October 3, 2018
Starting a Succession Plan is Scary — But Important
Developing a plan to pass on the family farm can be a difficult challenge that may seem intimidating. The question that must be answered is, “What happens next?” – this question is an effective means to move things forward. During the process of sorting out the answer, families will be forced to deal with issues like “Who gets what?”, “How can we make a plan?” and “How can we do it in a way that won’t upset anyone?”
“Succession planning is never an easy topic,” says Jeff Bowman, Ag Team Leader and CPA. “It can be rife with emotion and conflict, but it is also a challenge and a reality that all family businesses will inevitably face. A succession planning discussion should be a family meeting where we talk openly about those things that frighten us.”
For many farmers, their farm represents a large percent of what they own. Without a plan for succession, a farm is very likely to either go out of business, be absorbed by another neighbor, or end up being used for non-farm use. The goal is to avoid a devastating outcome. When it comes to succession planning, the most important thing is to just start the conversation.
It’s crucial to start thinking about a plan and start introducing an idea of what the next five to ten years will look like for the operation. It may not be time to hand it over just yet, but to begin the transition process. This is an important time for having conversations about involvement and addressing whether the farm will stay in the family.
Easy Steps for Succession Planning*
- Establish a planning model process. An example process might look like this: a) Plan a family meeting, b) Set a long-term goal, c) Write down the plan. This last step is the most crucial — if it isn’t written down, it won’t happen.
- Plan for obstacles. It’s not an easy time, and issues may arise. These issues can include debating what’s equal versus what’s fair, dealing with a lack of control, or encountering a shortage of money. It’s important to face these issues, put them on the table, and speak freely.
- Focus on common goals. Whether we’re active or inactive in the business or if we’re working on an operation daily, there are certain goals we can all agree on that will help the business succeed.
- Practice good communication. It’s important to discuss concerns openly and listen to those being presented. Succession planning may not be easy at first, but it is a life- and family-changing process.
- Commit and act. If action is not taken, then nothing changes — but if a conversation is started and concerns or problems are presented, then they can be followed through with a plan of action.
We serve as a trusted ally to families who are planning their long-term financial and farm goals and guide them through each step of succession. There's no time quite like the present when it comes to the matter of succession planning — make plans with your family today.
Let us help you make the best decision for your business. Contact Jeff Bowman at email@example.com or a member of our agriculture team at (209) 527-4220.
*Succession planning steps organized by Kevin Spafford of Legacy by Design as a presentation to our clients in 2015.