Prenuptial Agreements – Uncomfortable and Necessary

The Practitioner

You can find issues more uncomfortable than prenuptial agreements. But not many.

For starters, people view prenups from amazingly different points of view. One of my granddaughter’s professors told her that asking anyone for a prenup was demeaning and exploitive and showed such a lack of trust that even asking would be grounds for breaking an engagement.

On the other side, a friend of mine has the attitude that “anyone who won’t sign a prenup is after your money.” She told her son that if someone were unwilling to sign a prenup, that would be disqualifying. “Why should anyone be paid for marrying you?”

My own view is somewhere in the middle, but I do believe that for members of a family business, marriage isn’t just about two individuals. A divorce could impact the family, the employees, the lenders, the customers, and the community. It can damage or destroy an…

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2017: New Year, New Business To-Do List

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Sometimes, you just have to connect the dots between the economy and your business decisions.

In agriculture, that means settling in for another year of low commodity prices, according to ag economists. We ended 2016 on the third year in a row of below the 10-year average for net farm income. Dollar strength has created a significant headwind for ag producers, making our products more expensive for other countries to purchase. It feels like we are running uphill.

The good news about 2017 is finally market prices and costs are coming close to equilibrium. Input prices are falling for grain producers; fertilizer, in particular is trending lower in cost. The futures market looks positive. Hey, hey…we’ll take what we can get.

So that leaves all of us agriculture with a significant new “to-do” list for the new year. Here are some starter ideas.

Business to-do list for 2017:

  1. Double-check inventory. If you carry inventories, review your target levels and actual levels and make sure that you are not bloated in one area.
  2. Re-evaluate labor needs. Labor in rural America is going to continue to be a struggle. Focus on developing your current labor’s skill sets in different areas, and look into technology where available to offset labor reductions.
  3. Seek opportunities. Keep your eyes peeled for niche and alternative market ideas. Necessity is the mother of invention, and in tough times some of the most amazing businesses have been born.
  4. Look into sustainability. Increasingly, consumers are buying food and agriculture products based on how they are grown or raised. To complicate matters, there is little trust and transparency in the food and agriculture system. Food and agribusiness companies want to know that your businesswill continue to operate, remain resilient, and potentially expand. The reality is, these forces are affecting the health and growth of your business today. If you are not focused on sustainability, then you are missing key strategies and solutions that mitigate these forces already affecting your business. Check out @KCoeResourceMAX for some ideas on this topic.

Folks, I’ve seen my share of ag market cycles. We’ll come out of this one just like we have the others. And we will likely come out sharper and stronger because of what we learned.

So buckle up, paste on that smile and focus in on your business to-do list. Let’s roar into 2017 with a new spirit and commitment to doing the best we can every day. Get it done!!

 

 

 

Focus On Cash Flow to Fight Fear

If you buy into the current headlines, there is no doubt that fear is driving the bus.

But I have learned one thing in working with family businesses over the years: focusing on cash flow can help fight business fear.

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As we come to the end of 2016, the ag economy is in a tough spot and it’s time to pay attention to business spending that impacts cash flow.

Paying attention to the little things that drain your cash flow will bolster you when the inevitable “Black Swans” — unexpected events that destroy income flow – swim into your business life. These can happen at any time. Take some time at the end of this year to look at your core disciplines, get lean and manage your business with a heightened awareness.

Why focus on cash flow? Your cash flow statement is like a fuel gauge, indicating how much cash you have left and when you need to refuel. You can’t run a business if you run out of cash. It is a key document that lenders often look at to help determine the capacity, or the ability of the operation to repay its debts. And while it’s an important document to have on hand when seeking financing for your operation, it’s also a valuable management tool.

The cash flow is the key statement in tracking your business over time. It tracks all cash coming into the business, and all cash out, over a certain timeframe. It’s different from an income statement or balance sheet in that it’s limited to only showing changes in the cash available to your businesses due to a variety of factors. It can be done on a monthly or quarterly basis. It helps document your farm’s ability to generate cash and cover expenses. Farmers typically use them on an annual basis. I like to use them as a way to summarize a business, either end of year or end of month.

Look intently at transactions. Cash comes into the business in form of sale of products or assets. You can study your cash flow to find your biggest expenses; for example, look at the top three expenses and see if there is anything that can be done to reduce those expenses.

The cash flow statement can tell someone quite a bit about your spending habits or the maturity of your business. Typically, new businesses have a more difficult time showing a positive number, as the business might not yet have reached a critical volume of sales, or it could be spending cash to generate inventories to sell at a later date. A more seasoned business might have taken on more debt to finance an expansion, so you might see a net positive from operating but a net negative from financing activities.

During a downturn in ag markets, a weaker cash flow statement can be explained, especially if it’s due to tough market conditions. In fact, it can be a good budgeting tool to have in down cycles to get a better idea of any cash shortages and what you might be able to do in both the short and long term to fill any gaps you have.

For anyone out there who wants to master the cash flow statement, you have to understand the nature of capital activity. Here is a great tutorial on cash flow statements from the University of Vermont: http://blog.uvm.edu/farmvia/?page_id=447

No doubt you’re working hard to figure out ways to tighten your belt even more than you already have. It doesn’t matter how well you budget or how efficiently you manage your business, there may be periods in which cash flow is negative. No one knows for sure when these periods will occur, and how long will they last, but every operation should have a financial contingency plan to provide for unexpected cash flow shortfalls.

Communication is key during difficult times. Sharing farm-related issues and financial matters with business partners ag lenders, farm advisors, and family members is extremely important during challenging times in the farming business.

Fight fear with communication and measurable cash flow statements. Remember, you can’t manage what you don’t measure.

Living to Farm? Or Farming to Live?

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I recently attended the Iowa Women in Agriculture conference, which pulled together women working on farms ranging from hobby farms to commercial hog and grain operations.

The individual concerns rising from women’s stories throughout this two-day conference were reflective of the realities in rural America. And if I heard it once, I heard it 100 times: farming is hard work. Many of the women at the conference were putting in 60-hour weeks to keep their farms productive, manage the marketing and social media, and remain a viable part of their rural community.

Nicole Jonas, of Red Granite Farm in Central Iowa, won’t deny that working on her vegetable and perennial flower farm is physically and logistically demanding. When vegetable season is in full swing, she can be harvesting, watering and transporting products to farmers markets from dawn to dusk. “But I love it. I live to farm, I don’t farm to live.” She has put systems and processes in place that make her work on the farm more streamlined and efficient.

For example, when she first opened her business with her husband, they had people stopping by their farm 7 days a week, at all hours of the day or night. Jonas realized she had to put boundaries in place for the sake of her mental health and family time…even if it meant losing a sale. Sunday afternoons became sacred for her family, and a CLOSED sign went up on the barn door where people typically purchase her plants.

“I’m limited on my time to do things, so I’ve learned to say no and even to charge more for my work,” says Jonas, who also does landscape consulting.

Women need to change the mindset of farming just to live. When your work and life are not in harmony, the day can feel like a drag. Even the small chores on the farm feel like moving mountains. Here are some quick tips to shift your mindset toward better harmony in your working life:

  • Understand what an imbalance is to you. Maybe 60 hours of farm business work is heaven in your mind. But if other parts of your life are starting to falter, that could signal imbalance.
  • Learn about the drivers that create stress for you. Is it overdue accounts? Inventory control? Not enough food in the house? Stress drivers are different for everyone. Learn yours, accept them, and then put systems in place to reduce that particular stressor.
  • Get tools to restore harmony to your work/life balance. There are so many great technology tools to help with managing your to-do lists. Do some research online. One of my new favorites is a tool called IFTT, which stands for “If This Then That”. This tool connects the apps and devices you love with systems that automatically trigger reminders or scheduling.

Jonus says each day is a balancing act in her business, but she wouldn’t want to live any other way. That’s living to farm. Visit Red Granite Farm online at: www.redgranitefarm.com.

Why It’s So Hard for Women to Say ‘No’ at Work — Fortune

The MPW Insiders Network is an online community where the biggest names in business and beyond answer timely career and leadership questions. Today’s answer for: At work, what’s the right way to say no? is written by Linda Celestino, vice president of guest services at Etihad Airways. Saying, “no” can be quite challenging, but every…

via Why It’s So Hard for Women to Say ‘No’ at Work — Fortune