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Leave a Legacy: The Heart of the Business

October 26, 2013
By: Kevin Spafford, Farm Journal Columnist
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Planning for succession is an ongoing process. It begins with a transition goal and flows through a series of actions that gradually move the operation from one generation to the next. While the process might be long, there are several steps that must be implemented immediately.

Start with the basis of business. People engage in a business, such as farming, to make money and provide financial security for their family. That basis for business and the drive for multigenerational success are the foundations for a comprehensive succession plan.

Included in the quest for maintaining a certain standard of living is to ensure the family is not burdened with more debt than necessary, has the right tools to manage the unexpected and saves enough for a retirement option.

But Farm Journal readers ask for more; they understand succession is bigger than that. We’ve received several inquiries related to  succession, but the majority have been disconnec­ted from the immediate tasks. For instance:

Q I have a small cattle operation. For the past several years, I’ve been trying to connect with an aging farmer who might be looking toward retirement. He’ll visit with me about succession but then says, "There’s not enough room for two families on the payroll." He recently told me his son graduated from college, but he has no interest in the farm. There’s no one else to pass the farm on to. How do I open the door to engage him in a more productive discussion?
AIt sounds like you’ve opened the door; you’re just not getting the answers you want. Transition is tough, and giving the operation to another person, especially an unrelated third-party, is difficult. Try approaching your neighbor with a business plan. Invite him to join you in creating something bigger than either of you could create separately. Enlist his experience and allow him to shape the operation based on skills he can help you develop.

Q  I would like to see more about transition planning for farm operations that are not going to go to family members. It seems there will be more non-family farm transitions as farmers age and younger generations, who might not have grown up on a farm, look for farming opportunities. I don’t think there’s a lot of difference between family and non-family transitions. However, I’d like to learn more about how to deal with the planning issues between unrelated parties.

AWhether or not family ties are involved, it’s important to focus on the benefits to the other party. Everyone knows this is not a benevolent act. It’s a business transaction that allows you to grow, while at the same time, providing a retiring farmer and his family a fair return on a lifetime of work. It’s also a promise by you to continue the farm in a way that honors the founder and provides the care one might expect in a familial relationship.

You’re right about the lack of differences between transitions to rela­ted and unrelated parties. The steps involved and rudiments of the process are the same. The difference is in the conversation. You should make sure the extended family is involved and informed. Beyond a simple nod, an aspiring farmer is well-advised to create a good working relationship with the next generation. Ultimately, those heirs might become landlords.

No matter what you call it, how long it takes or how difficult it might be to initiate, succession is a must.

To aid in the succession planning process each step of the way, work through the more than 20 tools available at www.FarmJournalLegacyProject.com/tools

As Farm Journal’s succession planning expert, Kevin Spafford breaks down the complexity  of the process to help farm families cultivate multigenerational success. Contact him at:

E-mail: legacyproject@farmjournal.com
Website: farmjournal.com/leave_a_legacy
Facebook: www.facebook.com/FJLegacy
Twitter: @FJLegacyProject

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FEATURED IN: Farm Journal - November 2013

 
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