This workbook will walk you through the process of drafting a governance document for your business by providing you with expert guidance, clear steps to follow, and actionable recommendations that can be worked into any schedule.
We’ve put together six dynamic meeting agendas that can be completed in 7 hours or less, where we walk you and your business partner(s) through engaging and impactful steps
But before we jump in, let’s make sure you are prepared for success!
When drafting any legal document, it’s important to understand the terms you’re working with to have confidence in the plan you’re putting together. For some, this will be a quick refresher on what you already know. If this is the case for you, celebrate your knowledge here — that is an asset to this process! If this is new information to you, celebrate the beginning of your learning journey towards meeting your goals.
For starters, a governance document is different from a business plan.
A business plan is a living document that guides you through the startup stage and primes your farm or ranch for successful growth. It can also help you obtain funding by highlighting why your business is a valuable investment, or be shown to potential partners to demonstrate how you’ve thought through your concept and have confidence in your idea.
A governance document on the other hand, is a legal document that sets forth the rules for how the farm or ranch will operate and handle responsibilities over the life of the business. This is a guiding document for the long game, one that anticipates the highs and lows and how to navigate them. Farmers and ranchers in the Discovering Resilience workshop often comment that “this sounds like a prenuptial agreement!” and honestly, it kind of is. It’s a written agreement about how the business assets will be managed and what obligations owners have to the business, and vice versa. If the thought of a prenuptial agreement doesn’t resonate with you, think about the governance document as a perennial rulebook for how your business operates, legally speaking.
While each business entity has a different name for its governance document, they all do the same thing. They lay out the rules for how decisions are made, how assets are managed, and how responsibilities are assigned and handled.
Sounds like a pretty useful document, doesn’t it?
Before you start creating your own governance document, take a moment to reflect on the following questions:
- Am I a co-owner of the farm or ranch business? If yes, this workbook was written for you! Move onto question 2. If not, then you’re the sole owner of the business right now and much of this workbook won’t apply as it focuses on group decision making. Instead, you can put together a straightforward governance document that demonstrates separation between you and the business by utilizing the annotated Single Member Owner LLC Operating Agreement.
- Do I understand what a business structure does? If yes, move onto question 2. If not, take 10 minutes to read the Farm Business Structures Basics for a quick overview. For a deeper understanding, take the Discovering Resilience workshop, where we cover essential business structure functions in the second module.
- Do I have a general partnership? If yes, move onto question 4. We also recommend reviewing the Sole Proprietorship and General Partnership Fundamentals, specifically focusing on the section titled Preparing a Partnership Agreement for a General Partnership where we include a list of key issues for partnership agreements to address. You can then come back here to start working on creating your partnership agreement.
- Do I have a clear understanding of why I have the business structure that I have? If yes, move onto question 3. If not, take 5 minutes to work through the Farm Business Entity Flowchart to identify how your goals align with your chosen business structure. You may find as you work through the flowchart that you land on the business structure you have, affirming your choice, or you may be surprised to find another structure may be a better fit for your goals!
- Do I feel comfortable with what a governance document looks like and its basic contents? If yes, then you are ready to use this workbook! If not, then be sure to read through either the LLC Operating Agreement Formation Checklist, the C Corporation Sample Bylaws, or the Preparing a Partnership Agreement for a General Partnership section of the Sole Proprietorship and General Partnership Fundamentals, depending on which business structure you have, before using this workbook.