Here’s a staggering fact: Families fail to keep their families and fortunes together for three or more generations 90% of the time.
While these seem like unbeatable odds, with good planning and preparation, farmers can become part of the coveted 10% who stick together, says Johnne Syverson, a family business consultant with Transition Point Business Advisors in West Des Moines, Iowa.
The key is to focus on all four types of wealth and capital—human, intellectual, social and financial
Syverson says human capital involves who we are, where we come from and the talents of the family. Intellectual capital includes work and life experiences, formal and informal education, spiritual beliefs and practices and work ethic. Social capital consists of a person’s contribution back to the community. Finally, financial capital is comprised of assets, such as real estate, machinery, livestock and buildings.
“These components make up a more holistic view of wealth,” Syverson says. “It is important to transfer all components of wealth to the next generation. Without which, the financial wealth will eventually disappear.”
Families who are successful in transitioning their operation understand wealth in this way, Syverson says. Other good habits and common characteristics of successful families include:
- Meet regularly and have fun together
- Communicate well and exhibit trust
- Know their family story
- Actively mentor the successive generations
- Celebrate shared values and accept any differences
“These things don’t have anything to do with taxes or buy-sell agreements,” Syverson says. “They have to do with relationships.”
Jumpstart Your Succession Plan
Syverson will be leading a Farm Journal Legacy Project Workshop in Garden City, Kan., on Dec. 12. He will explain how to construct a succession plan, have critical conversations with stakeholders and assemble a helpful team of advisors.
Kevin Bearley, principal with Kennedy and Coe, and Paul Neiffer, agribusiness CPA and business adviser for CliftonLarsonAllen, will cover the legal and tax aspects of succession planning.
Other upcoming Legacy Project events include:
Dec. 2-3: Kansas City, Mo.
This Legacy Project Conference will span two days and dive deep into the logistics of creating a sound succession plan.
The Farm Journal Legacy Project Workshops help families begin the process of transitioning their family farm to the next generation.
Dec. 8 in Greenville, Miss.
Dec. 10 in Norman, Okla.