Organizing the Agriculture Business

Structure

Many Agriculture enterprises are single owner – family run enterprises. Some are full-time enterprises where everyone in the family contributes when not in school. Many family farm members have also taken off-farm jobs to supplement the seasonal income of the farm and to secure insurance and benefits that are not available to a farm family. While some family farms and ranches are large enterprises that have incorporated and utilize managers and a host of full-time employees, many family run farms are small to medium sized.

Many agriculture support and processing businesses have moved away from the traditional family run enterprise to a more structured arrangement. Most have incorporated and operate like a typical business rather than a farm enterprise. Accounting has a lot to do with this. Most family run farms use a cash basis bookkeeping system to report income and expenses to the IRS. This probably has more to do with tradition than function, but is still fairly common. Agribusinesses often abandon the cash basis accounting and move to a more business oriented accrual system where income and expenses are matched.

An important component to the success of a business is the management structure. Who makes decisions and how are these decisions implemented throughout the system is a serious consideration. With full, part-time and seasonal employees it is imperative that a logical control system be in place so that a coordinated effort is sustained. Businesses that put all the control into one person or have a structure where the command and control is fragmented will often run into trouble when the enterprise gets busy. The reader of your plan should have confidence that the entrepreneur has a logical and functional structure in place.