You are now well positioned to start making decisions for how you want to govern your farm or ranch business.
You may disagree, but the evidence is in the work you’ve done to get to this point. You already know which issues are important for you to address (aka your Worst Things… ). You also know what support your team needs in order to make decisions together.
Now it’s time to consider essential governing questions for your business, which will very likely address your worst things.
The task here is to practice making a collaborative decision on essential governing procedures for the business, keeping your goals and outcomes from Step 2 in mind. Where you can’t make a decision, you are probably identifying a barrier and that is important to note too.
Try this: 5 minutes to make a decision or discover a barrier (~1.5HR exercise)
Schedule a business meeting with your partner(s) to get started on creating governing procedures for your farm or ranch business. In the meeting, assign a notetaker and use a timer. Give yourselves 5 minutes to answer each of the 17 questions below, noting down either a decision or identifying a barrier that’s keeping you from making a decision.
This is an exhilarating exercise that might feel uncomfortable, but trust your instincts! Afterwards, return to your decisions and build on them, taking appropriate time to flesh out each governing procedure. We will address the barriers you encounter in Step 5.
Round 1: Financial Matters (15 minutes)
1. What are the required financial contributions of each owner?
- Decision:
- Barrier to deciding:
2. How do we want to handle profits and losses?
- Decision:
- Barrier to deciding:
3. How and when do we decide whether to hand out or “distribute” profits to members? Who makes that decision?
- Decision:
- Barrier to deciding:
Round 2: Management Matters (15 minutes)
4. Who makes day-to-day decisions? For example, will the LLC be manager-managed or member-managed?
- Decision:
- Barrier to deciding:
5. What is our protocol for making day-to-day decisions?
- Decision:
- Barrier to deciding:
6. Are there any particular roles, responsibilities or benefits of any members or managers that we want to specify?
- Decision:
- Barrier to deciding:
Round 3: Meetings and Voting Matters (15 minutes)
7. Will we have an annual meeting and, if so, when?
- Decision:
- Barrier to deciding:
8. How are members informed about the time and place of meetings and how meetings can be conducted?
- Decision:
- Barrier to deciding:
9. Who has voting rights and upon what are they based?
- Decision:
- Barrier to deciding:
Round 4: “Big” Decisions (40 minutes)
10. Will we allow additional members and, if so, who decides?
- Decision:
- Barrier to deciding:
11. What happens if a member wants to leave, or if a member’s interest in the company is somehow passed on to someone else?
- Decision:
- Barrier to deciding:
12. Who decides whether the company takes on debt?
- Decision:
- Barrier to deciding:
13. Who decides whether to close the company?
- Decision:
- Barrier to deciding:
14. Who decides whether existing members can make additional capital contributions?
- Decision:
- Barrier to deciding:
15. Who decides on amendments to the governance document?
- Decision:
- Barrier to deciding:
16. Who decides whether the company can change hands (i.e., be acquired or merged with another company)?
- Decision:
- Barrier to deciding:
17. How are all other “big” decisions (i.e., not day-to-day decisions) made?
- Decision:
- Barrier to deciding: