Learn From the E-Myth Principle

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Post authored by
Jeanne Bernick

Jeanne Bernick

Jeanne serves as K·Coe Isom's Ag Market Champion. Previously editor of Top Producer, she uses her 20 years of experience to help large commercial growers expand and sustain their agricultural businesses.
Reading Time: 2 minutes

Family-owned businesses represent more than 90% of all business enterprises in the United States. Yet, only approximately 30% of family owned businesses survive into the second generation, 12% into the third generation, and 3% into the fourth generation, according to University of North Carolina at Asheville.

Of the 70% of family-owned businesses that fail to transition successfully; 60% fail due to problems with communication and trust, and 25% fail due to lack of preparation by the next generation.

No family farm or farm business sets out to fail, but many of the tools needed to run a successful agriculture operation aren’t production related to the farm. Outside factors influence the success of farming today, including global market forces, the value of the dollar, and changing consumer trends. The good news is there are ways to make the farm sustainable to the next generation and beyond.

The E-Myth, a book by Michael Gerber, talks about how most of us believe we can succeed as entrepreneurs, when in reality most small businesses fail. Gerber thinks many business owners begin with a fatal assumption — that if you understand the technical side of your business, you understand how to run the entire business. This is the e-myth.

Danny Klinefelter, Texas A&M University economist, suggests you apply this lesson to farming, by learning more about other players that affect your operation.

“Every business has four constituencies: employees, buyers, suppliers and funding sources,” he says. “Find the top three things that most frustrate each of these groups in dealing with a business like yours. If you can reduce those frustrations, you can become the supplier, customer, employer, borrower or tenant of choice.”

For example, find out what bugs your landlord. Maybe he or she wants you to keep the weeds down or plow snow off the driveway. Another example: Lenders like to hear from customers when changes to your working capital situation occur — don’t wait until the end of the year to contact them.

2016 is the year producers will need to pay attention to the small things that affect the operation and look for any opportunity to tighten up loose ends. The managers who can make the two-percent reduction in costs in all sectors of the operation, instead of a 20-percent cut in one area, are the ones who will be successful. Pay attention to what’s happening outside of your farm business to look for areas to improve.

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