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Is There a Partnership in Your Future?If you're contemplating change, it's an option worth considering. |
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Thinking about expanding or modernizing your farm, but not sure whether you're willing or able to make the big leap on your own? One option is to form a partnership with another producer. "If you look at the numbers, it can be just powerful," says Marv Siekman, farm business consultant with AgStar Farm Credit in St. Cloud. "It's not for everyone. But for people it works for, it's a tremendous financial planning tool, a way to leverage what you have into something much more. It's a 'one plus one equals three' type of situation." What does it take for a partnership to succeed? "Number one is a positive mental attitude--and number two and number three and number four," says Siekman. "If you can visualize it, there's a lot higher probability you can do it." A well-formed partnership offers many benefits:
Partnerships can make sense for young or old, equity rich or equity poor. They aren't for everyone, however. You need to be willing to give up some of your independence. You need to be able to compromise, to get by without having the final say about what happens on your farm. You need to have personal traits a person would want in a partner--a good reputation, good communication skills, good management skills, honesty, reliability, and so on. And you need to find the right partner--someone whose vision, personality, management style, philosophies, goals, work style, and so on mesh well with yours. Getting StartedIf you think you might be interested in exploring a partnership, a good first step is to get advice from someone who's had some experience with it, either personally or as an advisor. Ask what the positives and negatives are, what works and what doesn't. Your Dairy educator (see list below) can be helpful here, as can lenders and farm business management instructors. The next step is to find a partner. Maybe you have someone in mind. If you don't, let other producers, lenders, vendors, and others know what you're thinking about. Word of mouth does wonders. "Build as big of a web as you possibly can--you never know which lead is going to play out," Siekman says. Finally, if and when you and a prospective partner connect, spend plenty of time exploring whether you're right for each other. When Siekman meets with prospective partners, he gives them a workbook that lets them assess both their financial ability to enter into a partnership and the many nonfinancial considerations involved, such as management style, goals, and personality. You may wish to hire a facilitator to help you assess your ability to enter into a strong, workable business relationship. The exploration process should include a look at the future, too. Realistically examine whether the partnership you are proposing would be able to generate enough income to meet the needs of both families involved. And when you're working out the details of the partnership, don't forget to include provisions for dissolving it if a death, divorce, or other unforeseen circumstance should make that necessary. |
Specialized Dairy Educators |
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Neil
Broadwater, Winona County |
507/457-6440 |
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