How to start the conversation about taking over the farm with Jolene Brown

Hosts Emmery Mehlhoff and Alisha Nord visit with Jolene Brown, a walking, talking spokesperson and champion for the people of agriculture.

Jolene is a farmer in eastern Iowa, contributor to Successful Farming magazine’s popular family business column, author of two great books, and an inductee into the prestigious CPAE Speaker Hall of Fame.

In this episode, your hosts discuss ideas from her upcoming workshop entitled: “If we huff and puff, will we blow your house down?”

Jolene shares lessons learned from her 30+ years of working with farm families. She addresses the issues of communication and conflict, fair and equal, entitlement and transition.

During the workshop, she will provide 10 template tools to help with the transition of labor, management, leadership, and ownership.

When your business is constructed correctly, not only do we have a productive and profitable result, but we have also laid the foundation for the legacy of a family business.

To find out more about the March 22 workshop visit the NDFB website's event Jolene Brown succession planning event. RSVP for this free event to jpepple@nodakins.net

To hear more from Jolene Brown, visit www.JoleneBrown.com

 Contact our hosts at emmery@ndfb.org

Transcript

[Straight Talk theme]

[00:07] Emmery: Welcome to Straight Talk with NDFB. I am your host, Emmery Mehlhoff.

[00:11] Alisha: And I am Alisha Nord.

[00:13] Emmery: We are your Farm Bureau duo, bringing you your competitive edge. In today's episode, we visit with Jolene Brown from eastern Iowa. Jolene is a walking, talking spokesperson and a champion for people in agriculture.

[00:26] Alisha: On today's episode, we talk about bridging the generations on your farm and how your time is valuable. Your farm's future is valuable. So now is the time to secure your farm's future. On March 22 of 2024, join us in Fessenden at the Festival Hall from 10:00 a.m. to 3:00 p.m. Along with Jolene's message, we will also have a key advisor panel moderated by Jolene with an attorney, a CPA, and a financial planner. This event is free and open to the public.

[00:59] Emmery: Join us for this episode.

[Straight Talk stinger]

[01:04] Alisha: So today we have on Jolene Brown. And Jolene, if you just want to introduce yourself, I'll kind of let you just do the introductions since public speaking is your forte.

[01:18] Jolene: And interviewing is yours, right? Yes, I am Jolene Brown. I am a professional speaker, a family business consultant. But most of all, I am a real farmer Brown and I am so tickled to be coming to North Dakota to be with the Wells County Farm Bureau and the group that they're bringing together.

[01:35] Alisha: As Jolene said, we'll mention it a couple of times just for people listening, depending on when they're coming in and out of the podcast. But Jolene is coming up to Festival Hall on March 22 in Fessenden, North Dakota, and we will be starting our programming at 10:00 a.m. Registration is at 9:15, and it's going to go 'til about 3:30 in the afternoon. So just want to get that in a couple of different times so people listening can make sure that they plan for that day to come in. But Jolene, if you just kind of want to talk about how you got in this profession and have you always been a speaker or what made you want to be in this line of business?

[02:18] Jolene: Well, I didn't even know that I was in a job of being a professional speaker until somebody told me it's what I was doing. But when the '80s came along and the land values crashed, those of us in the Midwest knew that we lost about 63% to 67% of our net worth. And at the same time, our interest rates were 20% to 21%. And what I know is, down all of our gravel roads in the countryside were coming these words, bankruptcy, foreclosure, suicide and murder. As a matter of fact, a farmer in our area who was perceived to be in financial difficulty had shot and killed his wife, his hired man, and then he went and killed the president of the bank. And then he killed himself. And we bank at that bank. So the next day I find myself speaking at the Iowa Farm Bureau Annual Meeting. And just before I took the stage, we were all getting dressed in our hotel rooms. And on the CNN, the Today show, and Good Morning America, they showed the blood splattered blinds of the president of the bank's office. "Agriculture's in trouble. There's no hope, there's no way. Look what these people are turning to." And as I walked out on that stage and I saw all of these members looking back at me, I know exactly what they were thinking. If it happened to him, could it happen to me? And what do we do to stay strong on our inside, to ride this roller coaster that life gives us on the outside? 

That day I completely changed my topic. And I taught them how to build an internal bank account when the external one is gone. So when I walked off the stage, I was shaking. That was a vulnerable an emotional and important presentation. But I'm going down my two tiers of connecting escalators, and at the bottom were ABC, CBS and NBC. And I turned around to see who was coming. But Emmery and Alisha, nobody was coming. It was me they were after. And I finally, at the bottom said, ladies and gentlemen, I have a statement to make. And I thought, "You dummy! You don't have a statement!" But what I did say, "The day that those in agriculture learn how to separate our self worth from our net worth, is the day we're going to be okay." It doesn't take us long in agriculture to know that we have all kinds of resources for our production skills. We can learn about weeds and seeds, breeds and feeds, money, machinery and marketing, but we're crappy with people. That's the people that do all the production. So my focus has always been on the human side of agriculture and certainly morphed into a point that can bring us great joy or great pain. And that is working as a family business. And that's the thrust of what I do now for consultation.

[04:49] Alisha: Wow, that is quite the story. And those listening, I'm sure your gut just kind of drops a little bit because you do you think about that often, what's going to happen to the farm or ranch or depending on what type of situation you are in, that can become real very fast and it's something that I think is on the back of all of our minds. And so that's why we are very excited to bring you up to North Dakota. Could you kind of describe the day and the workshop and what people can expect when they come up to Fessenden?

[05:24] Jolene: Well, I'm not coming for show, although there will be so much humor and many real life stories that they're not going to realize I'm hitting them over the head because I want them to love and honor their families. And the only way I found that you do that is if you do the business right. So my topic is going to be that day, if we huff and we puff, will we blow your house down? So I'm going to take them to the three little pigs, and they're going to find that the third one did it right. The third one put in one brick at a time, took him forever to build that house, and then he put mortar in between the bricks to hold it together. And that's exactly what we need in our family business. So I'm going to share with them in my time with them, and also we've got a panel of key advisors that are going to be in front of us. We're going to tell them about what bricks they need in place. And I will tell them that the mortar is your attorney, your accountant, and your financial planner. Because all of the work that we do for succession and transition planning must be financially feasible, and it has to be legal that it holds up, because they're going to hear many things during my talk. But one of the most important things they will hear is that silence is the greatest destroyer of a family and business. And until we know the value of transparency, even if they don't like the rules of your game, they deserve to know it. Then it's important that we have more than just a hope and a wish and an assumption. So we have to get through the silence. 

We're also going to hear that a conversation is not a contract. And I got to tell you something. Farmers lie. They do. Here's the three biggest lies in family business. Work hard. Someday this will all be yours. Or, yeah, I'm going to retire. And then there's the dreaded, oh, you don't have to worry about your brothers and sisters. They've got their jobs. They are not interested in the business. That's true, until you're dead. So I will take them to those three conversations that we have. I will give them a much better alternative, and they will clearly understand that if things are not in writing, things do not exist. So as we put these bricks in place, it is not a dreaded process, something we've got to do and we don't know what to do. But it is something that will bring not just increased productivity, but profitability to your business. It will give you some much needed peace of mind. And my goal is I want us all to sit together happily at a holiday table. So I'll be taking them to the lessons I have learned by sitting at over 400 kitchen tables with families just like theirs. And they've taught me what works and what doesn't as I help them fix or grow or transition their business. It's time that we honor our families and do it right.

[08:00] Alisha: Yeah, I think two of the things that I'm never going to forget that you just said is "Conversation is not a contract. And if it's not in writing, it doesn't exist." I mean, if those two things couldn't ring more true, wow.

[08:15] Jolene: Here's the sad thing with family more, not less, needs to be in writing. We will address the issues of earned sweat equity. In other words, I've been working in the business a long time. I'm building my parents net worth. They've been paying me peanuts because I'm going to get it all anyway, right? And if we don't have this compensation that earned sweat equity is transferred every year, no one has the chance to continue to stay motivated and excited or even build collateral so they can buy into the business. So they will clearly understand that things have to be in writing. And then we need them in writing because we've got to deal with this thing called fair and equal. This is the number one roadblock of why family businesses won't transition. Well, we've got some kids in the business and some not in the business. And how do we do this? 

You're going to love this question. I was recently asked this. I've been farming with mom and dad for eleven years. Dad understands that fair is not always equal, but mom believes that equal is equal. So if dad dies first, am I screwed? Those are the kinds of questions that I get. So we have to learn how to compensate and how to deal with fair and equal. And that is a tool that we will certainly address as well as will our advisors. There are many ways that you can reward people who have never been a part of the business, still acknowledge that they're a part of the family and part of an inheritance, perhaps. But if you want the business to continue, then you've got to make sure you don't have cash on demand payout. And heaven forbid, please don't put people in business together if they never could get along. How many times have I heard parents say to me, "Well, we're going to divide it equally among our kids, but they never could get along." Well, why on earth are you going to put them in business together? So I don't mince words. I take them to these kitchen tables and we will get a lot done.

[10:08] Alisha: And I think just having the number one thing, having that conversation, because no matter if you have two kids or ten kids, things change over time. Just because somebody didn't want to be a part of the family farm when they were 18 doesn't mean at 28 that they don't want to anymore. And unless you start having those conversations and seeing where people's interest lies, I mean, that's where a lot of problems that you can see stem from, because that conversation was never had. People were never able to express what they actually wanted, or maybe they had a new interest or not an interest anymore. And so I feel like, as a daughter of a farmer and a rancher, kind of coming into this situation of planning out what the future looks like for my siblings and I, that's a conversation that we need to have. Because, number one, like you said, right now my sister has no interest in the farming or ranching, but she loves that life. She loves living in the country. She loves bringing out meals. But as far as doing the actual work, that has never been an interest to hers. But if we were to split up the farm and give her nothing, that would create a huge blow up. And my dad has finally realized that, that just because she doesn't have an interest, she hasn invested a lot of her time and money doing other things that are, I guess, technically a part of the farm and ranch. But her interests don't lie in it. So that's a very interesting way of wording it.

[11:43] Jolene: Well, we certainly have to take a look at what are your prerequisites before you invite a family member into the business, because it's not a birthright. And I've also learned that a family business is not a place to rehabilitate a family member. If there's somebody angry or addicted or arrogant, don't hire them. Nobody else would. And yet we tolerate stuff from family members in a business than you would never tolerate from any other employee. So I do not want moms and dads bringing in the kids. I want leaders, managers, hiring worthy employees, earning the right for management, leadership and potential ownership and then we have to take a hard look at what are the roles of the people in the business, what are the contributions? And then we must compensate them accordingly, because you pay people out of the cash flow, not out of the net worth, and you pay people on the value that they bring to business, not because we're all related, we all get to pay the same thing, or we've all worked here at the same time, what is the value that they bring to business? And I want you to work for somebody else for two to three years before you come into the business. But you may come with a different skill set. You've learned it doesn't always have to be this way. There might be a better way. You've also learned maybe things aren't so bad at home. I want to go back there. But you learn that you've got to know your job. 

You know, I do so many young and beginning farmer grower, rancher meetings. I hear time and time again from the younger generation, "You know, Jolene, I can't do anything right, but I don't even know what I'm supposed to do, but I can't do it right." And that's because they don't know their job. It's a habit assumption. And then I have many of different generations say, well, they ought to know what they're supposed to do around here. They grew up here. Well, how's that working for you? You see, when you work for somebody else, you knew what your job was and you had to work with people you didn't even like, and you still did it. You learned you actually got paid. Well, there's about 30 lessons you learn, and that's one of the prerequisites. Before you invite a family member into the business, they have to have a non-family boss. Now, I know you need them on the farm and ranch and they want to come back, but please don't shortchange this step, because when they do come back, it's at a completely different level of employee, and it's exciting because you have hired them well. And so we go through the prerequisites before you invite them in, and then we have to take a look at, well, is this person a contract employee only doing one or two things we can contract up? Is this person deserving salary, and fringe benefits? And just understand this, just because you want to doesn't always mean you get to. That means that just because you want to be in the family and that you get to, it's not the senior generation's job to make a business big enough that if anybody wants to work here in the family, we'll find a job for you. Oh, no, no. 

This next generation, or the person who's considering being invited, needs to come with a business plan. We're so blessed, if we're blessed enough to be invited to work here, here's our understanding of what the business looks like now. If I'm privileged enough to come back, here's what I think I could add. I got a lot of lessons to learn from you, but I've worked elsewhere and I think I can improve this, I can add more value. And then we're headed off on the right direction.

[14:57] Emmery: So that ties into a question that I had. How do you start that conversation with mom and dad? Both Alisha and I are in our 30s, are either actively farming or come from a farming family, and are looking at that next stage, literally here. But the question is, how do you even start that conversation with them and say, hey, mom and dad, we want to sit down and we want to talk about what this transition is going to look like. Is the best way to write up a business plan and say, "Hey, look, I've been working here for a few years and I have some ideas. I'd like to formalize some stuff."

[15:33] Jolene: Well, there's a couple of things that surface. Sometimes there is something that happens in your community. A farm accident takes place, or someone dies suddenly, or they die without a will and you know the family is struggling, or you might even see a sale bill in your local paper at the coffee shop. Snd you don't want the same thing to happen to you that has happened there quite often, that can be a conversation starter. The other choice is, and I really like this one, I want them all to come to this workshop, to this wonderful day of laughter and learning, because there's something magic happens when we all show up, same place, same time, and we go home and get the work done. So I want them to bring all generations, because we're going to have the upstarts to the old farts and everything in between. And here's what I know. They can go back home and say, remember what that long legged speaker from Iowa had to say? And yes, I am 6 feet tall. I want them to say, "You know she tells some scary stories. We don't want it to be ours. And mom and dad, there's nothing I want more than to honor how hard you have worked and how you have built this farm and ranch and what you sacrificed. And there's nothing I'd like more than to continue your legacy of what you've done, but we have no idea what you got planned. And it would be really helpful to make this happen if that's what you want to have happen. This is your ranch. This is your farm. You can do whatever you want to with it, but it would really be helpful to know how we can support what it is you'd like to be done." And then you can ask some questions. 

But there is a third way, and that is, I always have to remind the younger generation who really wants this conversation, is that they better have their house in order first. I don't care what stage in life you are. If you're married, just married, if you are single and you're working on your, I hope that you better have your will and you better have your powers of attorney for health care and finances. You have no right to ask about theirs if you don't have your house in order. It's quite often easily to say, you know, my wife and I, or my husband and I, we weren't sleeping at night. So we decided we better get some things in order to help make sure that we're both secure, because we love this family. We love you. So here's what we've done. We've gone to this attorney so and so, and we went with knowing what we owed and what we own, and we went with guardians for our kids, some ideas, and who we would like to make sure can make sure the wishes of the will are carried out. And so we got our house in order, and it cost us about this much money to do it. We don't know. Do you have a will? Because, boy, it sure gives us peace of mind. And there's nothing I'd like more than to have you sleep better at night, too. So whatever you've got planned, it would be very helpful if you would share us what your plans are. Now, if they don't have this conversation and they don't follow through, I have a question for you. How much risk are you willing to take in the hopes things will be as you wish? How many years of blood and sweat and tears are you going to put into a business, hoping we can all get along, hoping there's a will. We just love each other. We'll be fine. And here's what you have taught me over 30 years, and that is hope is not a very good business strategy. Instead, good businesses have things clarified and in writing, including the succession plan for the business.

[18:39] Alisha: Yeah, I really like that. And like you said, running your operation like a business. I mean, that's a mindset that I think we kind of get lost on or kind of forget, because it is. It's the family farm or the family ranch, and everything's great, and we can run off of happiness and joy when in reality, that is not true, that we need to run our operation just like any other business out there.

[19:05] Jolene: I'm chuckling here because I had someone say to me last week, "You know, Jolene, when I die, I just want two things. I want all of our kids to get along. I want them all to be happy." Well, if that's what you want. You got a heck of a lot of work to do now, and I have to ask them, well, do you want the business to continue? Because if you do, I just want to hear a yes or a no, not, oh, we don't know how to do it or what's it going to cost. I just want to know, is it the fire in your belly that you want this to continue? Because if you say yes, we've got two things underway that have to take place. You have to teach people how to lead, and you have to teach people how to leave. Now, that doesn't mean you're kicking them off the farm or ranch, for heaven's sakes, that's their soul. Don't you dare do that. But what jobs can they still safely do? And yet I had an 80 year old man say to me, "Oh, you know, Jolene, someday I'd be turning something over to my boy." His boy was 60. I said, you screwed your son. We're talking grandkids here. How would you feel being 60 years old, building your parents net worth all the time and taking care of their health care needs and running them around and keeping the farm or ranch going, and yet you never had any collateral in your own name. We got to take a hard look at reality, people. And so it is very important that we get things in writing that it makes financial sense. And I got to tell you something. I've learned I have to get the senior generation financially secure first, and they must know this. In other words, they have to understand they have enough money, how to live and to live in the way they want, because there's a profound truth, and that is people have to live until they die. So how are they going to live, and what are they going to live on? And I know that one of the most underutilized advisors, and one will be on our panel is the financial planner. This is a person who helps you figure out what you own, what you owe. What are your sources of income. Do you have beneficiaries for things? Have you thought about this? And then if we can get them financially secure, first and only if we do will they transition power and control, because if they're not secure, they will never relinquish it. Oh, you want to buy more land? Oh, what about me? You want to buy more equipment? What about me? More critters. What about me? And they will hang on because you're dinking with their security. I want the next generation to take the risk on what they can grow or what they can lose. And that senior generation, if they have put in years of blood and sweat and tears into the business, we've got to make sure that they are financially secure first.

[21:41] Alisha: Yeah. And the other item that you had kind of touched on, too, that relates back to this is this isn't just a two hour conversation. This is months and months, if not years, of planning, which is why it's very crucial when dad or grandpa or uncles are pushing this off, because it doesn't just happen overnight. These conversations are long. There's lots of feelings and emotions involved. And that's why just getting that initial start is so important, because it can take a long time. And I guess you know better than me. I mean, what is the typical time frame to have a full, I guess, succession plan from beginning to end? What does something like that look like?

[22:27] Jolene: Well, there is no end. Okay. There's three things you have to transition. The first is education. This is what we do here. But, you know, you're bringing people who have even a different kind of education. What else should we be doing? The second thing you transition is the experience. This is how we do things here. Oh, but you've learned how else it could be done. Could we make it better? And then the third thing is the hard asset. Now, most people want to start with the last thing. Let's run to the attorney. Let's get a will. We need a trust. We got to do. And they haven't done the first two things, and then we end up with a heck of a mess because we don't make the transition right. So what I want them to know is that this is where I come from, but, boy, have I learned from my families, is that I want operations. That is anything in the business that is movable. That's people, equipment, critters, machinery. Those are all things movable. That's what makes the business operate. I want 100% of operations to be owned by those who know how to operate a business. Now, the second portion was usually the land, because many of us in agriculture involve land. And then we tie those two together. So you have the first option to rent, the first option to buy. And if you're not paying the owners of the land, they can rent to somebody else or they can sell it. But you see, all this is terms that we have a buy sell agreement, that we have a commitment because you told me you want the business to continue. So we have to have those advisors. On the panel with this attorney, not only are you going to have somebody who knows that you need a will and durable powers of attorney, but who understand structures not just for liability, but for incremental transition of a business. They will know you keep operations separate from land. We're going to have a really good accountant. This isn't just somebody who does taxes. This is somebody who understands the five key ratios of successful businesses. This is someone who says, "Oh, while you're coming in to talk about this, would you bring the next generation with you so that they can learn what we're talking about and what we mean by these numbers?" I want them to have on their advisory council, a family business consultant who will say to them, "Okay, what's the mosquito bites? What's been bugging you? What keeps you up at night? What are you worried about? What are you doing well, that we can celebrate? And have you celebrated?" We want to keep goodwill in the family so we can work on the business. And then they do independently need that certified financial planner. Well, those are going to be the advisors in front of them. And when you know that you don't have to do this alone and that we cannot let perfect be the enemy of really good. Oh, but if this tax law changes. Oh, but if so and so comes back to the farm, and so they do nothing. Well, let me tell you, if you've done nothing, the state of North Dakota is going to tell you what's going to happen, and you're not going to like it. So let's get this done right. Very few things are irrevocable until you die, then it's irrevocable. But you can make changes as the business changes, as the people change, but you do the best you can with what you know now. So transition the education, transition the experience, and then we'll get to work on those hard assets.

[25:49] Emmery: Thank you so much, Jolene. I will be there March 22, Friday in Fessenden to hear from you, and I am planning to bring as many of my family members that I work with here on the farm with me that are willing to take the drive. But I would really encourage our fellow listeners to plan to join Alisha and I with Jolene and her panel in Fessenden on March 22 and learn about what it will take to make the first step, the second step, the third step, or just continue to work on the family business and transition and all the things that we need to do to keep family farming alive in North Dakota. So really excited, Jolene, that you're coming up to North Dakota. And I'm hoping that this nice weather that we're having will continue for your journey up here and for the duration of your stay.

[26:37] Jolene: Well, if not, put Mother Nature on some hormone pills and get her regulated, because this is... My tulips are starting to bloom and we just turned to March. This is crazy around here. But as I said, we work with the best people on this planet. Let's help them honor those families and let's get the business done right.

[26:55] Emmery: Awesome. All right, well, we'll see you in a couple of weeks, Jolene, and hope to see our listeners, too.

[26:59] Jolene: I can't wait.

[Straight Talk stinger]

[27:03] Emmery: Thank you for listening to Straight Talk with NDFB. Again, Jolene Brown will be speaking in Fessenden on March 22, 2024, starting at 10:00 a.m. You can find more information at ndfb.org. Just a reminder, this event is free and is open to the public. Please RSVP for the meal count purposes. You can email jpepple - jpepple@nodakins.net if that email is too long for you to remember, you can also find it in our show notes. This event is only possible because of some great sponsors.

[27:40] Alisha: The workshop on March 22 is brought to you by Eddie, Foster and Wells County Farm Bureau.

[Straight Talk theme]