Lessons From Family Legal Issues

Beiersdorfer Orchard and the buildings in the background.

Over the last few years my husband’s family orchard has been dying. The family as a whole turned their back on it. Those that stayed aren’t very business savvy. No one has bothered to find new clients, and if a big order comes in at the last moment, those with the physical capabilities don’t show up to do the work.

This past year things got intense. The only cousin that works on the orchard doesn’t want to fix equipment. He’d rather spend money the orchard doesn’t have to either have someone else deal with it or buy new equipment. (For anyone not savvy on how much farm equipment costs, think in the $100k realm.) He spent money the orchard didn’t have. And Grandma, the bookkeeper, accountant, and head of the company, didn’t communicate just how bad things were. She had hopes that everything would turn out in the end. Instead, the bank is threatening to take everything.

When the shit started to hit the fan, I was the ear that Grandma talked to about things. I’m a business owner, so I understand how delicate the balance is from time to time. I asked Grandma why she didn’t have the hard conversations. Her response? She didn’t want to upset the family dynamics. There is more to that there, but it’s personal to their family. Let’s just say the family has a bad habit of letting all their shit brew until it explodes. Needless to say, it’s a delicate situation.

Lessons are everywhere.

Lesson 1: Communication is key.

I’m sure more of this could have been avoided or at least worked through if everyone in and around the farm would communicate with everyone else. That way Grandma would know what needs to be budgeted for, and the workers would know what they have to work with. Hard choices need to be made on a day to day basis, and the best way to make decisions is to communicate all the details.

Lesson 2: Employees are NOT family.

Yes, you should treat employees with respect accorded to another fellow human. That’s a given. But, we tend to let family get away with stuff we wouldn’t tolerate from our best friends. If you work with family, make sure that the expectations are out there in the open that they know they will not be treated with kid gloves. Business is business, and sometimes some rather difficult things need to be discussed. If the company goes under, not a single one of them will have a job. That outcome would strain the family even more.

That means treat them with the dignity and respect that you’d give employees, but do NOT let them be the anchor that drags down the whole ship.

A row of apple trees.

Lesson 3: Cash flow is extremely important. 

Living on debt and prayer is not a good way to go about business. Know what’s coming in and when. Don’t spend until it’s in the bank if possible. Schedule maintenance and eventual replacement of equipment into the cash flow. And if you have to take out a loan to get some equipment, make sure you have enough positive cash flow to pay it back.

And don’t cock up the cash flow by being lazy. If a client puts in an order and it could save your ass, do the work. Even if that means begging others to help you pull off a miracle.

Lesson 4: Legal protection is necessary.

They are teetering on the edge of losing the farm because it was used as collateral for the very expensive equipment. Could she have had legal arrangements to make it “safer” to make that bet? Maybe. But at what cost?

In the world of business, everything is under the company’s name in case of a liability. The orchard is an LLC. All the buildings and property (other than the house Grandma lives in) is under the company name. Thus, when they made a bet against their cash flow, the whole orchard was put at risk.

Only a very good lawyer and you can answer the question of what is really necessary to protect your company and personal assets. Make sure you get a good one.

Remember, building your company intentionally one step at a time is the way to go. A lot of people will lean on the income, so make it a stable foundation.