 8.Where might a strategy for selling come into play? 9.How will senior farmers move to sharing key decisions? 10.What will strengthen the family glue and keep you headed toward the future together? What is the first step that you will take to make this decision? And by when?

46. 46 Presenter: Homework  Decision Closing Exercise –Remind participants to bring back their decision lists at the next session. –Allow at least 10 minutes at the start of that session to ask what discussions took place related to the exercise, and what steps had already been completed. Remember, though, that they might have made a plan that didn’t require action in the short time since the last session.  Vision –Participants will be working on vision throughout the workshop. –As you return to vision, be sure to ask what aspects of continuing as a family farm they’ve included in the statement.

47. 47 Homework BEFORE NEXT SESSION:  Meet with other key stakeholders to begin the process of defining a compelling vision for your family farm. Include in that vision your dream for future generations and how long you want the farm to remain a legacy in your family. IN THE TIMEFRAME THAT YOU SPECIFIED:  Take the step that you committed to, that addresses the one question which you specified as most critical to the success of your farm.  And, as you work on that step, discuss that action with other key stakeholders.

48. 48 Family Farm Resources BOOKS (all available through Amazon): –Passing Down the Farm, The Other Farm Crisis, Donald Jonovic, 1986. –Keep the Family Baggage Out of the Family Business: Avoiding the Seven Deadly Sins That Destroy Family Businesses, Quentin Fleming, 2000. –At Home in the Vineyard: Cultivating a Winery, an Industry, and a Life, Susan Sokol Blosser, 2006 –Legacy by Design, Succession Planning for Agribusiness Owners, Kevin Spafford, 2006.. CHECKLIST –Farm Succession Risk Management Checklist. Free, self-scoring tool to evaluate your progress and chart action. At http://www.familybusinessonline.org/resources/frm_chkl ist_farm.aspx MAGAZINES –“Family Business,” published quarterly. www. Familybusinessmagazine.com. Includes a good e-summary (alas, but filled with advertising between the topic bullets). GAME –“The Farm Game.” A good, and fun, tool to teach children about farm business management. Developed by a farmer “invented on the seat of a tractor” (to make some extra $$). www.farmgame.com.www.farmgame.com E-CLIPS –www.eclips.cornell.edu. Free to use. Contains all of Frishkoff Family Farm presentation, other dairy producers, and many other entrepreneurs. Tons of advice, at the click of your computer.www.eclips.cornell.edu

49. 49 Ten Critical Decisions Working Copy This is your check-off list. Tear it off. As we proceed, mark each decision that seems critical to the success of your farm. 1.What is your vision of the future in terms of continuing as a family farm business? 2.What actions are important to minimize risk to anticipate possible worst cases? 3.How will you groom young family members as part of your farm family? 4.What talents and experiences does the farm need for future success? 5.What employment opportunities will you offer to family members and what expectations will you have? 6.What will be the role of non-family employees, and what will they need to do their jobs? 7.Who will own the farm and farm business next, and how will ownership transfer? 8.Where might a strategy for selling come into play? 9.How will senior farmers move to sharing key decisions? 10.What will strengthen the family glue and keep you headed toward the future together?

50. 50 Presenter: Helping with Research  Understanding what steps you take as a result of attending “Managing for Success 2007—Time for Change” can make a difference for other farm families.  We ask, therefore, that you complete the simple, short research page which follows and turn it in to your workshop leader. And, we ask that you provide your name so that we can collate this data with additional data that you provide as you move through various modules and complete assignments.  All individual information will be held in confidence. Your information will become part of a larger database of workshop participants.  Thank you for helping with this project.

51. 51 Follow Up Information List the number # for the decision that you chose (1 through 10) What is the first step that you will take to make this decision? By when? Demographics: Please help us understand a bit more about your farm and family. Circle best answer for each numbered question, or fill in the blank provided. 1.Gender: M or F 2. Your generation on the farm: 1 st 2 nd 3 rd 4 th 5 th more 3.Farm in your family since _____ (year) 4. Acres farmed ____ (owned and leased) 5.As you look at others in your industry, do you consider your farm small? medium? large? 5.Who else works full-time with you on the farm? Circle all that apply spouse sibling(s) parent(s) child(ren) 7. Total number of full-time, non-seasonal employees ______ All information will be held in confidence. To track progress related to your plan, it is necessary for the research team to know what you action you plan to take. And, our funding is dependent on our ability to show the results of the workshops. Please provide your name and county. Name: County: