Family charters & Farming: a roadmap to success
The problem above all in a business is decision making. A family charter brings everybody together, adds transparency, builds communication and creates trust.
A family roadmap and an aid to decision making are just two of the ways Nuffield scholar Peter Craven describes a family charter in the first Farming Focus bonus episode.
Continuing our in-depth look at Making succession work for your family business from the previous episode, Peter Craven returned to Farming Focus to discuss a concept he first came across on his Nuffield travels.
A solution adopted globally by farming families, Peter sees family charters as a tool for all farming family businesses to build trust, enable open and effective communication between family members and help them create a vision for the future of their business.
Using a charter to focus on the family not the figures
Peter encourages all farming families to recognise the importance of making time for discussions about the future, focusing on themselves as much as the figures.
During his travels as a Nuffield scholar, he came across a situation where a bank, asked to loan a significant sum of money to a farming family, was more concerned about the family’s cohesion and future planning than its financial position. This led to the creation of a family charter, which the farmer described as ‘a way of protecting ourselves from ourselves’.
The family charter tackles the questions ‘Do we want to remain as a business, together? And if we do, how are we going to do that?’. Peter says it also asks who the family includes, and what is shared with whom.
Ideally, it includes those not involved with the day-to-day running of the farm, as exclusion can become problematic. He cited the example of a daughter learning of her family’s business plans at a village meeting. To help prevent this sort of situation arising, a charter includes everyone, including those without equity but with an interest.
How to create a family charter for a farming business:
Peter stresses each charter is unique to the family concerned so are based on principles rather than being an ‘off-the-shelf’ blueprint. These are the elements he recommends:
- Set the scene by determining who you are, your values and what you want. This is particularly important for those coming into the family
- Identify potential problem areas to avoid fallouts before they happen
- Establish roles, responsibilities and accountability
- Decide processes such as how to spend money, how to make decisions
- Plan how the next generation is going to be integrated into the business
- Make a living document, reviewing and revising as situations change
- Only involve professionals, e.g. accountant, solicitor, once the document is drafted, establishing the ‘what’ and ‘who’ yourselves before others support the ‘how’
Overcoming the problem of decision making
In conclusion, Peter suggests the problem above all in a business is decision making. That’s what is really knocked if communication stops and opportunities are lost because you can’t make decisions together. The family charter brings everybody together on one page, adds transparency, builds communication and creates trust.
“And that’s really where the magic starts.”
Box: Top tips for creating a family charter for a farm business
- Acquire as much information as possible about what you want the charter to look like, and what is relevant to you. Every family farm business is different, so structure your charter accordingly.
- Start questioning what is going right on the farm, but also what is not going well. Understanding what you may need to do to remedy the latter and how you achieve that is important.
- Decide what you want and where you are trying to go. This isn’t always easy and takes time, it won’t necessarily come to you overnight.
Listen to the full episode at Farming Focus- also available via Spotify and Apple podcasts.