Q My husband and I are possibly going to be "farm successors." We’ve been talking to an older couple for a few months now, trying to figure out if we’re a good match. Their kids are not interested in farming. Though we know the couple from church, we don’t know them very well. All of the information I can find is about helping the farmer find a successor. Is there any information for the family that is being considered to be the successor? What do we do now?
A business plan allows the aspiring and transitioning farmers to create a strategy
A Thank you for your note. As you know, taking the time to make sure you’ve found a compatible counterpart is the first order of business. If you don’t have a well-suited situation, all of the talk and planning in the world won’t make it so. On the other hand, with a good match, your relationship can grow into something that is not only professionally satisfying but also personally gratifying.
Think of the connection between the aspiring farmers (you and your husband) and the transitioning farmers (the other couple) as a marriage. Each person comes into the relationship with a history and other family members who are part of the mix. Bringing all those people together is a feat in itself; getting them to agree on everything is virtually impossible.
Work through the following nine steps to help you prepare for your succession journey:
¦Sit down and interview the transitioning couple. Objectively listen to their responses to help you decide if your temperament and goals align with theirs.
¦Design and then implement a professional development plan to help you prepare for ownership. You might involve the transitioning farmers in your plans, inviting them to help you design and plot milestones to achieve.
¦A communication guide and thorough notes on each meeting will help all parties remain focused on the transition. It will also help you and the transitioning farmers communicate with extended family members, existing employees and third-party partners.
¦A detailed description of the responsibilities an aspiring farmer might assume will go a long way
toward helping both parties begin to work together. It also helps to spell out the lines of authority.
¦Both parties will need to negotiate and then establish written expectations for a fair wage, benefits and bonuses, like the information provided in an employment manual.
¦A business plan, which should not be taken lightly, allows the aspiring and transitioning farmers to create a strategy based on their common objectives. It allows them to combine their capabilities and begin working toward common business goals.
¦At first, the operating agreement might be a simple guide to spell out how decisions will be made and who is accountable. Later, both the aspiring and transitioning farmers will need to
negotiate a more detailed operating agreement with decision-making authority and income distributions.
¦The buy-sell agreement is possibly the most underrated agreement an aspiring farmer will negotiate. A buy-sell spells out the terms, conditions and events that will trigger a purchasing or selling transaction.
¦The transitioning family might choose to continue to own the land. If so, the aspiring farmers will want to negotiate a long-term lease on the property and spell out the terms and conditions of the arrangement.
To access a library of tools to aid in the succession planning process, visit www.farmjournallegacyproject.com/tools