Are You Ready To Pass Your Farm To The Next Generation?
Sometimes the first step in a journey is the hardest. But start you must, if your goal is to transition your farm successfully to the next generation of family or even to non-family members.
Here are four considerations as you start to plan:
Set expectations for what you want to achieve. The succession plan starts with knowing what you want. Spend some time getting really clear on what you want the plan to achieve and what you want to do post-implementation.
Rena Striegel says farmers sometimes tell her they don’t have any idea—they don’t have any hobbies, and their identity is completely tied up in being a farmer.
“We get fearful that if we transition out of the farm we’re actually giving that up when, in fact, you’re not and you don’t have to,” says Striegel, president of Transition Point Business Advisors.
“I don’t think you’re ever not a farmer," she adds. "Sometimes it’s simply a matter of getting into a mindset that you will transition to a different role. It might be on the farm’s board of directors. It might be that you become a coach and mentor, or something involving the community or your grandchildren. You know, it just takes a little bit of time to figure out where you want to provide value next.”
Know that the process is a journey. The road to successful succession takes time to travel, Striegel notes.
“This isn’t one event or just one conversation,” she says. “Even once you make all the major decisions and get documents in place they will need to be reviewed and updated from time-to-time, because you're going to have changes happening—you may decide to acquire things, you may decide to sell things.”
Even so, it’s good to know that most of the heavy lifting you’ll need to do from a planning standpoint occurs in the first year of the process, Striegel says.
Give yourself a long timeline for development and implementation. A long timeline helps ensure that you are able to communicate with everyone about the process and steps involved in the succession plan. Whereas, a short timeline is like a short runway for a plane that’s taking off or landing.
“You know that feeling where you’re thrown into the back of the seat, your stomach and your heart kind of lurch, the plane shakes uncontrollably, and you're like, ‘Oh my gosh, are we going to live?’ Well, that's kind of the same with succession planning, if you don't have a bit of a runway. You need adequate time to help the heirs, coach and mentor, and get people grouped up into the roles and responsibilities that they need to have to make the transition successful and less stressful,” Striegel says
Know that imperfect planning and execution are far better than execution with no sound plan. Striegel says she doesn’t know of any family that gets through the series of conversations and decisions that need to be made in a perfect fashion, and that’s OK. Give yourself a lot of credit, and often, for starting the journey that too many farmers put off.
Ultimately, succession will be one of the most significant – and valuable – undertakings you, your family and operation achieve.
For more information, you can contact Rena Striegel at www.tomorrowiscoming.com
Transfer Knowledge Before Assets
Define Your Family Business Investment Policy
Farm Succession Planning Gets A Boost From An Ethical Will
