How to have a successful business partnership on the farm or ranch
Most all of us get into the livestock business because we love cattle or other animals, we love seeing the fruits of a calf crop come to life, or we love the connection between animal agriculture and food production. Perhaps we didn’t necessarily choose to get into the livestock business because we wanted to run a business or have a partner in business.
Yet, partnerships can be one of the most beautiful or one of the most painful opportunities on the planet. Maybe the partnership process was done right, with great conversations, intelligent use of accountants, great use of a business mentor or coach, and establishment of a number of things I will discuss further in this article.
There are numerous challenges to forming, growing, and maintaining a healthy partnership. The key is creating health just like we do with our cattle or other animals. If we cultivate and nurture health in our partnership, success will be a secondary byproduct.
Reasons to form a business partnership
In an effort to learn more about partnerships, Dr. Nels surveyed veterinarians in their partnerships. Most all aspects of partnerships are very similar regardless of industry. This survey that Dr. Nels Leadership Coaching conducted on behalf of Animal Medical Center (AMC) asked practice owners the reason they entered into a partnership. The top three answers were:
- Financial reasons
- Increased income
- Ownership transition
You need to partner for reasons beyond financial gain. Why? Because a healthy partnership is cultivated by working with someone who helps you be a better person, has different strengths, and who can successfully communicate and live their core values with a desire to help others.
Positive reasons to enter into a business partnership as a ranch owner or livestock producer that can help build success, include:
- A desire to build a legacy operation that goes beyond us as individuals or the future partner.
- A desire to help someone be the best version of themselves and grow our own leadership potential.
- A desire to build a more broadly diverse ranch, dairy, or livestock operation. A potential partner should bring something unique to the table to help strengthen an operation’s foundation and better serve the livestock, landlords, or investors.
- A desire to make the pie bigger. When creating or growing an operation with more diverse offerings, you also generate more revenue to share.
- A desire to reap the benefits of “together is better.” This requires both great humility and hunger, understanding when to yield to other’s expertise, and utilizing your different strengths for the betterment and healthy growth of your operation.
So, you have decided to enter a partnership. It gets off to a strong start, but you don’t invest in leadership growth and cracks start to show. How can you get your ranch or livestock operation back on track?
Communication is the number one opportunity for all livestock operations. It is such a simple word, yet so often failed, and often the cause of failure in partnerships.
Partnership pitfalls and how to work through them
In the Animal Medical Center survey, veterinarians indicated 4 pitfalls to building a successful business partnership:
- Commitment to the operation
- Personal core value differences
- Inability or unwillingness to give up control
Communication is the number one opportunity for all livestock operations. It is such a simple word, yet so often failed, and often the cause of failure in partnerships. In the AMC survey, two-thirds of respondents agreed or strongly agreed with the statement ‘Communication between partners is an issue.’ Communication doesn’t have to be complicated. Yet, it’s important to consider both structured and unstructured communication needs.
Planned meetings. These are a primary example of formal communication among business partners. I strongly suggest your formal meetings have an outside professional in the room. You can invite a different guest speaker each month. Consider asking your accountant, insurance agent, financial advisor, attorney, or business coach/mentor to speak. You will often discuss opportunities, problems, or challenges that can be related to finances, people, or the direction of the enterprise. In these cases, our behavior can be instinctual when needed to be responsible. These differing professionals will not only help make the living breathing business stronger and healthier, but also bring a level of accountability for healthy conversation directed to what’s best for the whole business and not any one individual.
As we talk about partnerships in agriculture, many times these partnerships are with family members. Have you ever had a “family” meeting in which tempers flared and the meeting ended with an abruptness, leaving everyone involved feeling hurt or even more angered? This is one of the key reasons for having another professional in the room for any and all family business conversations.
Routine communication. Communication between livestock operation partners can be less formal but needs to be routine in nature to fill any partner’s cup. For example, about six months ago, my current partner in the veterinary practice told me he felt he couldn’t talk to me because he didn’t want to bother me on my crazy busy schedule.
At first, my ego got in the way of doing the right thing. You should react constructively and with humility in filling a partner’s cup versus reacting emotionally and egotistically. This conversation led to growth in our partnership.
To have a healthy partnership, routine communication is required well beyond any formal meetings. You must put effort towards just talking, asking “Hey, what are you working on?” “What are you thinking about?” “Is there anything we need to talk about that we haven’t?” “Is your family ok?” You must be humble in nature, caring for their well-being, remaining overly kind in the heated moments, and yielding to your partner’s strengths or needs.
Commitment to the ranch or farm
As producers evolve through the seasons of life and day-to- day grind, often one partner can begin to think they are doing all the work. In my consulting work with operations and veterinary practices, this is a common problem. The AMC survey showed 46 percent of veterinarians agreed or strongly agreed with the statement ‘Commitment to the practice by you or your partner is an issue.’
First, you must define “work.” One partner may be doing more mental gymnastics work and another partner may be doing more physical work. When communication isn’t where it is supposed to be, and one partner feels the workload isn’t shared, problems arise.
There needs to be a mindset of being fully committed to the operation. You “aren’t going anywhere” and are fully committed to doing what’s best for the operation with no thought of ‘getting out.’ Next you must define individual roles in the operation that capitalize on each individual partner’s strengths.
For my veterinary practice partnership, my strength is understanding the big picture, development of leaders, and finances. For my partner Ty Brunswig, DVM, his strength is the details, coaching people in the daily trenches, and client relationships. We work to utilize those individual strengths to grow the business or solve problems that may arise.
For your livestock operation, maybe one person is a better stockperson while the other is better at working on the operation’s financial health, perhaps negotiating bank interest rates, handling tax planning, or buying cattle. Or one partner is a master at selecting genetics to improve the foundation of the herd. The key is to talk as partners about who has what strengths and being intentional about capitalizing on those individual strengths.
As these things occur, and everyone maintains a humble heart, yet strong hunger, concerns on workload and who is doing what tend to go by the wayside. And if there is still real concern about who is doing the work, you must have real, authentic, humble, yielding, and crucial conversations.
Personal core value differences
Everyone inherently has a set of personal values that lead to how we think, talk, and act. We are often driven by and make decisions based on our values, consciously and unconsciously prioritizing them. If you are money-driven, you make decisions to make more money, but may be okay with compromising other values to do so. If you are family driven, you make decisions to spend more family time at the expense of the operation. If you are self-fulfilling in nature, you may make decisions that float our own boat at the sacrifice of the family and the operation.
To me, there needs to be harmony in the middle of all those things — business, family, money, and self. But unless you are aligned on a set of core values, harmony will not be reached. Eighty-one percent of veterinarians in the AMC survey rated personal core values as a very important trait in picking a business partner.
Partnerships are beautifully powerful, living breathing things, but they all need a set of rules of the road to guide them. I have had many partners over the years and am currently involved in the management of several partnerships. These partnerships require a set of core values that serve as rules of the road for our behavior, decision making, vision, and direction.
Think of core values as a set of accountability standards that everyone understands and serve to keep all partners in line. Done well, we can achieve harmony, even as we make money and minimize egos and greed.
Inability or unwillingness to give up control
In my work with operations and business transitions, I’ve experienced this as an area that can be 100 percent lethal to a partnership. As veterinarians or even producers, our intelligence and ego are often the problem. Forty percent of veterinarians in our survey agreed or strongly agreed the inability or unwillingness of a partner to give up control was an issue. My poor ability to give up control, decision making, and a leadership position led to one of my greatest learning journeys.
My business partner, Dr. Ty, is a rockstar go-getter, like myself, and from his initial days at AMC he wanted to do more and grow. And at first, it really bothered me! My leadership lid at the time wasn’t high enough to know how to handle him. The good news is we navigated the journey over time.
Transition of leadership responsibilities needs to happen over time, not overnight. Often the transition of leadership occurs during monumental events, like at retirement, when the business or operation sells, or even when death occurs. Your team members or family members need an intentional, gradual leadership change, instead of a sudden change in leadership where they have no idea what is expected of them or how new leadership will function.
As a ranch, dairy, or livestock operation owner or partner, giving up control and decision making happens over time. It is about transferring your knowledge of how to successfully lead the business. If your mind is wrapped around the axle of power and control, then you are in trouble. You are feeding your ego, and not feeding your own personal growth and development, or the personal growth and development of your partner. Your focus should be like a farmer: to cultivate, nurture, and grow current and future partners.
Some of the greatest opportunities in farm and ranching operations come in the terms of transferring leadership responsibilities to the junior partner or the next generation of family. Giving up control and communication are the top issues I hear over and over from family members or from people on the operations I work with.
The bottom line is partnerships take intentional focus and work. If you concentrate on points in this article with current — or future — partners, your partnerships can and will be better, and great things can be achieved for the legacy of an operation.