Select a Category
Farm Transition Planning Can Never Start Too Early

Farm Transition Planning Can Never Start Too Early

As farm operators continue to age and the next generation prepares to take on the family legacy, farm transition planning is becoming one of the most important challenges farm families will face. The planning process covers several areas including asset distribution, operation assessment and successor development, all of which can prove to be difficult and complicated.

Jaclyn Wilson-Demel, a fifth generation rancher, is currently working through transition planning for a 20,000-acre ranch that’s been in the family for 125 years. “Succession planning is a long, emotional journey because you don’t ever really retire from ranching, it’s a lifestyle ‘til the very end,” said Wilson-Demel. “We’re finding that the best way to reach our goals is to collaborate with one another. We each bring operation ideas forward, and then work as a team to reach a decision that not only addresses everyone’s needs but also reflects our vision for the ranch.”

Transition planning provides an opportunity for families to assess the current situation, develop future goals and prepare an action plan for success. Family dynamics, managerial styles and physical resources will all play a role in each family’s planning process. Each generation’s aspirations should be fully disclosed to avoid unnecessary bumps throughout the process. The management transition affects not only the successor and retiree, but also key employees and family members adjusting to new management.

Evan Tate, a part-time commercial cattle farmer and active YPC member, has embraced his leadership role within the operation while preparing to take over the family farm. “While I don’t own my parents’ farm yet, I’m still accountable for day-to-day operations. Our farm transition is on-going, and I’m learning a lot as I continue to take on more responsibilities,” said Tate. “I’m constantly trying to change things and aim for continual improvement. I think my parents have embraced this because the only resistance I get is a, ‘Well, we didn’t do it that way,’ so I consider myself very lucky. There’s no butting heads here.”

While no single, fool-proof transition plan exists, there are several common themes to explore for building a successful farm transition strategy to fit each family’s unique situation. These include establishing a mission statement, choosing a successor, conducting an operation analysis, developing a detailed business plan and identifying opportunities for successor development. Exploring these five topics will guide each family through building a customized farm transition plan.

Identify a mission statement to help keep ideas and planning focused on the purpose of the operation. This also provides an opportunity to address concerns from key employees and to amend the current business strategy.

Name a successor who is capable of making tough decisions and who will be an inspiring leader. Evaluate objective strengths and weaknesses of the current and future leader to reveal potential changes in management style, and develop an organizational chart illustrating the framework for stakeholder interaction to eliminate bumps in operational flow.

Complete an operation analysis by addressing current strengths, weaknesses, opportunities and threats. These should include competitive strengths, areas where the operation can improve, industry trends to explore and outside factors that threaten the operation. This analysis can be used to develop business strategies, identify the operation’s financial standing and reveal obvious courses of action.

Develop a business plan that considers employee roles and responsibilities, investor and lender relations and equipment needs. Provide as many details as possible to avoid misinformation and disagreements in the future. The business plan should also include contingency planning in case of unexpected death, disability or divorce.

Allow time for successor development to ensure a smooth transition internally and externally. Employees need time to adjust to new management and the successor needs time to cultivate existing relationships while building new connections. Current leaders can supervise the successor’s development by gradually increasing responsibilities. This is also a good time for current leaders to complete a will or develop a trust.

Regardless of the family’s management style and financial feasibility, early preparation is the key to ensuring a smooth transition. It gives families the opportunity to uncover complications with enough time to solve them.


Share This

Categories: Agriculture,Backhoe Loaders,Excavators,Compact Track and Multi Terrain Loaders,Skid Steer Loaders,Telehandlers,Wheel Loaders