Do You Avoid These 14 Family Business Landmines?
Family farm businesses face unique challenges. As a result, 90% of family businesses don't survive past the third generation, says Dick Wittman, president of Wittman Consulting and a farmer in Culdesac, Idaho.
Some catastrophic landmines farm families face, Wittman says, include:
- Company vehicles
- Room and board
- Expense accounts
- Setting compensation
- Withdrawals of capital
- Insider inter-entity transactions
- Family employment policies
- Medical benefits
- Retirement plans/pensions
- Business benefit continuation
- Workdays and holidays vacation, sick, business leaves
- Buyout understandings
- Outside activities
Luckily, these land minds can be avoided by creating written policies for each. “Having these in writing takes out the emotion around these issues,” says Wittman, who spoke at the third annual Legacy Conference in Kansas City on Dec. 8-9.
He encourages farmers to think through each issue and decide the protocol. Then simply write down, in simple language, your thought. As a result, you are creating a policy before the need and it’s not about one person.
“You need to think about if your policies and SOPs would attract successor or chase one away,” Wittman notes.