The odds are not in your favor. For your family business to survive and thrive across multiple generations, you must be proactive.
“As farm operations become more complex and the economy continues to challenge healthy financial performance, it’s more important than ever to talk about the generational longevity of your operation,” says Rena Striegel, business coach and consultant with Transition Point Business Advisors in West Des Moines, Iowa.
Follow these tips and strategies, says Striegel, who will be speaking at the 2019 Legacy Conference happening Jan. 14-15 in Chicago.
Keep the endgame in mind.
The first step is to be clear about what you want your transition to look like. Do you want to continue working on the operation? What role do you see yourself playing? Retirement is oftentimes viewed as the date when you turn in the keys to your tractor.
For most farmers and business owners, succession is a lot easier to talk about when “retirement” is eliminated from the vocabulary and “transition” is inserted. That transition can come in the form of mentoring, help during busy times or any number of operational duties. This shift in thinking about the future often allows decision makers to make way for future leaders more easily.
Set the stage with your family.
Once you have determined what you want your future to look like, it’s time to bring the rest of the family into the conversation. It is best to invite everyone, including in-laws, to a family meeting to talk about the future. Create a relaxed atmosphere. Food is always a great addition to the meeting.
The purpose of the first family meeting is to set the stage and introduce the topic, not to get into the nitty gritty details. Simply talk to your family about your hopes for the future. Let them know you welcome their thoughts, but you prefer to have those discussions privately.
From the initial family meeting forward, be mindful of what hat you’re wearing based on the topic at hand. You will hear and react to information differently depending on the hat you’re wearing. For example, at a family meeting, make sure you have on your family hat. Try to keep the conversation focused on the legacy of the operation and what you want for your children and grandchildren.
Start the conversation with stakeholders.
The next step toward gaining clarity is to determine what other stakeholders want and what they are thinking. This can be done through informal conversations or simple interview questions. Include on-farm and off-farm heirs as well as children who are actively participating in the operation. You will be amazed at the level of understanding and thought young adults are giving toward the future of the farm, even as young as 11 or 12 years old.
Give adequate time for these conversations so everyone can really dig into what people are thinking and feeling. Being heard is a key component in these discussions. Ask more, talk less. The more clarity you gain from these conversations, the easier it will be to create a succession plan that works for everyone.
Put words into action.
Once you know where you want to go and have had all the necessary conversations, it’s time to put together the plan and bring your professional team into the conversation. At a minimum, you will need to include your lawyer, certified financial planner and CPA.
“A comprehensive succession plan includes ownership, management and governance,” Striegel says. “Developing a plan using these three perspectives will ensure on- and off-farm heirs are considered in a way that positively impacts the operation for years to come and preserves family harmony.”
Attend the Farm Journal Legacy Conference
Dive deep into the logistics of creating a sound succession plan at the Farm Journal Legacy Project conference. Experts Polly Dobbs, Paul Neiffer, Rena Striegel and Dick Wittman will provide insight and answer questions on how to take inventory of your current situation, resolve conflict and navigate the many legal and tax tools.
To learn more or register, call (877) 482-7203 or visit TPSummit.com.