Q I've tried to talk about succession issues with my kids, but every time the subject is brought up the conversation ends in frustration. It goes downhill fast when one of the kids says, "I want a chance to (blank).”
Another will counter: "You've had a turn; now it's my turn!”
A third will stress: "That was then, this is now. Can't we just get along?”
Then, mom gets upset, leaves the room and the discussion ends in finger pointing and discontent.
I know you encourage open communication. I realize that families don't talk about succession as they should, but how can we if the outcome is always displeasure? Shouldn't I [as the parent] feel a sense of satisfaction and the kids show gratitude?
A In succession planning, taking action to accomplish the defined objectives reaps rewards. The process, however, is not easy, and some steps will be more difficult and less rewarding than others.
Most business owners don't plan for succession because initiating the process is uncomfortable, and the process will test your resolve and try your patience. It requires a different set of skills and abilities than most owners possess, and often there is not immediate gratification.
As a call to action, please consider asking the following questions during initial family meetings.
What is succession, and how will success be measured?
Succession is the act of transitioning the family operation to the next generation. The measure of success, in the discussion stage, is a clear vision of what you want to accomplish. It may include naming a management successor, specifying the years until retirement and identifying a method for transitioning ownership.
Who will be involved in the succession planning process, and why?
Only active family members should be included in discussions regarding ownership, transition plans, financial arrangements, etc. The concerns of inactive family members often cloud the issues and distract attention.
How long will the succession planning process take?
Planning for succession is an extensive process; it isn't a once-and-done event. The initial plan may be completed in six to eight months, but the execution and subsequent refinement may go on indefinitely. The critical point is to establish a realistic time frame, implement as you go and adjust as circumstances change.
What expectations of active family members will be considered in the planning?
Active family members are the life blood of the operation, so their wants and needs must be considered in the succession planning process. For a grown child, continued success of the family operation is critical to their immediate family's financial security. The entire process is predicated on the long-term sustainability of the operation. The benefit of succession is a lasting legacy that endows active families for generations.
Is continuation of the family operation important?
The preservation of the family operation is the foundation on which succession planning is built. If maintaining the future integrity of the operation is not important, an owner can suffice with a retirement plan and a simple estate design.
Describe the likely roadblocks, hurdles or walls to success.
Any worthwhile endeavor will present unique challenges; identifying and detailing the most prevalent stumbling blocks will help prepare the entire family to persevere through the strenuous process. The miracle of succession planning is found in the results, the maturing roles, business development and the financial security of the entire family.
Define the role for each of the active family members in the succession planning process.
Active family members have a vested interest in designing a workable succession solution. The process requires a fair amount of diligence, some study and several plausible succession solutions to devise the right scenario for each farm family.
How will differences and disputes be resolved?
Mixing the emotional waves of a family endeavor, the demands of business and the social expectations of ownership with the desire to create a workable succession plan will cause some stress, frustration and anxiety. Creating, in advance, a method for dispute resolution will help everyone through early stage discussions.
What's next, what's expected?
Each meeting and every conversation should conclude with a follow-up date and, if applicable, an agreement for specific action. Procrastination is the enemy of good planning. Once the succession planning process is underway, be diligent to keep the momentum going; hesitation is a threat to your succession aspirations.
I've tried to talk about succession issues with my kids, but every time the subject is brought up the conversation ends in frustration. It goes downhill fast when one of the kids says, "I want a chance to (blank).”
Kevin Spafford is the author of Legacy by Design: Succession Planning for Agribusiness Owners and is a certified financial planner whose firm guides farmers and agribusiness owners through the succession planning process. Mail questions to Legacy by Design, 901 Bruce Road, Suite 160, Chico, CA 95928, send an e-mail to SuccessionSolutions@farmjournal.com
or call (877) 523-7411.