Have you heard the saying “plan for the worst and hope for the best”? There’s a lot of truth to this with regards to risk management.

Risk management is all about planning for the worst in order to be prepared for if and when the worst comes to pass. This is what legal resilience is all about, the ability for your farm or ranch business to bounce back after the fallout.

Remember: Planning is bringing the future into the present so that you can do something about it now.

In risk management we start by imaging the worst things that could happen and work backwards from there to put a management plan together. Generally speaking, this is what you’re doing by creating a governance document. You’re creating a process for dealing with the heavy stuff of life as it relates to your business (death, divorce, disputes, disability, and debt), as well as the more day-to -day stuff (business contributions, compensation, decision making, meetings, roles and responsibilities).

Mapping out the constellation of “worst things” you want to manage through your governance document is the first step to writing one.

This is an effective exercise to do together with your business partner(s).

Farming with Love

If you are operating the business with a romantic partner or spouse, it can feel awkward, tough, or just plain wrong to imagine the worst. It can be helpful to think of this exercise as a means of strengthening your relationship, specifically at the point where your personal relationship and the farm business intersect. Keep in mind, you are doing this work to support both!

Try this: Planning for the Worst Things (~1HR exercise)

  1. Gather together with your business partner(s) and assign a notetaker.
  2. Take 15-20 minutes to reflect together on your farm or ranch business as it is right now: How do you relate to each other as business partners? What roles and responsibilities do you each have? How do you currently make decisions for the business? What do each of you have invested in the business? Write these reflections down as you go.
  3. With your reflections in mind, take 30-40 minutes to discuss and identify the absolute worst things that could happen between you and your partner(s) in relation to the business. It’s important to give each partner time to share the worst things they can envision happening. Pay attention to areas of overlap and contrast, without judgment or blame. This exercise is about hearing each other’s fears, and holding space for vulnerability in order to support each other. This is about understanding.
  4. After everyone has shared, write down the “worst things” that could happen into a numbered list, either in a notebook or word document. Aim for no more than 10 “worst things.”

For example:

  • A business partner takes out a loan that’s more than we can afford to pay off…
  • As business partners who are also romantic partners, we break up..
  • One of us gets injured and can’t farm anymore…

Well done! That was not an easy task, but it’s an important one as you are setting a baseline for the issues your governance document will help you to manage. Now, let’s shift perspective to where you want to go and how you want to shape that path in Step 2.