Bloodlines and Bottom Lines: Navigating Family and Finance on the Ranch
Gain family transition tips from this conversation
Farmers and ranchers face a multitude of challenges and threats to their operations each day—some more impactful than others. But when we step back and look at the American family ranch, what is the greatest threat to that legacy?
According to Dave Specht, a family business and continuity expert, the answer is mismatched expectations across generations.
“Unless a family is clear on their purpose and where they desire to go, everything else is irrelevant,” said Specht. “When families don’t take the time to become clear and transparent about where the business should go, it results in wasted time, money and even relationships.”
So, how can different generations find clarity in the direction of the business? It starts with transparency and communication.
“One of the gaps I see in farm and ranch families is a lack of understanding across generations about finances,” Specht said. “If a family doesn’t understand their financial status, they should not invite the next generation back.”
The rising generation needs to understand the realities of risk so they can think and act like owners—before they ever become owners.
In addition, each generation must remain curious and open to the ideas and desires of the other, especially when adjusting business goals and models.
“Most operators don’t even realize they have a choice,” said Specht. “They look at the operation and think they need to keep scaling, but eliminating some things might actually be better for the business and the family.”
Navigating change in a family business is rarely easy, but sometimes the past offers helpful perspective.
“Ultimately, families will have to change and innovate to continue through shifting market conditions and challenges,” Specht said. “One way I help families accept upcoming change is by looking back at the beginning of the business—to serve as a reminder of how much innovation has already happened.”
Creating clarity and aligning expectations isn’t just about setting business goals—it’s rooted in strengthening family relationships.
“Too few families are invested in family continuity as equally as business continuity,” said Specht.
Building those relationships looks like spending time together in non-working environments and simply having fun. Generational empathy and curiosity are also key, as they help each generation understand the other's values and struggles.
Each generation brings its own experiences and expectations. The founding generation often went without and assumes the next should do the same. But second and third generations, removed from the early struggles, may seek a more balanced approach to life.
“Rising generations are wanting more of a balanced approach to life, which can create friction,” Specht said.
That friction can be eased by practicing empathy—putting ourselves in one another’s shoes and asking better, less self-centered questions.
“Lead with empathy and look out for the other person, with the main goal of preserving the family relationship,” said Specht. “The bigger family purpose is greater than individualistic needs.”
This means the younger generation should also recognize and respect the retirement needs of the senior generation—and all they’ve endured to build the operation.
Specht encourages the rising generation to reflect on the following questions:
What are the financial needs and lifestyle expectations of my individual family unit?
Do I really want to operate on the same land, or do I want the same upbringing and community for my own children?
What skills and talents do I offer the family business—or to any business?
Am I willing to take on the debt of the family business?
Taking the time to honestly consider these questions can lead to new insight—and potentially new opportunities.
“It may be the biggest opportunities are not within your family right now,” said Specht. There could be a neighbor or area farmer without children to pass the operation to. Or your talents may be better utilized elsewhere—for now.
Whatever the direction, one thing is clear: Everyone should be part of these conversations—especially mothers.
“Matriarchs are the difference between success and failure in family and business continuity,” Specht said. “They are the story-keepers and shape how children view the operation. They are the most invested in family dynamics too. When people don’t make plans with the mothers fully involved, I’m skeptical it will work.”
There is no silver bullet for passing down a family business, but investing in family relationships is a strong place to start.
“If you want to preserve your farm or ranch, you need to work on family relationships first,” said Specht.
Listen to the full conversation on the Casual Cattle Conversations podcast.
