The author is the senior editor for Hoard’s Dairyman.
Navigating relationships is part of being a human, but that doesn’t mean it is easy. Miscommunications, unclear expectations, and unaligned priorities can all throw a wrench into how we build bonds with other people. If we don’t handle those setbacks appropriately, they can even cost us the relationship.
This is just as true in a business setting as it is in our personal lives. The relationships we have with our bosses, co-workers, and suppliers often determines what the company can achieve.
The interconnected spider web of relationships that exists on any dairy farm means that paying attention to how we communicate and work with others makes a tremendous difference in the success of the business. While every relationship matters, the center string of the web on larger dairy farms is often some form of partnership, whether between family members or unrelated individuals.
Get aligned
Without the legal connotation, a partnership simply refers to multiple people or groups with a common goal. In a business such as a dairy farm, it joins people together to contribute to the operation and share in the profits or losses.
There are various types of partnerships dairy farm ownership may take on, such as a general partnership, limited partnership, or limited liability partnership. Before entering into any kind of partnership, though, it is crucial to get on the same page as your potential partners. In a University of Wisconsin-Madison Division of Extension webinar, food entrepreneurship specialist Jessica Jane Spayde highlighted what questions to ask of possible business partners.
A good place to start is by establishing goals and expectations. Talk to any potential partners about your ambitions for the business. How do you hope to grow the operation? This could encompass milking more cows, but it could also mean exploring value-added opportunities or branching into other enterprises, such as genetics or cropping. Then, ask about and listen to their ambitions for the farm.
Those goals can then lead to a discussion about both parties’ expectations on the size of the business and how many employees they want to manage. This is also the time to talk about what you want your role in the farm to be.
“Think about what your role is now and how you hope that changes over time,” Spayde described. How does that fit in with what a potential partner hopes to be doing then?
Similarly, be upfront about any ownership changes you may expect, such as bringing a child or other family member into the operation. “It’s important to talk sooner rather than later about how you expect ownership to change over the years,” she said.
Talk money
Finances can be a difficult subject to discuss, but if you are considering entering into a partnership with a person, Spayde encouraged being realistic about risk, salary, business expenses, and accounting. “Be as explicit as possible when talking about money,” she stated.
Everyone has different levels of risk tolerance, so it is important to be clear about what you are investing in the business — and thus, what you stand to lose if things do not go well. In the volatile dairy industry, it is a good idea to discuss a potential partner’s perspective on managing financial risk.
Have an honest conversation about what you and potential partners need to draw to make a living, Spayde continued. Also, discuss what the company can purchase for owner and employee use, such as vehicles or supplies, and at what quality. Asking these questions up front and addressing the business’ reality can help limit challenges down the road.
It is also a good idea to have a formal agreement about who does the farm’s accounting, even if it is one of the partners. Make sure all parties agree on how you will communicate about finances and how often. Know how owners and employees will be paid and if this will change over time.
Nail down the details
If potential partners agree on the goals and financial operation of the business, it is time to tackle the day-to-day operations. In other words, how will you get tasks done as co-owners?
“There are a lot of decisions to be made about how you make decisions,” Spayde began. Who handles which topic areas? Which can be handled independently, and who has the final say if you disagree? Spayde also advised thinking about how you will handle conflicts when they come up.
Similarly, consider how you want to communicate. Determine what format works better for ease of use; for example, is email, a phone call, or texting better? Be honest about what is most convenient for you, Spayde emphasized. If communication becomes a chore, you or your partners won’t do it, and that can lead to mistakes and missed opportunities.
Many jobs on a farm will be done independently, but there are also times when collaboration is necessary or helpful. To help determine which approach to take, Spayde said to think about what you want to do alone or together, what you enjoy doing alone or together, and what has to be done either alone or together. This is also the time to discuss what kind of work environment you thrive in; that covers physical needs as well as structural or cultural requests.
Among Spayde’s final recommendations was to get on the same page about what kind of documentation you want to have and what level of quality you are aiming for. For example, do you want to have standard operating procedures (SOPs) in place for certain tasks in the next year? What are the farm’s goals for milk quality, reproduction, calf care, or other areas, and how will you track progress? When farm owners come to an agreement, perhaps with the assistance of farm consultants, communicating those goals clearly to employees helps them do their job better and move the farm forward.
There is no handbook for developing successful business partnerships, but the basics are intuitive. All partners must be open about what they need and expect as well as how the farm will get there. If consensus can’t be reached, the person might not be a good fit for the business. But if partners can find a way to work together toward the same vision, all of the relationships on the farm have a better chance of thriving, too.
OCTOBER 2024 issue:
