checkbox facebook google-plus hamburger help linkedIn search twitter YouTube

Expect More From Your Crop Insurance Partner.

Learn More
Email Newsletter Signup
  • I want notifications on ...
Newsletter Signup

Steps for Transition Planning in the Ag Industry

Date: 
Author: 
January 2019
Educational Opportunities: 
Articles
Interests: 
Grain, Dairy, Swine, Beef, Timber, Young, Beginning Farmers
Home > Education & Events > January 2019 > Steps for Transition Planning in the Ag Industry
Share:

Passing On Your Legacy. Steps to Consider.
I would encourage you to take the time every now and again to reflect back on the past several months to understand what went well and what didn’t, but may be improved. By taking those opportunities into account, making sure that farm financials, marketing and business plans are updated, you can set goals or objectives for the future. For those looking to pass the farm operation onto the next generation, is succession planning on your to-do list? Succession planning should be an on-going process, one that certainly doesn’t happen overnight. Even if you believe it is years off, it is never too early to start discussing those plans and getting a formalized plan in writing to work from. I would like to discuss three specific areas to focus on as you work through the process.

Communication. It seems simple enough, but time and time again communication or lack thereof seems to be one of the largest contributors to succession planning going well, or not. Often times, the different generations make assumptions about how things will proceed. Until it is verbally discussed or written down, you shouldn’t assume. I would urge you to have these conversations earlier rather than later to manage expectations.
Whether you are the one passing on the operation, or the next generation taking it over, be open and honest. I like to use the saying “it’s better to know a plan you don’t like, than to not know the plan”. Discussing a plan and the reasoning behind it will allow all those involved to better understand it and be prepared. If you are dealing with both on-farm and off-farm heirs it can be difficult to come to terms with what is fair versus what is equal, they are not the same. Having, strong, open and frequent communication is important and will help manage expectations.

Ensuring the Operation is Viable. When discussing succession planning, it is important to evaluate the financial performance of the operation and understand the whole value of what is being passed on. Ensuring that the operation is viable for the next generation, while making sure that the older generation is taken care of, needs to be part of the equation. During all of the highs and lows facing Agriculture, the operation needs to remain viable while succession planning continues. As stated previously, succession planning is an ongoing effort, a long term process that needs to focus on long term planning, not just focusing on what’s happening in the short term.

Build a team around you. Succession planning may start with a discussion between those involved in the operation. However, the entire process doesn’t need to be faced alone. Intent does you no good if you do not have things properly documented or signed by the designated parties. Bringing in resources to help you through the process is another way to try and alleviate any undue stress. I’ve said many times, that one of the best thing about farm families, is that you get to work with family – and the most difficult part of family farms can be having to work with family. Succession planning can be an emotional rollercoaster; trying to focus on the business aspects, rather than just the family ties can sometimes help.

Bringing in a third party resource to help drive the discussion is common. They can serve in an advisory role to ensure that the plans are sufficient for all parties involved. Hold interviews to understand how the consultant works or thinks; to gauge if they will be a good fit for your operation during the process. Be sure to take the whole picture into account; use an attorney, CPA, tax advisor, trusted lender and understand the different purposes that each of these roles serves. They can help moderate conversations, document the plan, confirm viability, or act as a sounding board. Be prepared to hear items in the plan you may or may not like, while being open to different ideas and challenges. The process will allow you to create a well thought-out and cohesive plan.

Whether you are just getting started or have been planning for several years – I hope these three areas serve as a starting point, or as a reminder. This is a process, one that doesn’t have a one size fits all option, or one that will likely follow the same plan the entire way through. It will take time to discuss, plan and then execute. Start and maintain open communication of the plan, evaluate financials to ensure the viability of the operation, and build a team of trusted advisors around you to help you through the process.

 
Comments
There are no comments.
 Security code