|Business qualities checklist | Family needs and preferences | Goals and objectives for a new enterprise | Summary
Ag-Alternatives is a series of factsheets designed to help you evaluate the feasibility of a new agricultural or rural based business. Worksheets in each factsheet help you personalize the information.
Interest in alternative enterprises has increased in recent years. Many farmers are looking for new ventures to generate additional income, to bring in other family members or to better utilize resources. Others are looking to non-traditional enterprises as a way to get started in commercial farming or to help support a rural lifestyle. Here are examples of a few farming alternatives: non-traditional crops, livestock and other farm products; service, recreation, tourism, food processing, forest/woodlot, and other enterprises based on farm and natural resources; production systems such as organic farming or aquaculture; or, direct marketing and other entrepreneurial marketing strategies.
Personal and family assessments are important when you evaluate various enterprises as any decision impacts each family member. Each person has different expectations for the new enterprise, including the role he or she will play, what management skills are needed and the expected results. Sorting out personal and family goals in advance prevents confusion and perhaps even conflict in the future. The goals also help develop specific criteria for evaluating alternatives.
This factsheet helps you evaluate your most critical assets: you and your family. In the first part, checklists and self-tests assess limitations and opportunities related to business skills. The activities help you identify the needs and lifestyle preferences of your entire family. The second part asks you to identify specific goals and objectives that you and your family would like a new enterprise to fulfil.
Business Qualities Checklist
Certain personal qualities are correlated with the ability to succeed in an independent family business.
Worksheet 1: The Business Qualities Checklist helps identify your strengths and weaknesses. These strengths and weaknesses can make a big difference to your new enterprise choice. All family members should complete the exercise, even if they have little business experience. (Note: the worksheets may appear very small with newer versions of Internet Explorer. To enlarge, place the cursor over the text and then click on the screen enlargement icon that appears on the screen.)
Fill out your copy of the Business Qualities Checklist before continuing.
Evaluating personal business qualities
So, how did you do? The more check marks the better, but only someone with exceptional business management potential will have checked all of the qualities. If you placed at least a few checks in each section, you have a good set of skills that will help greatly as you start a new enterprise.
If you currently operate a farm business, you likely checked quite a few items. If not, consider this question: Is an independent farm-based business really right for you? If your business qualities are weak, operating a farm business will be difficult, and developing a new enterprise will be even harder.
If you are considering a change from full-time or part-time employment to the ranks of farming entrepreneurs, review your checkmarks. If you have very few personal business qualities, ask yourself the same question: Is an independent farm-based business really right for me?
It's possible to develop the personal qualities needed to succeed in business, but it's an additional challenge that requires determination and persistence. You may find that another family member has more of the personal qualities needed to succeed in business. If so, consider delegating the management of the new enterprise to that person.
Family Needs and Preferences
The family is going to be affected by whatever enterprise change you make. After all, farm-based businesses are usually managed and operated by families, and the business often shares yard and household space with the family. Right now, many of your family's desires may be satisfied by the current business or job. To prevent family resentment, a new business must satisfy more of their needs and lifestyle preferences than the present business. What happens if you ignore family members needs and preferences?
Kathy and Bill want their son Jim and his wife Bonnie to join the family farm business. Jim has been interested in and has helped operate the native fruit business since he was a teenager. Together they researched new enterprises opportunities. They settled on a bed and breakfast because Kathy had always wanted to operate one.
One year after they had started the bed and breakfast there was tension, anger and exhaustion. Kathy enjoyed the new business and resented the demands of the native fruit operation. Bill was exhausted with the extra demands placed on him by visiting guests and the lack of peace and quiet he once enjoyed on the farm.
Jim was frustrated by the lack of responsibility he was given in either enterprise. Bonnie felt like a maid to the bed and breakfast business and was amazed at the low income she and Jim had to survive on.
These are examples of problems that can be avoided if families openly discuss their strengths and weaknesses, wants and needs before a new enterprise decision is made. All family members have strong opinions about their own roles in a business.
Worksheet 2: Family Needs and Preferences has four different categories:
The exercise gives each family member a chance to compare their present satisfaction and future concerns in an organized manner. The exercise is most effective when all family members are included and each complete the exercise on their own. An evaluation and discussion guide follows the exercise.
- satisfaction with the current farm business or employment situation
- willingness to take risks with a new enterprise
- hopes and concerns about the future of the farm business and family roles in it
- types of enterprises that are preferred
Remember, there are no right or wrong answers.
Evaluating the family exercise
After you complete the exercise, sit down as a family to compare responses. If your answers are similar in every category, the family is exceptional and will experience smoother sailing than most. The more typical family disagrees on many subjects, but also has areas of agreement. The following discussion helps you understand your responses.
Satisfaction With Current Farm Business or Employment
The way you rated each statement in the first section shows how satisfied you are with your role in the farm business.
In family businesses, the main manager often has a more positive attitude toward the business than other family members. Look for areas where family members are either very satisfied or dissatisfied. A family member who is unhappy with family relations is expressing a need which may or may not be fulfilled by a new enterprise.
Starting up a new enterprise usually adds stress on the family's personal relations and finances. What will happen if income drops and there is less spending money? What if less time is available for family? Can that be tolerated for six months? Six years? If family members like their current roles in the business, will they be unhappy if the roles are changed?
Family members should discuss these questions and set some limits as to:
These limits will become part of your family's personal guidelines for evaluating different enterprise options.
- how much income may be sacrificed for how long?
- how heavy a workload will be tolerated?
Willingness to Take Risks With a New Enterprise
Are all family members equally comfortable taking risks in order to reap higher profits? People react differently to risk. If two or more people with a financial stake in the business feel differently about risk, conflict may occur when high risk enterprises are developed or when savings or borrowed money is used.
Nontraditional and innovative enterprises tend to be more risky than other small businesses. When a product or service is developed to meet a new market demand, the chances of receiving high profits are better than if the "same old" products and services are offered to the "same old" marketplace. However, the greater the level of innovation, the greater the risk.
Family members must discuss the question: what would happen if the new enterprise failed? Take the time to agree on an acceptable level of risk or an amount of money everyone is willing to lose. For example, are you all willing to risk losing the entire farm business? Will you limit risk to a $1,000 investment on a trial basis?
Hopes and Concern for the Future of the Farm Business
This section tells you about the motivations behind family members interest, or lack of interest, in developing a new enterprise. Are profit and high income important? Is maintaining a farm lifestyle more important? Or are all of these issues important? What are family members willing to sacrifice to stay on the farm? How do family members perceive their own individual roles in the business? What role does each wish to play in the future?
In discussing areas of agreement and disagreement, make sure family members understand and respect each other's concerns. Although family members may not be able to reach complete agreement, having common goals and expectations for the future helps you work together as a team.
Questions 27 to 30 identify the types of commodities family members like to work with. Questions 31 and 32 identify the preferred work pace. If the steady pace of a dairy is appealing, for example, you may not like the hectic seasonal pace of bedding plants. Questions 33 and 34 concern labour management. Some enterprises require so much labour that outside workers may have to be recruited, trained, supervised and even housed. How do family members feel about this?
Questions 35 to 37 indicate how interested family members are in a "people business."
While most farm enterprises involve livestock or crops, many provide a service. Examples of innovative service enterprises are listed on the following page. To be successful, service businesses need people who are outgoing and genuinely enjoy all types of people. Which family members would enjoy this type of enterprise? Are there any who couldn't tolerate a people business?
Questions 38 to 41 identify what features in the new business are important to family members. What common feature is most important to all family members? If no common feature is identified, it may still be possible to think of an enterprise that satisfies the different needs of all family members, so do not despair!
Dealing with conflict
Worksheet 2: Family Needs and Preferences has probably brought to light some areas of agreement and disagreement among family members.
Conflict is normal. In fact, it's healthy! It's also important to find ways to work through conflict, otherwise the conflict may grow more serious.
The following recommendations are based on a study (Rosenblatt, 1985) of successful family-operated businesses:
Examples of Service Enterprises
- Keep communications open
Find a way to keep information flowing and allow family members to express concerns. Try holding a regularly scheduled family meeting.
- Involve all family members in decision-making
Even if not directly involved in the business, all family members are affected by it.
- Set a limit on the time required to operate the new business
Agree on a set amount of time, separate from business hours, for family or individual activities.
Bed and Breakfast
Cross country ski trails farm
Farmers' Market vendor
Seed and supplies distribution
Hay rides and sleigh rides
Tours of the farm
Farm festivals and special events
Small engine repair
Goals and Objectives for a New Enterprise
Family members should understand each others concerns and preferences. You are now ready to draft specific goals and objectives for a new enterprise using Worksheet 3: Goals and Objectives for a New Enterprise.
Family members should work together on this section, because all must agree on what's expected of a new enterprise.
Defining family goals and objectives gives you some guidelines to assess your options. Refer to these personal guidelines frequently as you work together through the decision making process.
The Amber family was searching for a new enterprise to add to its mixed grain and cattle operation. After all family members completed Worksheet 1: Business Qualities Checklist, they sat down for a chat. They discovered that Jim, the oldest son, had excellent leadership skills.
Each family member then completed Worksheet 2: Family Needs and Preferences. As they discussed their answers they learned many things. Margaret, the mother wasn't interested in learning a new enterprise because she was very busy with her off-farm job. Younger son, Hal, wasn't interested in farming. Paul, the father, was willing to risk a moderate amount of money in the new enterprise. Grandma Jean's enthusiasm to work with people, surprised no one but Jim's comfort with supervising workers and dealing with customers was a surprise.
On Saturday night the family sat down together and filled out their Worksheet 3: Goals and Objectives for a New Enterprise. Paul, Grandma, and Susan decided they wanted to be actively involved in a new enterprise, but they wished to leave the leadership role to Jim. Their first choice was a horticultural enterprise, with service and livestock enterprises as second and third, respectively. The dairy and Margaret's off-farm job would be maintained at about the same level, with the new enterprise providing supplementary income. They set $8,000 as their goal for profit, $5,000 of which would be used for additional family living expenses.
The Ambers decided to risk losing Jim's, Grandma Jean's, and Susan's labour for one season, and in addition, an investment of a couple thousand dollars, if the enterprise failed. They would start the new enterprise on a small scale so the dairy operation wouldn't suffer. Everyone seemed satisfied with the results and agreed to go on to take an inventory of their resources.
Before you evaluate and select a new enterprise you need to assess the business management skills and personal qualities of the family members. The family's needs and lifestyle preferences also should be explored before a new enterprise is chosen. Identifying differences of perception or opinion in the beginning can prevent conflicts later.
All family members should be included in the early discussions, not just those who will have a management or labour role. Once the manager's skills and the family's needs and preferences are identified, a list of goals and objectives for an enterprise should be completed. This list will identify which enterprise ideas fit the desires and needs of family members.
Rosenbalt, Paul C. "The Family in Business" 1985
San Francisco: Josey - Bass Publishing
The Ag-Alternatives factsheets have been adapted with permission from: Farming Alternatives - A Guide to Evaluating the Feasibility of new Farm-Based Enterprises (NRAES-32, October 1988, ISBN 0-935817-14-X). This publication was a project of the Farming Alternatives Program, Cornell University, Warren Hall, Ithaca, NY 14853 (607) 255-9832; and Natural Resource, Agriculture and Engineering Service (NRAES), Cornell University, 152 Riley-Robb Hall, Ithaca, New York (607) 255-7654.
For More Information
Personal and Family Considerations: Where do You Want to Be?( Agdex 1834-10) (current document)
Identifying Alternatives: What are the Possibilities? (Agdex 811-2)
Marketing: Will it Sell? (Agdex 848-5)
Production Requirements: Do You Have the Resources? (Agdex 811-4)
Financial Feasibility: Can You Afford to Do It? (Agdex 811-3)
Profitability: Will it Make Money? (Agdex 811-6)
Decision Making: Will You Start a New Enterprise? (Agdex 811-5)
For these factsheets and other publications, call Alberta Agriculture, Food and Rural Development's Publications Office at 1-800-292-5697.
Alberta Agriculture, Food and Rural Development's website at http://www.agric.gov.ab.ca
Diversification information at http://www.agric.gov.ab.ca/diversify
To access specialists, information and services within Alberta Agriculture, Food and Rural Development, contact the Alberta Ag-Info Centre at 1-866-882-7677.
Source: Agdex 1834-10. Revised April 2003.