Knowledgeable input from external advisers could be key to improving your operation

Could your farm or livestock operation gain value from outside perspectives? Has your business matured to a point where you’re thinking about expanding or diversifying? Has your family become too big or too conflicted to make business decisions easily?

If so, you may be ready for an advisory board.

“When you’re in the thick of managing the business every day, it’s easy to become complacent or get blind spots,” said Davon Cook, a Pinion principal and family business adviser. “Inviting an outside perspective can be eye-opening and energizing.”

You probably have an informal board of advisers already, Cook adds. These are the trusted people you call when you have a problem or want to bounce ideas off someone. Your adviser could be your accountant, banker or agronomist, the owner of a successful feed yard, a family member or a friend from church.

That informal network is a good starting point for a more organized advisory structure. With that foundational framework and the meetings that follow.

To launch an advisory board, Cook recommends recruiting two to three outside experts and trying to include at least one from outside of the daily sphere of influence of your business.

She also encourages farmers and livestock producers to look beyond agriculture for someone who can bring new or unique skill sets to the meeting table. For example, if you know a big challenge for your operation in the next couple of years will be financing, and you’ll need to figure out some new financing strategies, recruit a chief financial officer in your area.

If you’re thinking about a major generational transition, you could intentionally recruit someone for your advisory board who has been through a succession experience, or you might seek someone with a different generation’s viewpoint.

Six key points

To put an advisory board into place, keep these tips in mind:

· Keep it practical and doable. An important first step is putting your time and energy into recruiting two or three external advisers with the expertise you need. Also, not all meetings have to be in person. A Zoom meeting can work just fine and save on travel expenses. Advisory board meetings can last half a day to a full day.

· Confirm expectations. It’s essential to lay out your goals and objectives with your advisory board members. That usually includes a confidentiality agreement. That’s important because you’ll have to share some inside information, including financials, if you want your outside advisers to really understand what’s going on in your business so they can offer their best advice.

· Remember the role of your advisory board. These advisers don’t actually have the power to vote or force a decision for your business. They’re there to give advice. That’s different from a fiduciary or elected board, which has a legal duty of care to the business and related liability. What your advisory board can do is give valuable input you’re not likely get anywhere else. That can sometimes mean asking you tough questions.

· Prepare board meetings with care. An organized advisory board usually meets two or three times a year. A big part of the value of those meetings is crafting a meaningful agenda. What’s more, you must do your homework ahead of time on the information you’ll present to them. As an added benefit, you’ll analyze those fact sets better than you might have done otherwise.

· Hold yourself accountable. When you’ve spent time with your advisory board – people you respect – be prepared to follow up on ideas, suggestions and action plans that took hold during your meetings.

· Pay your board members. Since advisory board members are giving you their time and expertise, you should pay them. Compensation isn’t usually a large amount. Advisory board members aren’t supporting themselves by their service or doing it for the money. Most directors will have full-time jobs. But because you want them to have an obligation to invest their time and effort in preparing for meetings, some payment is warranted. She’s seen typical farm families and smaller feedlots pay from $1,000 to $4,000 a year for advisory board members.

In time, you may want to upgrade to an actual elected fiduciary board with legal responsibilities, but starting more simply with an advisory board can bring expanded skill sets and perspectives to your business. That can open new doors of opportunity for your future success.

Editor’s note: Maxson Irsik, a certified public accountant, advises owners of professionally managed agribusinesses and family-owned ranches on ways to achieve their goals. Whether an owner’s goal is to expand and grow the business, discover and leverage core competencies or protect the current owners’ legacy through careful structuring and estate planning, Irsik applies his experience working on and running his own family’s farm to find innovative ways to make it a reality. Contact him at [email protected].