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10 Questions for Your Succession Adviser
From Legacy Moment eNewsletter (March 05, 2010) Please join us for future issues, delivered via email each Friday. Most succession planning advisers come from one of four professions – financial, accounting, legal or business consulting. Each discipline has its own characteristics that are necessary to the overall process. However, facilitating an agribusiness family’s succession planning process is an entirely different skill. ...
Defining Agripreneur
From Legacy Moment eNewsletter (February 12, 2010) Please join us for future issues, delivered via email each Friday. If ‘agripreneur’ were listed in the dictionary, the definition would read like a page out of Chad Olsen’s biography. Chad is an extraordinary agribusiness owner, and an aspiring agripreneur would be hard-pressed to find a better mentor. Chad and his wife, Pam, own Olsen Custom Farms, LLC. They custo...
Legacy Primer - Download Now Available
Our experience has shown that the right succession plan is key to achieving your goals. We invite you to download a Legacy Primer - 30 pages of information and tools to help you 'Leave a Legacy.' The Primer is brought to you courtesy of the Farm Journal Legacy Project and Pioneer Hi-Bred (content by Legacy by Design). Download Primer Now Legacy Project Workshop Series Leave a Legacy TV - Schedule & Local Listings
Why You Need a Buy/Sell Agreement
From Legacy Moment eNewsletter (February 19, 2010) Please join us for future issues, delivered via email each Friday. The buy/sell agreement is one of the most important tools for maintaining the integrity of a business entity. A properly written and executed buy/sell agreement will: Prevent inactive owners from gaining an ownership interest Ensure ownership continuity in case of death, disabilty, dissoluti...
A First Step on the Road to Permanence
The second episode of “Leave a Legacy” is in the can---recorded and ready for editing. As I pen this entry, I’m sitting at Midway in Chicago waiting for a plane, and recounting the preceding days. It’s been another whirlwind tour filled with rehearsals, presentations, meetings, tapings and study. The Farm Journal Legacy Project is an all-consuming labor of love. This outreach will change the world for each and every person ...
"The Family is Closer..."
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Tomorrow on 'Leave a Legacy' TV... Join host Kevin Spafford as he welcomes guests Chet Esther (Farm Journal Legacy Project documentary family) and Paul Neiffer (CPA specializing in agriculture). In a special segment, we also learn about how the Esther family feels at this stage in their succession planning process. As Chet puts it: "There's good discussion but, at the end of the day, everyone leaves on the same page... It's honestly brought the family closer together.&...
Every Family's Conundrum
From Legacy Moment eNewsletter (February 19, 2010) Please join us for future issues, delivered via email each Friday. Fair versus equal is a recurring theme. It affects everything, and solutions are unique to each family. My next Leave a Legacy column in Farm Journal will again address this issue. In response to a reader’s question, I said this: Q. You say equal isn’t fair and fair isn’t equal. Can you...
The List of Common Objectives
Creating, defining and then sharing a list of common objectives is one of the keys to succession planning success. The Legacy Moment eNewsletter of January 22nd discussed the broad objectives of succession planning; it suggested that you complete the Goals Clarification Worksheet and begin to define your objectives. (Sign up for weekly eNews here.) Using the worksheet (excerpt below), write sentences (I call them word pictures) t...
Goals for Succession Planning
Q. In a recent presentation, you mentioned that most family farmers have three general goals for succession planning. Can you explain what you mean? A. Most farmers and agribusiness owners seem to have a good idea of what they want to achieve when they think about succession. Yet their ideas may be a bit fuzzy and undefined. As they describe their desires, they use general terms and tend to say "you know" a lot. THREE PRIMARY GOALS: Maintain the Ope...
Overcoming Obstacles
He’s one of my favorite authors. Whenever a challenge seems insurmountable, I refer to James Allen’s As a Man Thinketh. This little book is both instructional and inspirational. It is motivating and reassuring. It is founded in principle and full of advice. As I sat down to write this entry, I flipped to a highlighted section and started reading, “Even if he fails again and again to accomplish his purpo...
They Still Suit Up On Sunday
As you read this, America is gearing up for the Super Bowl. As the season came to a close, the playoff teams faced-off and ad agencies were hard at work creating the next Super-blockbuster… and we all love those commercials, right? In the waning days of the regular season and throughout the playoffs it became increasingly clear that no team could beat the Colts or the Saints. Both teams had spectacular season...
Family Conversation
Q: Great beginning show on Leave a Legacy ........but we missed a portion. Can you list Ms. Darling’s five points to keep in mind to start the conversation with family? Thanks, we look forward to more great information. A: Thank you for asking. As a new outreach, Leave a Legacy is designed to provide good information and appropriate tools for farmers and agribusiness who like you have an interest in succession plannin...
Thank You, Pioneer
I’ve spent many hours this month in a pressurized cabin in the sky, criss-crossing the country, firing-up elements of the Legacy Project---speaking events, conferences and Leave a Legacy TV. As many of you know, the generous support from Pioneer Hi-Bred International, Inc. is making this endeavor possible. As an agricultural company they anticipate that forward-thinking operators, future CEOs and agripreneurs of tomorrow will ...
Leave a Legacy TV
As I write this blog, the first episode of Leave a Legacy TV is “in the can” – recorded, and awaiting final edits for broadcast. Whether you view it next Thursday following AgDay, Saturday after U.S. Farm Report or catch it online, be assured the program is designed to help you traverse the succession planning process. The Legacy Project is an all-hands commitment by Farm Journal Media and Pioneer Hi-Bred Inter...
Dedicated Agripreneurs
It will go down as one of the most exhilarating experiences in my professional career. I just returned from the Pioneer Outlook Conference in Puerto Rico. This year’s gathering may have been comparable to Pioneer’s events of years past but, for me, it was a brand new experience. On the surface, the tropical setting may sound like undemanding R&R in the sun and surf. Not so… it was even better. Instead, part...
Listen in: Legacy Project News Conference
Listen in as Pioneer Hi-Bred announces a substantial 10 year grant to support the Farm Journal Legacy Project. The Legacy Project, in collaboration with Legacy by Design is intended to "provide awareness, education, and practial solutions to help hundreds of thousands of American farmers" transition family farms from one generation to the next. Listen now (12 min.) Read more about the Legacy Project Looking to the Future (Farm Journal 01-2010)
A Succession Plan to Achieve Your Intentions
As you cast your resolutions for 2010, use the motivation of the New Year and commit to take the next step (or the first step) in the succession planning process. We all know that dreams can come true, but the inspiration must be followed by commitment and supported by perspiration… To thrive across the generations, a business must: Build upon and abide by a plan for success Be dynamic, motivating, and progressi...
Christmas Wishes
As impersonal as the internet can be, this blog and my columns are intended to create a dialogue between us. I am always mindful that there are real people who read, reflect and sometimes respond to my words. As this year gives way to the next, please know that I sincerely appreciate a healthy exchange of ideas, and the opportunity we have to connect. Looking Ahead to 2010: Register for AgC...
Partnerships & Alliances
When you consider growth and development there is always a question of how best to accomplish the task. Considering a partnership or any type of strategic alliance requires more research than most people invest. The most important aspect of a business alliance (shared ownership, strategic alliance or dedicated supplier) is a common and clearly defined objective. What do you want to accomplish, what does the other party[ies] want, and ...
A Growing Agribusiness
A growing agribusiness should generate three sources of income—profit, equity and satisfaction. The objective of every business owner must be to maximize these rewards. To do so, an owner must aspire to the five Gs: Grow equity, which is the foundation for permanence, rather than income. Groom tomorrow’s leaders today, rather than develop obedient managers. Generate capital improvements for long-term success, rathe...
A Light at the End of the Tunnel?
For the agribusiness owner, retirement should be a light at the end of the tunnel. For some it’s a sense of freedom and reward. But, for others it’s an oncoming locomotive at full speed. Regardless, any business – be it a farm, agribusiness and large operation – is only as valuable as the return (monetary, and beyond) a person is able to derive from ownership. It’s not uncommon for an owner, after 40-s...
Affirmations: The Key to Achievement
Affirmations are the key to achievement and self talk is the most important conversation a person can have. Whether you ‘can’ or ‘can’t’, you’re correct. Use positive self-talk with conviction and you start down the path to success. One of my great passions is flying. My first airplane was a 1946 Taylorcraft. Buying the plane was a dream come true. Learning to land, however, was one of the most difficult skills I&rsq...
These are the Good New Days
Nothing sells like bad news. According to the mass media, the sky is always falling. I recently read a book set in the early 1900s; the stories and the photos of that era always bring about craving for simpler times. But the early 20th century, though simplistically appealing, was also terribly primitive compared with today. The early 1900s was an era of tuberculosis, typhoid, sanitariums, child labor, child death, horses, horse...
Thankful for these Thoughts
This week we heard from a Midwest farmer who, prompted by Jeanne Bernick’s article “Staring Down Succession,” forwarded his own seasoned reflections about succession planning. Bill, thank you for sharing your thoughts with us. As a professional specializing in succession planning, I have a bias toward the value of this process for America’s farm families. As a third generation far...
Create a Custom Operation
For an aspiring agripreneur, becoming a custom operator may be the ideal opportunity to: learn the intricacies of farming develop good money management skills establish good customer service habits develop a reputation for reliability create some business equity Running a business is an excellent opportunity to develop the leadership skills necessary to eventually assume a management position in a larger fami...
Define Your Dream
“Dream and, as you dream, so will you become.” My daughter Sara is an avid horse person. If you are, or have been around a person totally wrapped up in horses, you know what I mean. It’s like a fever for which the only cure is more exposure to the virus that caused the illness. Recently, I received an email from her about wanting a ‘new&rsq...
What's Stopping You?
In the not so distant past, a person had valid, if unstated, reasons for not designing and implementing a comprehensive succession strategy. Back then, 1. There was an overwhelming air of confusion between estate planning and succession planning. Though often used synonymously, an estate plan is designed to minimize the estate tax, and it’s done as an individual activity. Succession planning is designed to maintain the...
Job Descriptions = Effective Tools
An often overlooked, but critically important, step in positioning the operation for growth is a written job description for every position on the farm. Large or small, an organization can’t grow efficiently until each person knows their respective responsibilities and is held accountable for specific results. Writing a job description is fairly straightforward. An owner/manager can start today, and enlist the help of the entire staff. Ask each person to record his/her job dut...
Decisions and Actions
Lou Holtz, arguably one of the greatest football coaches of our time, often says, “The only difference between the person you are today, and who you’ll be tomorrow, is the people you meet and the books you read.” Though I would never disagree with his football prowess, I do apply a little different slant to his aphorism. His point is well intended, yet not completely true. To change, improve or grow, a person has to want to cha...
A Time to Plan
If spring is the season for renewal, fall is the season to plan for renewal. As the owner of a growing agricultural operation, your focus is undoubtedly on harvest (especially in the rain-soaked Midwest), and then on a well spent holiday time of year. These rainy days and the semi-quiet months ahead are the perfect time dust off your business plan and take a fresh look. Many of you will attend a number of the agribusiness seminars, workshops an...
Management and Leadership
Is management or leadership the key to success? The easy answer is both. Good management and leadership skills are necessary to successful grow a business operation. Management is focused on duties, systems and tasks---things that must be accomplished, rudiments of a job that must be completed. Leadership is focused on how to accomplish something, with who and using what resources. Management is doing things right, whereas lead...
The Help We Really Need
Yesterday, I returned from an overnight business meeting in Dallas. I spent as much time in transit as I spent on the ground. During the round trip flights the plane took-off and landed six times. As I sat in the front row for each stop, the efficiency of the airline professionals as they went about ‘moving people’ from one destination to the next caught my attention. Every step in the process was well-choreographed, rehearsed,...
Next Generation Leaders
Most next generation leaders have a good education and valuable experience. They know the fundamentals and can perform the rudiments of the job. Yet they often crave more vocational (professional) development, especially as it relates to leadership. To grow an operation that is bigger, better, stronger and faster, a leader must be well- versed in people management, team development, projec...
Lead On!
"Lack of leadership may be the single biggest void in modern agriculture..." "Lead On!", Jeanne Bernick's overview of farm leadership issues (Top Producer, October 2009), includes a list of 'Leadership Characteristics to Cultivate'.
Ready for Succession?
Just the other morning I worked with a local farmer in his almond huller. The operation was more factory than farming, so it allowed us to visit regarding his thoughts related to succession. I broached the subject of who may be affected if he were suddenly taken out of the picture. You can imagine the response. We talked of family, unpaid bills, and mortgage terms. We discussed college educations and retirement dreams. We chatted about his spouse’s security and his newborn gran...
On Becoming a Strong Leader
What characteristics define an effective leader? How may the next generation leaders better prepare themselves for the crucial role in their future? Who has that special kind of leadership, primed and excited to skillfully guide your own operation in the decades ahead? Consider these questions as you listen to Kevin Spafford's conversation with Jeanne Bernick on Top Producer Radio (3:46). For more on leadership development: Download Legacy by Design's Leadership Sk...
Legacy Project Families
Join us as AgDay and U.S. Farm Report chronicles three farm families, as Legacy by Design guides them to achieve their succession planning objectives. Follow the stories in the months ahead, and consider: "What is my succession planning story?"
Succession Scenarios
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As expressed in Case IH's Farm Forum, "succession planning isn't what it used to be." The article explains: "The opportunity for families to work together while building for the next generation is a core appeal of farming. But, increasingly, handing the operation over to the next generation is more complicated because the operation and the next generation may not fit the classic mold that made transition simple... It's enough to make you want to av...
AgConnect 2010
Your agribusiness is a source of wealth, pride, value, tradition and opportunity which may endow the family for generations. As part of the Farm Journal Legacy Project, Farm Journal Media has announced an alliance with the Association of Equipment Manufacturers to present Ag Connect 2010, January 13th through 15th in Orlando, Florida. This inaugural event will allow educational opportunities for the agricultural community - including a 'Plan Success' Workshop on January 14t...
The Gift of Independence
"The greatest gifts you can give your children are the roots of responsibility and the wings of independence." (Denis Waitley, Author) This Independence Day, wishing your family all the blessings of self-determination.
Learning as a Way of Life
The failure rate is enormous. 70% of first generation family businesses will not successfully transition to the next generation. Of the survivors, 90% will not transition to the third and of the very few remaining, 96% will not reach the fourth generation operations. As a family business owner, you know the statistics. You may even be able to recite the reasons most family business owners fail – 1) Inadequate Estate Planning, 2) Insufficient Capitalization, and 3) Failure to prepare the...
Bravado, Moxie and Success
Not one to fawn over the famous, but this obituary caught my attention. To be included in the ‘Remembrances’ section of the Wall Street Journal is a big deal. To warrant a quarter page, is a testament to the profile of that particular person. James G. Boswell, II was just such a character. He exemplified many of the traits we admire in great leaders. He was a trend setter, he was fearless, he had a big vision and h...
Time for a Tune-Up
If it’s good for them, is it good for you? You recommend it to every customer, every off-season, without fail. Like Christmas carols in December, you, the parts department, service reps and sales staff encourage customers to schedule off-season maintenance. Everyone in your operation promotes the value of a good tune-up. Planned maintenance is always preferred over unexpected breakdowns. We all know that pre-spring repairs mitigate mid-season meltdowns. A...
Mentoring Featured as a "Successful Habit"
On AgDay's Seven Habits of Successful Farmer Series, the final important habit is cited as mentoring. As the piece notes, "Sharing learned knowledge" is a critical element for any successful farmer. The four minute piece is worth a listen. If you are interested in mentoring in the agricultural community, please let us know. Review Full List of Successful Habits
Vilsack Speaks Out on NPR...
"The challenge is to figure out a way in which you can continue to have reasonably priced food and, at the same time, prosperous farmers." (Ag Secretary Vilsack) In "Vilsack Proposes Changes to Farming" on NPR (March 10, 2009), U.S. Secretary of Agriculture Tom Vilsack talks about his agenda for American agriculture from farm subsidies to energy initiatives and more. Play Now (4:46)
Succession Planning Webinar
"Plan Success. Enjoy Life!" UPDATE ON 03/07/09: This set of webinars has been concluded, but if you would like to be notified of future opportunities, just let us know. Succession planning helps to strengthen the family and fortify the operation. The process empowers the owner to make the decisions necessary to cultivate multigenerational success and protect our agricultural way of life. Creating a lasting legacy, preparing the operation ...
Leadership Strength in Your Agribusiness
The vigor of an organization is only as good as the leadership that drives the operation. Management has never been a seat-of-your-pants vocation. Leaders need education and development to succeed in today’s challenging marketplace. Development programs should be tailored to serve the individual needs and the specific responsibilities of the role. Just as a business plan details the systems, machinery, and tools necessa...
The Family as Business Partners
In the family operation, hiring is often based on, “We’ll find a place for you…” Then we fall into familial roles and patterns of behavior where Dad is authority and son/daughter is the obedient child. The communication link in a family business often breaks down in the roles we play and the comfort zone of family relationships – the zone where dad is always Dad and children are always kids. Parent is authoritative; child is obedient. If the goal ...
Invitation: Succession Planning Webinar...
"Plan Success. Enjoy Life!" Succession planning helps to strengthen the family and fortify the operation. The process empowers the owner to make the decisions necessary to cultivate multigenerational success and protect our agricultural way of life. Creating a lasting legacy, preparing the operation for generational transfer, developing leaders for long-term growth or planning for an unanticipated contingency — a comprehensive succession strategy is f...
Communication in the Family Business
Recently, I had the privilege of making the luncheon address to the participants at the ‘Young Farmers Seminar’ in Chicago. This first ever meeting was an adjunct to the well attended ‘Top Producer Seminar.’ For the attendees it was an opportunity to learn best practices for business, production and management. They networked with peers and interacted with some of our nation’s brightest young agribusiness stars. The attendees were not there because of what...
Leadership to Believe In
If you listen really hard you can hear it. Not the rush of a swollen winter creek or an airplane passing overhead, but the screaming void of leadership across America. We just elected a President, not based on his experience and wisdom, rather for his ability to eloquently articulate hope. Not for his accomplishments or good judgment, but for his pretentious speech of change. Imagine the most powerful nation in the world, long ago founded in independence, now res...
Calling all Bootstrapreneurs
Be assured, the challenges of yesterday prepared us with the education, experience and insight to meet the complexities of tomorrow. The entire nation faces an unprecedented challenge. Our capitalistic economy, political fabric and personal mettle will be tested in the days and months ahead. As a nation, we’ve finally reached the breaking point, where entitlement desires are bound by economic realities. Be assured, the business environment of tomorrow will be a l...
For the Next Generations
In researching material for a presentation, I came across “The Bridge Builder” - a poem written by Will Allen Dromgoole (1860 - 1934). She authored 7500 poems, 5000 essays and thirteen books from her home in Murfreesboro, TN. As with many classic works, the language may be dated, but the principles are as applicable today as when they were written 100 years ago. Are you a bridge builder? THE BRIDGE BUILDER An old man, going a lone highway, Ca...
Your Values, Your Legacy
"The values that you pass along, the wealth that goes to a new generation, and the principles you perpetuate as you leave your business to another, are of momentous significance to your family. You are stewards of a wide-ranging family fortune comprised of values, morals, principles, and money. Others will follow your commendable example, if all has been handled correctly. Though, on the surface, this decision appears to be purely about money and business management, it...
No Plan for Contingencies
The final installment of the twelve most common mistakes agribusiness owners repeat: The potential devastation from an untimely death, unforeseen disability, unfunded long term care stay or uninsured health insurance claim, is not worth the risk. This threat can be financially devastating to even the most financially sound proprietor. Planning for sudden and devastating contingencies is critical to business financial health, employee peace of mind and your family’s fi...
Who's on Deck?
The eleventh of twelve most common mistakes agribusiness owners repeat: John Phipps says it best in “Reality Takes Over“ (Top Producer, October 2008). He writes about the pleasant, yet unexpected realities in (son) Aaron’s return to the farm. In personal conversations, public presentations and columns, John agonized over the decisions, worried about the future and stepped timidly into a father/son business arrangement. But now, mere months after Aaro...
No Retirement Plan?
The tenth of twelve most common mistakes agribusiness owners repeat: Ask a farmer when he plans to retire and he’ll snicker a bit, and make some modest comment about how much there is to do, or how much he loves the work. He may even ask rhetorically, “Who else could run the place?” Stalling a bit, he’s hoping to avoid the real issue that he is unprepared for retirement. If not retirement, how about the next opportunity in a vocational life? Our...
The Legacy Survey
How can we help? Please take a few minutes to participate in theLegacy Project Survey. “The Farm Journal Legacy Project is bent on “Cultivating Multigenerational Success in the Agricultural Community.” That mission statement is just a formal way to say, “We want to help,” and we’re committing our resources to this important initiative. We hope you’ll join us on this journey and engage in the process as we deliver information, ...
Not Minimizing the Estate Tax and Transfer Obligations
The ninth of twelve most common mistakes agribusiness owners repeat: Forget the estate tax just for a moment - not that it doesn’t exist. It does and, depending on whose version of White House politics you believe, it will continue to pose a challenge for America’s agricultural community. But the imposition of estate taxes will not, in and of itself, destroy the family farm. In most cases, a competent estate planning attorney, financial advisor and CPA can...
Not Retaining Sufficient Capitalization
The eighth of twelve most common mistakes agribusiness owners repeat: The NUMBER ONE reason most family businesses fail is insufficient capitalization. Capital is to business as water is to life. It is required to sustain and grow a vibrant operation. Cash reserves are necessary for managing the economic ups and downs of a normal business cycle, and for weathering the storms of an unforeseen crisis. Our office sits on the shore of a picturesque lake. Though no...
Confusing Equal with Fair: Treatment for Active/Inactive Heirs
The seventh of twelve most common mistakes agribusiness owners repeat: The single biggest question I hear in my client consultations, columns, and live presentations concerns ‘equal versus fair’ for actively farming kids and their non-farming (non-active) siblings. It’s asked in various ways - sometimes it’s framed as a simple comment like, “We don’t want to leave anyone out.” Other instances are more forthright: “How do we make s...
Hope
“We grow great by dreams. All big men are dreamers. They see things in the soft haze of a spring day or in the red fire of a long winter’s evening. Some of us let these great dreams die, but others nourish and protect them; nurse them through bad days till they bring them to the sunshine and light which comes always to those who sincerely hope that their dreams will come true.” ~ Woodrow Wilson (1956 - 1924)
Not Planning for Business Growth/Development
The sixth of twelve most common mistakes agribusiness owners repeat: The two basic avenues of business development are: Grow bigger – increase gross income by increasing the size and scope of the current business model. Then factor in a small net income bump for economies of scale. Or, create a specialization – a niche – either vertically or horizontally integrating additional capabiliti...
Waiting Too Long
The fifth of twelve most common mistakes that agribusiness owners repeat: Kenny Chesney sings this warning very well, and the lyrics should become an affirmation for busy achievers: “Don’t blink. You’re six years old and you take a nap. And you wake up and you’re twenty-five… Trust me friend, [the years] go faster than you think.” How many times have you heard it? “Don’t wish your life away. Time...
Allowing Emotion to Dictate Business Decisions
The fourth of twelve most common mistakes that agribusiness owners repeat: They enthusiastically participated in the succession planning consultation. For this middle-aged couple it was a first visit. We discussed their succession intentions and talked about the family legacy. We talked about the future and their two children. Sarah, now 27, had attended a very reputable Ag school, graduated with honors and was almost to her fifth anniversary working full-time i...
Not Sharing Cares, Concerns and Considerations
The third of twelve most common mistakes that agribusiness owners repeat: In most families, there is a near-superstitious taboo about discussing personal, private, adult or parental matters. Kids are taught that it is impolite to ask parents or elders certain delicate questions. They’re not supposed to ask about income or financial issues related to business. In these families, questions about inheritance or plans regarding estate distributions may be con...
No Clearly Defined Objectives
The second of twelve most common mistakes that agribusiness owners repeat: Agribusiness owners ride a rollercoaster of seasonal, daily, hourly, and even momentary demands. The ebb and flow of business decisions, seasonal variables, time constraints, labor resources and environmental pressures all combine to tax a producer’s abilities to focus on what should be. A busy farm owner is often distracted by decisions of the moment that cause him to ignore simple, yet c...
Ignoring the Elephant in the Living Room
Overused, yes. Clichéd, yes. Appropriate? Absolutely yes. “The elephant in the living room” refers to a great big messy situation - a condition so big it’s obvious to everyone, yet so potentially messy that no one wants to mention it. The emotional landmines associated with owning and managing a family business - be it a farm, agribusiness or factory - are like the proverbial elephant in the living room. We know categorically t...
Twelve Mistakes Agribusiness Owners Repeat
A successful agribusiness owner should be concerned with two very important questions: - How do I pass the ownership interest in the farming operation to my heirs in a fair and equitable manner? - How do I ensure that the farm remains a viable business opportunity through ownership transition? There are twelve mistakes we see time and time again. Many well-intentioned agribusiness owners sow the seeds of discontent and unwittingly destroy the opportunit...
The Forge of Experience
Legacy by Design is intensely focused on providing solutions to the most puzzling aspects of long-term business success. The elements of a comprehensive succession plan provide a path to attainment. We spend a great deal of time discovering an owner's intentions, mapping a pathway to achievement, planning the actions and implementing the strategies for multigenerational success. Legacy by Design's mode of operation serves as the petri dish for experientially learning many of the key aspect...
Cultivating Multigenerational Success in the Agricultural Community
Sixteen years ago, Farm Journal introduced Field Agronomist Ken Ferrie and the test plot program. The goal was to improve productivity. Through the combined efforts of test plot farmers, chemical companies, seed suppliers, equipment manufacturers, Ken and the editors of Farm Journal, the test plot program is a resounding success. It has served an instrumental role in changing the face of production agriculture for Farm Journal readers. We owe a debt of gratitude to the test pl...
Yes - we can.
"A Nation of We Can't?", from Young Farmers & Ranchers' Todd Hadrick poses the question - "When did 'We Can't' become our national motto?". In his July 7th post on the American Farm Bureau Federation website, Todd states, "Many of us in agriculture have several generations of the land in our blood. This did not happen because our ancestors said 'we can't'. We are the product of people that said 'we can'.
Communication Can Sustain Family Farms
How will your family transition the farm, ranch, or agribusiness to the next generation? Is each generation openly communicating about how to best work together? "Getting started to think about these questions is the most important step," according to John Becker of Penn State's College of Agricultural Sciences. In "Intergenerational Communication Can Sustain Small Family Farms Through Succession", Becker goes on to note: "Inadequate farm succession planning ...
Confidence During Tough Times
When the going gets tough, what helps farm families to thrive? A University of Wisconsin study found that the attitude is key. According to the findings: "Families that survived in farming were more likely to: - Have confidence in farming as an industry (now and in the future). - Have confidence in the family's ability to endure and solve problems. - Have confidence in the family's ability to cope and respond as a family unit." Read a summary of the report on Farm Family R...
"Our country's entrepreneurial spirit"
According to Denise O'Berry, "Family businesses embody our country's entrepreneurial spirit and represent the hopes and dreams of many for independence, community, self-sufficiency, and wealth." In her article, Seven Short Leadership Lessons for Anyone Who Runs a Family Business, Edward Hess (of Emory University in Atlanta, Georgia) shares lessons for family leaders, including: "The fundamental overriding principles of managing a multi-generational family business are: a...
Is There a Solution?
Final Segment: Behind the Scenes with a Notable Agribusiness Family When an industry giant fails to achieve a lifelong objective, the earth shudders. Great institutions don't happen by accident; they are the result of a burning desire to achieve, a big vision, careful planning, tireless execution, agility and poise. Each trade is founded on the backs of visionary capitalists intent on changing the day's accepted norms. To these entrepreneurs, goals are expectations to be met - results ...
Succession Planning: Communication + Decisions
"Paying attention to both family and business concerns is not easy. Family rules and norms about what to talk about and what to keep quiet may limit discussion of important issue. As you begin to discuss family and business concerns, you may need to use a non-family member to help you sort through the questions that come up. But, families tend to be closed groups - it's in their nature. This can affect the family's willingness to call on outside resources for help. If you're thinkin...
Rural Entrepreneurship
CNBC's June 11th, 2008 interview with Bill Walstad, University of Nebraska Lincoln discusses the "big promise" ahead for future farmers and rural entrepreneurs. According to Walstad, as the population ages there is a need for the next generation to take over existing businesses and launch new ones, in order to "keep those communities vital." He goes on to forecast "new opportunities in the rural sector", with technology serving as an advantage toward success. ...
Countless Opportunities, Ten Tries and Zero Results (Part V)
Part V of Behind the Scenes with a Notable Agribusiness Family An excuse doesn't substantiate failure; it only appeases the moment, absolves culpability and allows for repeats. Failure is a lack of intended results. The function of failure is to instruct and to impose, or suggest, a do-over. One constant throughout Robert Mondavi's adult life, and a major motivator behind his outstanding accomplishment, was the desire to create a business that would endow his family for generations to c...
Time to Transition to the Next Generation?
Thank you, Kindra Gordon* of Western Cowman, for pointing out one of the many hazards of an incomplete succession plan. An unwillingness to transition management / control to the next generation is a recipe for sure disaster. Whenever this situation unfolds, I am reminded of a friend who spent decades looking forward to 'going home to farm.' The operation wasn't big enough to support two families, so he waited until retirement. When he left the corporate world, he moved to Iowa to farm wi...
Timelines and Open Lines
"Develop timelines for a sequential transfer of the business that allows the younger generation to gradually build equity in the business, receive managerial training and assume managerial roles before enacting the formal transfer. Maintain open lines of communication to help families develop an integrated vision for the future of the farm (and family) that accommodates individuals' concerns and experiences. This is particularly important during times of challenging business conditions...
Part IV - Lessons in Leadership from Robert Mondavi (Behind the Scenes)
What are the character traits of a good leader? Are the skills and abilities of leadership innate, or can they be learned? How does a person rise above the insult of expulsion from the family enterprise to create an entrepreneurial empire? Besides an uncanny ability to shape the future, a burning desire to create something bigger than self and the ego to know, intuitively, that it can be done, what are the qualities of leadership? The House of Mondavi by Julia Flynn Siler is ripe with exa...
Triggering Farm/Ranch Transition
"The first step is to attempt to get the family to recognize that potentially serious problems may be related to business transition... the typical transition occurs after a shock to the family or business... Waiting until the occurrence of this trigger typically leads to emotional decisions that may spell financial disaster for the family." "The Challenge of Family Business Transition" Dr. David Kohl and Alex White (Virginia Tech)
Part III - Behind the Scenes: Unrestrained Sibling Rivalry
As I read the book and then repeat sections to study the highlights in The House of Mondavi by Julia Flynn Siler, I am reminded that history is full of 'Cain and Abel' parables. As the children's storyline goes, "It's a tale as old as time." Brother against brother is corrosive to family unity, becomes a dividing line for future generations and creates a wound that no salve can heal. "Mon-DAH-vee" versus "Mon-DAY-vee", or Robert against Peter, as you may have ...
Part II - Behind the Scenes with a Notable Agribusiness Family...
The papers carried the news and it was certainly broadcast around the globe - Robert Mondavi passed away on the 16th of May at the age of 94. The paper I read referred to him as, "the pioneering Napa Valley vintner whose drive and salesmanship revolutionized the way the world thought about [California] wine..." Whether acknowledged or not, Robert Mondavi touched your life. He brought elegance to dinner, introduced the fashionable pursuit of wine and food pairings, sponsored wine ...
*** Announcing the Farm Journal Legacy Project ***
"The Farm Journal Legacy Project is a real step on the road to cultivating multi-generational success in the agricultural community. Our goal is to make a difference - and like you, leave a lasting legacy..." Charlene Finck, Vice President Farm Journal
Behind the Scenes with a Notable Agribusiness Family...
It seems everyone wants to hear the cautionary tale - the story of a family who, by all appearances, has it all - yet misses the opportunity to cultivate multigenerational success. Owners want to know what can and/or will happen if they don't take action. Most family leaders know that not taking action to create a viable succession plan is an invitation to disaster, but sometimes people need the motivation of fear, regret and reprisal to do so. Please join me as we take a look at The House...
Preservation of the Family Farm
Jeanne Bernick, one of Farm Journal's and Top Producer's preeminent writers introduced me, via email, to Dick Wittman, an Idaho consultant to farmers and ranchers. We haven't met in person, just through his website, yet Dick's management philosophy parallels my own very closely. Planning for success is critical, and the pressure on agribusiness owners has never been greater. As we grapple with increasing demands, the dynamics of a changing market and shrinking profit margins, we must reali...
Farming Across the Divide
Last week was spent in Texas and Louisiana seeing new clients and introducing a group of advisors to the succession planning methods of Legacy by Design. We met some incredible folks. Texas is... mighty BIG, and this was my first trip to Cajun Country. It seems to not matter the location, acres, commodities or family composition, a farming way of life stimulates positive perceptions and promises of prosperity. Live it, or stand close enough to feel it, and you'll notice that: 1. Family ...
Leadership: The Notable Difference (Part 4 of 4)
The skills of good leadership are not learned in a vacuum. We must utilize educational systems, mentoring relationships, daily experiences and new opportunities to learn. The good leader should: - Perform a self-assessment, objectively measuring personal leadership skills, abilities and aptitude for achievement. - Design a personal leadership skills improvement plan - including education, experiential exercise and practical applications. - Seek mentor/mentee relationships that ...
Leadership: The Notable Difference (Part 3 of 4)
The cry for leadership has never been more widespread. We sense a lack of leadership in many of our day-to-day encounters. - Many businesses are peopled by the less-than-ambitious who conduct themselves as if the customer were an irritant. - We watch as our elected officials fumble with the crises of the day, benignly responding to ethical issues, financial woes and security threats. - Moral fortitude is treated as old fashioned. - Entitlement is an American right by residential ...
Leadership: The Notable Difference (Part 2 of 4)
For a business, the summit is: - Sales - Profit increases - Equity growth - Expansion - People development To succeed in business, or any endeavor, we must overcome inertia, confront preconceived ideas, face self-limiting thoughts, construct plans and take physical actions. The most important determinate of business success is the ability to recruit, nurture and retain good leaders. Leaders are necessary at every level in an organization. The good news is - leadership begets leadersh...
Leadership: The Notable Difference (Part 1 of 4)
"When men climb a mountain together, the rope between them is more than a mere physical aid to an ascent; it is a symbol of the spirit of the enterprise. It is a symbol of men banded together in a common effort of will and strength - not against this or that imagined foeman of the instant, but against their only true enemies - inertia, cowardice, greed, ignorance, and all the weaknesses of the spirit." - George I. Bell K-2 - The Savage Mou...
Survive or Thrive?
Though we lived there for several years, a recent trip to California's central coast was the perfect occasion to explore and investigate some, as yet, 'undiscovered' new places to stay. Like looking for raw diamonds, the search adds alluring and inviting elements to otherwise routine travels. For this trip my wife knew she found the perfect spot. We'd driven by this particular inn no less than a thousand times. It sits between two very nice, well established - albeit pricey and staid - ...
Succession Planning: An Investment in People
"An old Chinese proverb says if you want to be successful for one year, grow grain. If you want to be successful for 10 years, grow trees and if you want to be successful for 100 years, grow people. A healthy succession plan is really an investment in people. It's the way for a dream, the farm, to carry on for generations." Katharine Bondy Western Leadership Centre (Calgary, Alberta)
Growing Your Farm
"Vertical integration may present a viable solution for growing a business. Rather than fighting the market, farmers must create an integrated means to the market by controlling more of the steps from farm gate to dinner plate. Farmers can develop a means of integration by, for example, purchasing a subsidiary, establishing a contractual relationship with an outsource company, or forming a strategic alliance. Combining resources with other farmers may offer an opportunity to modify yo...
Communicate your Succession Objectives
According to a 2005 survey conducted by the North Carolina Farm Transition Network, farmers do not talk with their families. Consider these results from the 2,099 survey respondents: ~ 67% have not discussed retirement plans with anyone ~ 43% do not have an estate plan ~ 42% do not have a will ~ 75% have not identified a farm successor ~ Of those who have named a successor, 50% of the offspring candidates currently work off the farm "Good communication is as stimulating as...
Planning Ahead
"Because of the complexity of farm transfers, they require considerable thought, discussion, and planning beforehand... Transferring the farm can be such an emotional topic for some farmers that they delay talking about it with their families until retirement is upon them, in which case the transfer can become a stressful and hurried affair. If you start to talk to your family about the transfer early, it will eventually become a common topic of discussion and you will be able to get th...
Leadership for your Agribusiness
Prominent minds share thoughts on leadership: "Good leaders make people feel that they're at the very heart of things, not at the periphery. Everyone feels that he or she makes a difference to the success of the organization. When that happens, people feel centered and that gives their work meaning." ~ Warren Bennis - Scholar / Author ~ ____________________________________________ "Leadership is the special quality which enables people to stand up and pull the rest o...
Young Farmers: Multigenerational Dreams
A survey conducted at the recent Young Farmers & Ranchers national conference in Baltimore expressed the high hopes of today's young ag leaders. From "Young Farmers and Ranchers Anticipate Bright Future" on the American Farm Bureau website: "92 percent of today's young farmers and ranchers see themselves remaining in farming for the rest of their lives, and 95 percent would like to see their children follow in their footsteps. 84 percent believe their children will b...
Considering a Merger?
"A (permanent) merger is not the solution to a temporary problem. A merger must be based on real and perceived expectations of gain. Be diligent in asking the tough questions. 'Extreme reluctance' may be the best frame of reference to assume before you agree to surrender your independence. - Weigh the net monetary value. As in wood working - measure twice, cut once. - Evaluate the gain in business acumen against the loss of free rein. - Calculate the increase in depth and breadth...
The Heritage of Agriculture
Photo courtesy of USDA "Farming is an integral part of our heritage and our identity as a people. American democracy is rooted in an agricultural past and founded on the principle that all peeople can own property and earn a living from the land. The ongoing relationship with the agricultural landscape connects Americans to history and to the natural world. Our land is our legacy, both as we look back to the past and as we consider what we have of value to pass o...
USDA Ag Projections
In USDA Agricultural Projections to 2017, the agency has released an interesting long-term look at the "major forces and uncertainties affecting future agricultural markets." Assumptions within the report include that the U.S. dollar will continue to depreciate through 2011, that global population growth will slow to about 1.1% per year, and that world economic growth is projected to increase at a rate of 3.5% annually. On a very positive note - - - "Strong domestic use and...
Advice for the College-Bound
Are you or yours in the throes of college decisions? "This is an excellent time for you to do some soul searching and decide what you want in a career. Make sure that the opportunity on the farm provides the experience necessary to achieve your long-term goals. Your expectations will be measured against the job [you anticipate]. In addition you should consider designing a leadership development plan. College is only a basic foundation for the lifetime of learning that will be necess...
Succession Planning Success Story
In Succession Planning Proves Its Value to California Dealer (Farm Equipment, February 2008), Executive Editor Dave Kanicki shares the journey of one Central California business which has made some great decisions. Quality Machinery Center suffered a harsh blow upon losing majority owner and co-founder Darrel Boling to a brief illness in 2005. Yet, as Kanicki relates, "Despite the personal loss, the dealership carried on its day-to-day business with barely a hitch." Several excer...
Moving Toward Ownership Transition
Continued from yesterday's entry... A Leadership Skills Inventory allows an owner to detail a development plan for the manager candidate. This will formalize the training and development process by which the successor may attain the leadership skills needed for a management position. Through this process, both will benefit from having specific steps and goals in writing. In developing a customized plan, bear in mind that the specific demands of each agribusiness are unique - as a combinat...
Planning Tools for your Agribusiness Succession Planning
Did you know that Legacy by Design offers Planning Tools to download? Tools include a Leadership Skills Inventory. Ability assessment methods are commonly used in the corporate world, yet we rarely put these tools to use in a family business. I suggest assembling a formal skills inventory which will allow you to step back and take an objective view of your successor's management abilities in respect to the needs for your farm or agribusiness. To lead a business venture, the successor...
Transferring the Spirit of your Agribusiness
"Succession planning is not just about passing the business entity to the next generation; it's about transferring the spirit and the intellectual capital of the entrepreneur to tomorrow's business leaders. It is about exit planning with grace, ensuring that the business will continue to grow and prosper as the business owner plans for retirement or the next venture in his/her vocational life. Planning for succession regards capital management; nothing is more threatening to a family o...
Succession Planning: Points to Ponder
Questions to Consider: Is planning for succession important? Is your business plan designed to facilitate a succession plan? Is your family prepared, informed, and supportive? Is company ownership titled for succession? Have you designed a plan for owner/manager candidate development? Do you have a contingency plan for spousal support? Have you communicated your succession intentions to active participants? The process of succession planning helps to as...
Agribusiness Success Through the 5 G's...
"A family farm or agribusiness is designed to serve the needs of the consumer, to address the demands of society, and to provide a means for an owner's family. An owner must aspire to the 5 G's: - Grow equity, which is the foundation for permanence, rather than income. - Groom tomorrow's leaders today, rather than develop obedient managers. - Generate capital improvements for long-term success, rather than spend today at tomorrow's expense. - Gather assets for a retirement option...
The Legacy of your Family Farm
The Farmland Information Center (a partnership between American Farmland Trust and USDA) offers a treasure trove of information about farmland stewardship. Consider this: "From 1992 to 1997 more than 11 million acres of rural land were converted to developed use - and more than half of that conversion was agricultural land. In that period, an average of more than 1 million agricultural acres were developed each year. And the rate is increasing - up 51% from the rate reported in the p...
Love your farm, love your family...
Farm-friendly Valentine's Day suggestions, courtesy of American Farmland Trust: Top Three Ways to Love Farms this Valentine's Day Brighten your sweetheart's Valentine's Day - buy flowers from a local farmers' market. Reserve a table for two at a restaurant that purchases ingredients from local farmers. Make a date at a food or wine tasting event in your area. _______________________...
Track Your Succession Planning Progress
The Canadian accountancy firm MNP offers a good library of useful information tailored to agricultural business concerns; much is applicable to farming counterparts here in the U.S. A sample from their piece on succession planning: "One of the traps that families fall into when it comes to transition planning is that of getting caught up in the urgency of day-to-day operations. Time passes quickly. Establishing and monitoring some key indicators helps to keep plans on track. Without ...
Succession Planning as a Declaration of Independence
"A succession plan: Directs a business vision beyond the life of the owner; it encourages decisions with long-term perspective. Promotes a sustainable business model based on solid systems, and valuable services, not just on the strengths of the current generation. Focuses on the "deliverable" (product/service) of the operation, rather than on the skills of the owner or the network he/she may develop. Forces broad-minded objectives, like equity growth and ...
Succession planning to change your family's world
"Choosing to implement a comprehensive succession solution may change the world for multiple generations. It may have a profound effect on loyal employees and the community. From the moment the succession planning process begins to the last action on the to-do list, a family's world hangs in limbo. A set-in-concrete succession plan replaces the uncertainty and anxiety of the next generation or more to come." Excerpted from "Succession Solutions by Kevin Spa...
Strategic Decision Making
Farm Family Decision Making from the Oklahoma Cooperative Extension Service (by Damona Doye and Randy True) begins with a great quote from Theodore Roosevelt: "In any moment of decision, the best thing you can do is the right thing, the next best thing is the worst thing, and the worst thing you can do is nothing." When it comes to creating a pathway for multigenerational success, to do 'nothing' is an ineffective choice, to say the least. The article offers a step-by-step a...
Early Planning for Succession
Farm Succession Decisions Require Long-Range Plans by Caroline Booth Lara (Southwest Farm Press; October 2006) recaps an interview with Danny Klinefelter, Texas Cooperative Extension Economist. Early communication is encouraged. "One positive aspect of early planning is that it allows the child to be developed as a successor, giving them time to become deeply familiar with all aspects of the operation, both internal and external. Professional development is key in farming and ranching,...
Transitioning the Farm
Transferring Your Farm Business to the Next Generation (Ohio State University, Bulletin 862) discusses the human relations aspects of farm transition. This worthwhile piece details the importance of establishing and then updating a flexible plan, allowing plenty of time for transition. ("The best transfer plans have often evolved over many years.") Communication, preparation, and preservation of business culture all contribute to a successful multigenerational transfer. As the...
Communication about the Farm Transfer
As you consider the best options for transferring your farm or agribusiness, it may be helpful to read through some communication suggestions offered by the Manitoba Agriculture, Food and Rural Initiatives. The Farm Transfer: Talking and Planning with Your Family prepared by Jill Falloon and Donna Hastings begins, "One of the most critical issues in the life of a farm business is the preparation for the transfer of the farm to the next generation -- a process that is often hard to thin...
The Succession Journey
"Be sure to take the time to assess and fully develop an understanding of your personal and business goals and objectives - don't forget to include your family in the decision making process. Remember that to plan your succession is about the journey." Excerpted from Succession Planning: An Agri-Business Perspective, from the Canadian Federation of Independent Business
Managing Change during Succession Planning
Managing Change Together from the Manitoba Agriculture, Food and Rural Initiatives is an overview of 'change', making the point that "The human experience consists of matching our capabilities against the challenges we face." An ability to accept, and embrace, the benefits of change helps us to overcome conflict among family members as we plan for multigenerational transfer. The importance of preparation is emphasized so that each family member may feel a part of the process. &q...
Avoidance is not the best strategy.
An article called simply "Succession Planning" was presented in Case IH's Canadian Farming back in 2004, and remains one of best quick overviews we've seen on the topic. The piece concludes with 15 key points to "Jump-Start Your Farm Succession Planning", as proposed by Peter Coughler of Ontario's Ministry of Agriculture, Food and Rural Affairs. The points include: "Learn as much as you can about farm succession and become an active participant in the planni...
Succession Planning - the Basics...
Planning Ahead for your Farm Transfer from the Pennsylvania Center for Farm Transitions provides a good concise summary of succession planning for farm families. The article begins, "Because of the complexity of farm transfers, they require considerable thought, discussion, and planning beforehand... With the plan developed, when retirement starts to approach, your farm and family will be ready to make a transfer that not only meets everyone's needs but is transacted smoothly and with a...
Plans you DON'T want.
"There are two types of plans that are all too common, but not very desirable. The 'no plan at all' plan and the 'gonna do something someday' plan... Sadly, these 'non plans' often lead to sale of the farm for development. The clear alternative is succession planning, both for the farm business and for the land." Excerpt from Transferring the Farm: An Essential but Difficult Task, by Vern Grubinger, University of Vermont Extension
Prioritize Planning
Too Many Companies Lack Succession Plans - Wasting Time, Talent (by Carol Hymowitz in the November 26, 2007 Wall Street Journal) covers the complexities of management evolution in the corporate world - - - yet the challenges are strikingly similar to those faced by agribusiness owners. Hymowitz talks about prioritizing the identification of talent, allowing time to groom successors. Hymowitz states, "In today's changing business landscape, companies need leaders with strengths and tal...
The Future of Farming = Opportunity
What will farming be like in 2030? A short piece by Josh Mowbray on FarmCentre.com (September 2007) makes some likely forecasts. No One Individual Can Do It All foresees that future farm managers will require a team of specialists to handle defined sets of duties. For example, a gifted agronomist will not be expected to stay up-to-the-minute on the complexities of human resources, while also serving as the operation's mechanic. In the bigger picture, the manager of 2030 "will face a...
Equipment Dealers Adapt to Changing Market
In Dealers See 'Big Things' for 2008, Farm Equipment Managing Editor Dave Kanicki summarizes owners' confidence levels and projections for the year ahead. According to Farm Equipment's recent survey, "dealers are projecting sales to improve 2.63% during the coming year." This informative feature includes 'Best Bets' charts and stats reflecting the evolving equipment dealer market. As Kanicki concludes the piece, "It's a new world out there for a growing number of traditiona...
Planning for Ownership Succession
A few effective quotes from Planning for Ownership Succession, prepared by the Ohio Employee Ownership Center on the Kent State University website. "Succession planning can be the crowning achievement of a productive career, or the Achilles heel undermining a lifetime of hard work. Succession Planning...requires excellent communication, a deliberate process, and openness to objective advice." "The earlier a business owner begins planning, the more likely it is that t...
Creating the Legacy of your Family Farm
(Photo courtesy of USDA NRCS) "Most family business decisions, changes, and improvements are made as knee-jerk reactions. The culture you create dictates the attitude in which all aspects of your business life are viewed. With every action you take, ask yourself if it is consistent with what you want to achieve, the culture you want to create, and the values you want to see perpetuated." Excerpted from Legacy by Design: Succession Planning for Agribusiness Owners (M...
Farm Succession: The Best Case Scenario
"It's people who don't think succession is a big deal and haven't worried about it who so often find themselves dealing with some major issues they never expected," according to Melissa Dumont. Dumont is the conference organizer of the International Farm Succession Conference. It's Never Easy: Even the Best Struggle with Transfer Issues (by Glenn Cheater on FarmCentre.com, October 2007) tells the story of one farm family who hosted conference attendees during this year's event. ...
Part of the Sandwich Generation?
The 'Sandwich Generation': Women Caring for Parents and Children by Charles R. Pierret in the Monthly Labor Review (September 2006) points out a changing trend in American households: "As life expectancy increases, more middle-aged people tend to have parents who are still alive. Additionally, these parents probably have fewer children, so there are fewer siblings with whom to share the burden. Adult children are more likely to live further from their parents... Women are having child...
Comprehensive Succession Planning Replaces Wishful Thinking
In Why Succession Planning Matters from BusinessWeek (07/30/2007), James Olan Hutcheson emphasizes the value of succession planning for every family business. Hutcheson talks about the priorities of developing a strategy, identifying a leader, and following up with periodic updates. He states, "This is no time for wishful thinking." The article concludes: "In case you balk at the possible expense or the distraction on top of your other duties, consider that poor succession ...
Design Your Retirement
USDA recently released its 2007 Rural America at a Glance report. One segment addresses the critical trend of Challenges from an Aging Population. The points made include that, "Growth rates from aging-in-place... will triple among the nonmetro older population from 6% in this decade to 18% in the 2010s." Furthermore, "Compared with their metro counterparts, nonmetro older Americans generally have less income... creating greater demand for... financial assistance." Far...
Bright Future for Agriculture
We appreciate this entry offered by Chris Chinn on the Young Farmers & Ranchers Blog (10/30/2007). Chris attended the recent FFA National Convention and came away with a revitalized respect for America's next generation of farmers: "They are prepared for the challenges they may face and determined to succeed I am proud of these kids and their optimistic approach to having a bright future in agriculture. There is no doubt in my mind these kids will make a difference in informing ou...
Enjoy your Accomplishments
"As a successful business owner, you deserve to enjoy your accomplishments. Designing a sound succession plan is the way to ensure you can. Failing to plan for succession can have devastating results for the family and business, leaving no positive legacy. Unsuccessful planning can be just as disastrous. As Greg Norman has shown us on the golf course, a bad ninth hole can ruin an otherwise great game." Words of wisdom for the family business owner, from Planning for O...
Selecting a Successor for your Agribusiness
"Choosing among your children is the single biggest roadblock to selecting a successor. This is especially true when multiple family members are involved in the farming operation. It may be that only one child works in the business, but does not have the requisite skills to manage the operation. You may have several children, but not all of them work in the business. What about your loyal employees? What if he or she is the right arm of your business?... The emotional strings that m...
Succession Planning Today
In "Tom Peters Times" (October 2007), Tom Peters Company President/CEO Juli Ann Reynolds writes about what she calls "Succession Planning in a YouTube World". In the piece, she explores the "most dramatic change in the business world" since the publication of Peters' In Search of Excellence a whopping 25 years ago. Back in 1982, Peters recognized the impact of making a "long-term investment" in employees, but today's business world is faced with a &qu...
Family Business Succession Planning
Succession Planning and the Family Owned Business by Christopher Hirschfeld on Inside Indiana Business makes some excellent points... "It makes sense for family business owners to begin treating the succession planning process much as they would treat retirement and estate planning." "Succession planning does not take place in a vacuum, but is a process requiring time and the involvement of multiple parties including the owner, heir and advisors." In the article, Hirsch...
What is a Buy-Sell Agreement?
Not clear about the function of a Buy-Sell Agreement? From Annette Higby (of Farm Transfer & Estate Planning, published by the University of Vermont Center for Sustainable Ag), here is a good definition: "A buy-sell agreement can be used to protect the heirs of the partners and to ensure a smooth transfer of a...partner's share in the business to the remaining partners. A buy-sell agreement provides for stable continuity of the business without a threat of termination upon the dea...
The Farmer as Expert
In Farm Transfer & Estate Planning (University of Vermont Center for Sustainable Ag), attorney Susan Higby shares these thoughts: "The pace and progression of farm succession is necessarily dictated by the arc of the business, the size of the estate, the mix of farm and non-farm assets, the retirement needs of the senior generation, and the personal goals and objectives of each generation as they mature. Equity for non-farming heirs is also a consideration. Because all of these fa...
Talking about Agribusiness Succession
"One of the greatest risks to achieving the succession plan is a lack of communication to family members and key employees. Do they know of the plan, participate in the plan, agree with the plan, and understand how it may affect their lives?... Feel comfort in knowing that there are expert advisors to help you every step of the way. " Succession Planning: An Agribusiness Perspective (by Stewart Anderson, from the Canadian Federation of Independent Business)
It's never too soon...
Never Too Early to Start Succession Planning by Tiare Rath on About.com includes an interview with Todd Millay, executive director of the Wharton Global Family Alliance. To make your succession plan work, Millay encourages the family business owner to, "Keep an open mind. Regardless of their blood relationship, it's important to evaluate your successor's professional and personal strengths and weakness vis-a-vis stepping into a leadership role." Summarizing the interview, Rath w...
Succession - through Leadership Development and Beyond
"Leadership succession, continuous growth and innovation do not happen as a matter of course: The very nature of a family business often undercuts these goals, serving as it must all of its stakeholders - customers, employees and current and future owners. A family's 100-year plan attempts - through its family mission statement, the family's financial institutions, and a well-considered succession strategy - to manage these tensions to ensure that both family and busine...
Motivation to Communicate
Motivation key to estate planning (by Beth Forbes, July 18, 2007) reviews the impetus behind the Purdue Extension website, Getting Motivated for Estate Planning. Sharon DeVaney, Ph.D. of Purdue University created the site to "help people see the need to put estate plans on paper." Says DeVaney in the article, "Often estate planning keeps dropping to the bottom of the list when it comes to priorities. Getting them to move that to the top of the to-do list is our goal with thi...
Succession: An Agribusiness Challenge
In Management Development and Succession: An Agribusiness Challenge, Ken D. Duft, Extension Marketing Economist for Washington State University, provides an overview for owners thinking ahead to management needs for the future. Two thoughts from this article: "It is very important for persons... to perceive a clear sequence of advancement opportunities. Moreover, either horizontal or vertical advancement within this perceived structure must be timely. Such movement is essential if th...
Working with Family
Our Relationship... And Working Together with Extended Family by Kathy Bosch of the University of Nebraska-Lincoln (Institute of Agriculture and National Resources) provides guidelines for parents, children, and in-laws working together and striving for harmony. "When family members are in business together, skill is needed to communicate plans, expectations and dreams... Families who discuss issues, agree on action to be taken, or compromise when views are different, promote healthier ...
More than one 'heir to the throne'?
An Eccentric Succession by Brett Anderson (Worth Magazine, December 2004) provides a good summary of one family's succession planning discussions. With three capable sons in the second generation, the Cakebread family (Cakebread Cellars) explains the process they went through to reach their leadership decisions. As Bruce Cakebread notes in the feature: "A family business transitioning from first to second generation is one issue. The percentage of failures is huge at that stage of a b...
Communicating about the Future of the Farm
We grow up believing that it is disrespectful to ask parents certain 'personal' questions - particularly issues related to income or business. Of particular taboo would be questions regarding inheritance or plans for estate distribution. While it typically is not appropriate to meddle in these issues, when an adult child is dependent the stability of a family business, he or she has a vested interest in understanding what you have in mind for the future. As a parent of the family you may f...
When to Begin the Succession Planning Process?
The time to get started on succession planning is now. Think you should hold off for a while? Read on... __________________________________________________________ "Few agribusiness firms have the luxury of operating at a pace of their own choosing. Business cycles, seasonal adjustment, and the general sense of competitive business pressures combine to create an environment wherein the time to decide has been greatly compressed. We have always been warned that to rush inattentiv...
Thinking Objectively...
We've all been caught up in the urgent at the cost of the important. Business planning, marketing programs, and special projects are no exception. We often allow our day-to-day existence to be directed by the crisis of the moment. Busy farm owners, not unlike any other business person, get distracted by alternatives and end up failing to address the essentials: "What is my objective? What do I ultimately want to accomplish?" Farming is a business, which means that each decisi...
The Best Management Team for your Farm
Some thoughts as we head into the Labor Day weekend: "The depth of a sports team's bench often makes the difference in a game. Business is no different. The depth of your management candidate bench determines your ability to succeed... The opportunities to grow a business can be severely limited if you do not have the right personnel with the right skills at the right time... Writing the management responsibility section of the business plan forces you and your current management te...
Succession Planning: The outcome is worth the effort
"The succession process will be most successful if a "team approach" atmosphere is established, supported by good communication and continuous skill development." "Family business succession is not easy. However, a well-crafted plan can smooth the transition and increase the chances of success, while at the same time helping to maintain family harmony." So concludes our final glimpse into Dr. Rodney Jones' comprehensive paper, Planning for Farm Busines...
Family Communication in Agribusiness
In a third look at Planning for Farm Business Transition/Succession by Rodney Jones of Kansas State University, Dr. Jones points that that, "There are three overlapping, and often conflicting systems at work in a family based business." Dr. Jones refers to the three communication components as management, ownership, and family. Each system addresses its own elements - day-to-day business, returns to investors, and "maintaining family unity." As Jones rightly points ou...
Goal Setting = Solid Framework for your Agribusiness
In a continued look at Planning for Farm Business Transition/Succession by Rodney Jones of Kansas State University, Dr. Jones talks about moving from the vision/mission process into the phase of setting defined objectives and goals: "The goal setting process is often challenging for agricultural business managers because many people have not tried to formalize their abstract ambitions. Clearly defined written goals are essential for a serious transition plan, as they provide a solid fr...
Your Farm Mission and Vision...
Planning for Farm Business Transition/Succession by Rodney Jones of Kansas State University (for the Four State Beef Conference) is an excellent paper on the many elements involved in succession. It's packed with a lot of good information - the paper will likely keep this 'Coffee Shop' buzzing through several posts. Jones emphasizes how important it is for the family business to establish both a Vision Statement and a Mission Statement. Dr. Jones describes a Vision Statement as a "uni...
Fair vs. Equal
What do Parents Owe Their Children? by Jill Falloon of Manitoba Agriculture covers the complex and delicate topic of 'fair vs. equal' in terms of farm succession planning. The headings in this piece will give you the big picture: Understanding Family Tensions Types of Justice Entitlement Making Sense of It All Consider Discussion at a Family Business Meeting Ultimately the Decision is Yours Maintaining Family...
Try-Outs for the Family Farm...
"Just being next in line to inherit the farm might not qualify farmers for full responsibility. 'That will just get you a try out for the team, it doesn't mean you'll get to play.'" So states John Baker of the Beginning Farmers Center in Ames, Iowa. (Baker was also quoted in yesterday's post. Both items are from Hannah Fletcher's feature, Succession Plan Keeps Farm in Family's Hands from Iowa Farmer Today.)
Four Generations and Counting
Succession Plan Keeps Farm in Family's Hands by Hannah Fletcher in Iowa Farmer Today (01/03/2007) relates the scenario of one family who has taken a proactive approach to succession planning decisions. John Baker (administrator for the Beginning Farmers Center in Ames, IA) serves as a resource for this feature and cites the following hurdles to successful succession planning: " - Urgency often takes precedence... farmers' planning horizon does not typically extend more ...
Succession in Family Business
"Developing good leadership skills involves aspiring leaders learning about themselves, and how to inspire others as well as learning good management practices. Creating opportunities for successors to learn key leadership skills, and considering these skills when choosing a successor for the business, may help improve the success rate for family businesses in the succeeding generation." From Succession in Family Business by Pamela Q. Weaver, CPA (Connecticut CPA, January ...
Succession Plan for Stability
"Having a succession plan, even though it may change over time, gives the family and business stability... A plan provides direction and tools..." So states Mary Jane Combe in Transfer the Family Business (October 2001). Combe goes on to stress that "It is never too early to begin... If left unaddressed, it can become more complicated over time as family members make assumptions about their future..." The article makes some strong points and is worth a thorough look.
Family Business: Communication among Family Members
Five Steps to Better Family Negotiations, published by John A. Davis and Deepak Malhotra of Harvard Business School (July 09, 2007) provides some excellent ideas for facilitating discussion among family members who also do business together. Key points include: Family members have "long-standing relationships that are based on strong emotional ties... greater reactivity... and play certain roles..." Because of this, "Family members also tend to have difficulty listening to o...
Leadership Matters
"The traits of a good leader are competence, long-term commitment, personal integrity, and interpersonal communication skills. In addition to these character traits and an attitude of 'growing toward excellence.'... The ability to lead a business venture is the ability to envision the future, articulate the vision, and then muster the necessary resources, people, and production inputs to bring the vision to life. Leadership is difficult to define but easy to recognize." From Legac...
Strategizing for Agribusiness Retirement
The University of Nevada Reno Cooperative Extension offers good information on "Retirement Strategies for Agribusiness Owners." Authored by Kynda R. Curtis and Margaret W. Cowee of the UNR College of Agriculture, the article covers concerns that are specific to farm and ranch households. A few excerpts: "Due to the nature of farm business, farm households have different savings habits and more diverse financial portfolios than typical U.S. households... Retirement planning...
Getting organized for succession planning
The Iowa Society of CPAs reports that "Every Family Business Needs a Succession Plan" (July 10, 2006). The article notes: "... a well-constructed plan is essential to passing the business on to the next generation." The Iowa CPAs advocate for strategies which include: - Begin the process five to ten years before you plan to retire. - Communicate with your family, and get them involved in the process. - Carefully select the right successor. - Develop the successor's ski...
Farm Equipment Optimism!
Farm Equipment Dealer Optimism Highest in 3 Years, reports Farm Equipment magazine, based upon a July 15, 2007 report in Ag Equipment Intelligence. According to the latest UBS Semi-Annual Agricultural Dealer Survey, "North American farm equipment dealers are more optimistic than... they've been since 2004." UBS analyst Dave Bleustein "sees equipment sales trending upward through the remainder of the year." Sounds like a great time to maximize business income, equity, ...
The Next Generation of Farmers
Our July 18, 2007 entry quoted a Fresno Bee story, "Growing without succeeding" by Dennis Pollock. The same article outlines some interesting (and hopeful) statistics: "There are signs that interest in farming hasn't waned. The ranks of 4-H and Future Farmers of America are increasing in California. Today, there are 130,000 members of 4-H clubs, compared with 62,000 20 years ago. Today, there are 65,000 FFA members in the state. Ten years ago, the total was 50,000. Twent...
Strategic Planning for the Agribusiness Owner
From Danny A. Klinefelter, Ph.D. of the Department of Agricultural Economics at Texas A&M: "Hockey great Wayne Gretzky said, 'What separates me from the average player isn't that I'm stronger or faster, but that they go where the puck is while I try to go where it's going to be.' Gretzky played strategically. "Like other family businesses, most farmers fail miserably at strategic planning. Typically only 30% of family businesses have a strategic plan. Strategic plans fail most...
Growing Agritourism
'Farm proprietors cultivate agritourism' in the San Luis Obispo Tribune on July 22, 2007 relates more examples of this growing trend. In an interview for the feature by Ermina Karim and Dawn White, Joy Barlogio of Jack Creek Farms in Templeton, CA stated: "Money earned through agritourism can mean that the land a farmer owns will continue to be farmed for generations to come." Barlogio goes on to say: "We're promoting education and an experience. People are attracted to ou...
Time to Appreciate Farmers
"So, anytime you meet a young farmer, don't insult them by asking if they have been busy; take just a moment and thank them for stepping up to the challenge of farming in the USA in the 21st century." Bambi Osswald's recent entry in the Young Farmer and Rancher Blog provides an overview of the life of young farmers in 2007. Juggling the demands of the farm, family, outside jobs, and community service can create huge time management challenges. It would be easy to put off ...
Advantages of a Comprehensive Succession Plan for your Farm, Ranch, or Agribusiness
There are many reasons to get started on the succession planning process... - Maximize business - income, equity, and satisfaction - Exercise options to efficiently achieve objectives - Facilitate and streamline solutions - Enhance retirement results - Secure a second opinion - Improve bottom line and reduce expenses - Save money, time, and effort - Achieve leadership development or ownership transition - Protect the family, and maintain a healthy standard of living...
"Growing without succeeding"
Growing without succeeding by Dennis Pollock (Fresno Bee - July 15, 2007) tells an increasingly familiar tale: "The younger generation is having difficulty taking the reins from aging farmers." As Pollock says, "Farmers sticking around longer sometimes means deferred dreams for their would-be replacements. In some cases, there's just not enough profit from the family farm to sustain partners... It means tough choices for family members sorting out how to keep an enterprise go...
The more things change...
"Dealers are 'Sold' on Shortlines", a feature article by Farm Equipment Magazine Managing Editor Dave Kanicki provides a good overview of the evolving face of farm equipment dealerships. With the growth of the rural lifestyle market, Kanicki makes the point that "While the professional farmer remains the primary focus of their dealerships for many, the (large property owner) and rural lifestyler can't be ignored." There has always been a stream of change in American agri...
Rural Lifestyle on the Rise
The NAFB Rural Lifestyle Report 2006 estimates that about 69 million Americans (26% of the population of the contiguous 48 states) live the rural lifestyle, and that number is on the rise. About 95% of the Rural Lifestylers own the land (three or more acres) on which they live. Some are "weekenders" with second homes, and some are "permanents" who work from home or are semi-retired. Many have horses or livestock, some grow crops, and most handle their own farm and home ...
Agriculture News and More
The Light is Green is self-described as "Business and marketing ideas for manufacturers, culled from what is (and isn't) working around the world." Although primarily focused on the auto industry, the website's Agricultural Equipment section includes updates on what's new in the ag arena. The site also offers information on customer satisfaction and marketing. Worth a look...
Celebrating Your Family and Our Nation
"The values that you pass along, the wealth that goes to a new generation, and the principles you perpetuate as you leave your business to another, are of momentous significance to your family. You are stewards of a wide-ranging family fortune comprised of values, morals, principles, and money. Others will follow your commendable example, if all has been handled correctly. Though, on the surface, this decision appears to be purely about money and business management, it is mo...
Objectives for your Agribusiness
"Every action is preceded by a decision to act by design or by default. Some people refer to this concept as proactive versus reactive management. You can act to avert crises or you can react to the demands of a given situation. Unfortunately, many people live by default. They are constantly predicating their actions on the crisis of the moment. In business I refer to this as crisis management. As a successful business person, you must avoid crisis management. You are most succes...
Maintaining Momentum
Succession planning is about dismounting from this horse to put on a younger rider, while maintaining the momentum of a progressive operation. Photo courtesy of Oklahoma Farm Bureau
Planning today...
"... families would benefit greatly if they would just take the time to develop a good plan... to reach desired economic, legal, and personal objectives. Planning today pays dividends down the road, not to mention a significant reduction in family anguish and costly expenses." The January 2007 Speakout Guide from the Ohio Farm Bureau Federation includes this advice, as well as in-a-nutshell guidance about "Planning your Transfer" and "Implementation"....
Longer retirements call for stronger planning.
The U.S. Census Bureau estimates that, in 2035, there will be about 70 million people will be 65 years of age or older. In the era of our grandparents and great-grandparents, most people did not do financial planning. A farmer worked right up until his last days on this earth, leaving his farm and possessions to a son or a wife. The lifestyle and medical advances gained during the 20th century changed all that, and today many people enjoy a retirement of 20 to 30 years. One of the man...
Family Businesses Thrive on Change
Keeping the Business in the Family, by Dr. Mark T. Green (Director of Austin Family Business Program at Oregon State University) represents just one of the resources available from the valuable OSU program. Dr. Green states, "If your business is in the first or second generation, you've got some work to do if you want to create a legacy for your grandchildren." He also notes that, "Savvy managers don't plan to survive. They plan to thrive on change." The AFBP Resources...
Retirement: Let the choice be yours.
Many agribusiness clients have questions about how they may achieve a financially healthy retirement. As you consider your future, take some time to identify the ideal situation. Ask yourself: - How will I spend my time in retirement? - As I prepare for retirement, how do I want to develop my business? - Have I considered alternatives to complete retirement? - Are my family or loyal employees interested in continuing to grow the business? - Do I see a financially satisfy...
Growing your Agribusiness
If your agribusiness isn't moving forward, it's slowly failing. None of us like to dwell on that, but we all know it's true. Today's competitive business environment should really drive home the point. Adequate capital, profit, and employee development all affect the potential advancement of any business. Furthermore, in a family enterprise, each generation must take responsibility for actively expanding the business. Maintaining a status quo won't be enough. Short-sighted families ris...
Strategy for Farm and Ranch Succession Planning
Oregon State University / Washington State University Extensions offer some great information in their "Farm and Ranch Survival Kit" publications. Issue 4, "Working Together to Create a Hopeful Future for Family Farms" includes suggestions on "What to Think About Before Joining Your Family Business", "Ten Rules of Transition Management", and more. As stated in the opening sidebar, "The authors in this issue stress open communication between gener...
The Graying of America's Farm Operators
One picture (or map) truly is worth a thousand words. Agricultural economist Fred Schmedt of the Noble Foundation shares some remarkable statistics on the Noble Foundation website in his August 2005 piece, "Farm Succession Planning is Critical." Good food for thought. It's well worth a few minutes to check out the diagram which colorfully displays the percentage of principal farm operators who are 65 years or greater, on a county-by-county basis. Although this illuminating char...
"Farming without a business plan..."
... is like hauling products from coast to coast without a road map." Well put. Paul Joerger of the Noble Foundation in "Planning to Succeed" (May 2000) strongly summarizes his point like this: "You don't have to have a business plan to survive. But you better have a huge net worth and be lucky, if you don't." A dynamic business model is the backbone of any agribusiness.
Begin Succession Planning Now
I've just discovered a treasure trove of valuable succession planning information on the Noble Foundation website. The Ardmore, Oklahoma-based foundation was formed in 1945 to educate area farmers and ranchers for achievement of their goals. In his September 2005 article, "Begin Succession Planning Now", agricultural economist Fred Schmedt emphasizes the urgency of getting started on the process: "... it may be more difficult to enable succeeding generations in the business ...
Preparation Makes the Difference for a Successful Succession Plan
"Family-Owned Businesses" by Jennifer Sorensen (BabyShopMagazine.com), provides a good overview of some of the challenges inherent in a family business. In her article, Sorensen makes the point that, "With baby boomers better prepared and less resistant to seeking outside advice, analysts predict a greater rate of survival in the future for family owned businesses." Quoted in the article, Edward C. Wachter, Jr. of McCann, Garland, Ridall & Burke (Pittsburgh, PA) stat...
Succession Planning Tools for your Agribusiness
We've just linked six useful Planning Tools to our website for the benefit of farmers and agribusiness owners. On the "Comprehensive Succession Planning" page of this website, take a look: Are You Ready for Succession? Questions for you and your family to consider as you prepare to establish your objectives. Succession Planning Self-Assessment General planning points will guide you to identify your succession planning priorities. Leadership Skills Inventory A checklist of Busine...
Strong Leadership - the Crop that Counts
For an agribusiness to grow, the owners and current managers must prioritize the advancement and training of key individuals. Ideally, this will be accomplished by means of a structured program which covers everything from creating business process to enhancing leadership skills. An inventory of leadership skills helps you to assess the skills and abilities of the succession candidates. The skills you observe in candidates, accompanied by a description of the depth and breadth of each skil...
Succession Planning to Preserve 300 Years of Family Business
"Three Hundred Years of Succession" on the Harvard Business School website makes some excellent points about our everchanging family business climate. In 1698, the Berry family established a business which became a premier international wine merchant. Throughout eight generations of family leadership, typically the eldest son would take the reins. Today, however, "The focus is on the health of the business, how the family fits into the company, and the abilities of each fami...
Emotional Demands on the Family Agribusiness Owner
For all of the advantages enjoyed by a family business owner, certain emotional demands are inherent in business ownership. These may include: Financial security of the family - Most family-owned businesses constitute the primary income for the family, bringing a weight of accountability to the owner. Leadership roles - The business owner may take on the duty of encouraging the next generation to fulfill their utmost human potential. The influence and generosity may feel like both an opp...
The 'Urgent' vs. the 'Important'
We often allow our day-to-day existence to be directed by the crisis of the moment. We've all been caught up in the urgent at the sake of the important. Busy farmers and agribusiness owners get distracted by day-to-day challenges and end up disregarding the basic question: "What do I ultimately want to accomplish?" Specifying objectives may be the most difficult part of the succession planning process for the simple reason that objectives become commitments. And yet, the only su...
Succession Success
In his article, "Succession Success" in BusinessWeek (April 23, 2007), Timothy G. Habbershon makes excellent points about open communication among family members. Habbershon, who is director of the Institute for Family Enterprising at the Arthur M. Blank Center for Entrepreneurship at Babson College, advocates for looking at the big picture, including all involved family members in the conversation, and not shying away from a little "normal and healthy" conflict. Habbers...
Equipment dealer profitability in 2007
Farm Equipment's website includes owners' answers to this question: "What area of your dealership offers the most opportunity for increased profitability in 2007?" Intriguing range of answers from across the country. Take a look.
Bridging the Gap to Succession
Bridging the Generation Gap, (Entrepreneur.com, January 26, 2007) uses non-agricultural examples to demonstrate the case for "gradual empowerment" of one's children, long before they're ready to take the reins of the family business. The stories in Geoff Williams' piece translate to farm/agribusiness families. As Williams states, "Of course, the best way to ensure a successful succession plan is to actually have a plan." Don't take the big picture for granted. Form...
Agritourism provides a boost for family farms
In "Agritourism growing across Oklahoma" (High Plains Journal, May 21, 2007) we read that this movement has hit the Sooner State where "State leaders want to turn Oklahoma's bucolic farms, ranches and vineyards into destinations for travelers, and cash for beleaguered family farms." The piece goes on to note that, "Following a national trend, many older farmers in Oklahoma are using tourism to supplement their incomes, and the promise of a new business is luring youn...
Social Expectations of the Family Agribusiness Owner
Social expectations of the owner are usually self-imposed, or reinforced by preconceived ideas of business ownership. These may include: Identification - One privilege of business ownership is that the owner derives personal confidence and community stature as a direct result. Stewardship - A responsible business owner feels a sense of obligation to manage the business and financial assets for the benefit of the next generation. Control - Business owners have the privilege of controlling ...
Succession Planning calls for effective transfer of leadership.
Whether the agribusiness owner is identifying the right manager or searching for the successor of the business, leadership matters! The key is a process that is structured and thorough. You can't just 'wing it' and hope for the best. An effective leadership selection and development process is a critical component of a comprehensive succession plan. One should have a defined method for selecting, and then developing a capable successor or manager. Consistent implementation of a leaders...
Working together
Generation Next by Dale McDonald in John Deere's "The Forum" (January 2007) features the story of three farm families and how they handled "transition from one generation to the next". As the author states, "Best of all, they found a way to work together where everyone got what they wanted - an accomplishment that cannot be underestimated." Agreed! Farming is an emotional business, and it's never too early to start a dialogue with the family. Your own dyna...
Farm Succession - Honoring the Farm Spirit
"Why the Obsession with Succession", by John R. Baker of Iowa State University's Beginning Farmer Center extols the spirit of the American family farmer, who despite many gloom & doom predictions to the contrary, is "still a vibrant and necessary part of society... Those who live next to the land and toil upon it are more likely to be interested in their community, their environment and their society..." Baker advocates for the urgency of succession planning. Sound ...
The time to talk is now
Case IH's Farm Forum Roundtable is an excellent resource for agribusiness succession planning information. From the Winter 2006 issue, take a look at "The time to talk is now", which emphasizes that "The ability of family members to communicate determines whether a transition will be successful.
Penn State Offers Practical Tools for Success and Succession
The website for Penn State College of Ag Sciences includes a good menu of checklists, guides, and information. Categories include "Passing on the Farm" and "Starting a Business". In an article called "Will Your Family Farm Continue?", Roland P. Freund of Penn State Cooperative Extension notes: "Your circumstances are different from every other farm situation. One recipe does not fit all. Research your options by searching, reading, and talking to othe...
What's your hurry?
- It takes time to design and implement the right plan. - Succession planning may enhance the bottom line by improving your outlook. - Capture the opportunities inherent in your business. - It is much easier to revise an existing plan than to implement anew. - Removes doubt and secures your business. - Succession is the natural sequence of a viable business. - Multigenerational wealth is success for the family business owner. - Planning should be implemented during a p...
NAEDA, AEM, and FEMA release new study
"The U.S. agricultural equipment industry generates over $82 billion in economic activity and is responsible for nearly 250,000 jobs in all 50 states..." Take a few minutes to review "New Study Details Contributions of U.S. Agricultural Equipment Industry to the American Economy", a collaborative report prepared by the Association of Equipment Manufacturers, the Farm Equipment Manufacturers Association, and the North American Equipment Dealers Association, release...
AFBF President Stallman Identifies Priorities
Recommended reading: "Can't is not in Young Farmers' Vocabulary" (AFBF website, April 2007) ___________________________________________________________ In response to this article, an open letter to Bob Stallman, President of the American Farm Bureau Federation: "Dear Bob: Thank you for reminding our constituents that farming is challenged by bigger threats than the farm bill, environmental legislation, and corn production (The Ag Agenda April 2007). Agriculture can...
Retirement... some day!
If you are a family business owner, additional pre-retirement elements come into play - including all-important decisions about owner and management succession. Because your family identity, as well as your household financial support, is tied to the business, there is an even greater depth of consequence to the objectives. Among the issues to be considered are: - When do you wish to transfer ownership? - How can you maximize wealth accumulation (Investment program? College ...
Overcoming inertia
The more I visit with farmers regarding succession issues, the more I realize there are three broad causes of inertia: The emotional dynamic. Family business, as with all family matters, is charged with emotion. It is very difficult for the owner to act in an objective manner regarding business decisions. Procrastination. This is everyone's built-in protection mechanism. We all know that, "Whatever can be put off until tomorrow will be." Confusion. The lang...
Choose to Save.
American Savings Education Council's "Ballpark Estimate" is a quick planning guide to help you gauge your progress toward your retirement goals. Incidentally, ASEC also has a great menu of calculators available to help you with decisions on everything from mortgage rates to college savings. You may find some of these tools to be useful to you as you design your succession and retirement objectives.
Goal: A smoother transition
"Sooner or later, everyone wants to retire." So begins Succession Planning Issues for Family Businesses by Susan Ward on Small Business:Canada. Ward lists six specific succession planning tips for family businesses, which we summarize here. (I recommend that you click though to the linked article to read the complete version.) "1) Start business succession planning early. 2) Involve your family in business succession planning discussions. 3) Look at your family real...
What's your objective?
Specifying objectives may be the most interesting, and the most difficult, part of the planning process. Most people fear commitment more than snakes, heights, or the IRS. Nevertheless, clearly defining your objectives helps to clarify the action necessary for achievement. Consider these areas: - What are the basic functions of my agribusiness, and its chief priorities? - In what products or services should we specialize? - How much family involvement do we anticipate? - How do we want...
Our changing world...
How our world is different from that of our grandparents: * Family dynamics (life style, geography, family units) * Costs of doing business * Production agriculture * Manufacturers' expectations * Tax laws * Profit margins * Real estate values * Environmental laws * Life spans * Wants, needs, and expectations of family All of this calls for a more complete transition plan when preparing to pass the business from one generation to the next.
Efficient and tranquil transition
Constructing a Succession Plan (by Neil E. Harl, Professor of Ag and Economics at Iowa State University Extension) was first published in Agricultural Law Digest back in 1997, but the information remains relevant today. One excerpt: "In the final analysis, a successful plan of succession in the farm or ranch business depends heavily on the personal chemistry of the individuals involved. However, a carefully considered and thought-out succession plan can be helpful in shaping ...
You've got to have a dream to have a dream come true.
Is your business model dynamic and up-to-date? To thrive across generations, a business must: - Build upon and abide by a plan for success - Be motivating and progressive in nature - Be flexible to adjust to changing conditions and shifting resources A complete business plan includes: - Vision or mission statement - Company history and guiding values - Outline of management responsibilities - Timeline for system changes and improvements - Analysis of strengths, opportuniti...
Succession planning in a nutshell.
"Your company not only represents your legacy, but also the capital you'll need to live in retirement. A good succession plan is your retirement nest egg: it will ensure that you have the funds you need to retire and that the business you have built continues to thrive." Succession Planning Tips from The Canadian Federation of Independent Business is a concise summary of the succession planning process, asking good questions and urging an early start.
Take 8 minutes...
... to view this interview with Dr. Mike Boehlje of Purdue University regarding his presentation at the 2006 Farm Futures Management Summit Conference. Dr. Boehlje offers some excellent insight. Highly recommended viewing. (Will be permanently linked in our Agribusiness Resources to the right.)
Team Players
As practitioners, we must appreciate the professional expertise of others, and allow our common objective (serving the succession needs of America's family business owners) to guide our efforts. I concur with the following approach and practices shared on the website of Buckingham, Doolittle & Burroughs, LLP. "While we recognize our capabilities, we also recognize the critical importance of being part of a planning team. In that regard, we work with accountants, financia...
It's time to get started
Why some families postpone the inevitable from the Toronto Star (Ellen Roseman, February 25, 2007) outlines a complex family business scenario. No two sets of family circumstances are alike, and each may change from one year to the next. Comprehensive, guided succession planning addresses the needs and wants of each participant as your vision becomes reality.
Communicate, Communicate, Communicate.
Communication is key (by Burt Rutherford) on the Beef-Mag.com website (February 2007) covers information from Rodney Jones, Professor of Farm Management at Kansas State University. Two excerpts from the article: "In many other instances... it appears to be a lack of understanding of the underlying issues, a failure to communicate and a lack of planning that results in the inability to successfully make the transfer happen.� "Jones says he can't overemphasize t...
The concept is Real Simple.
"What's the most surprising financial advice you've ever received?" The March issue of Real Simple magazine poses this question, and presents illuminating answers. A gem of life advice is contained within the response from a Tenesssee reader: "People fail when they trade what they want the most for what they want right now." Don't let day-to-day obligations prevent you from defining your objectives and achieving your heartfelt dreams.
Estate Tax in perspective
Though estate tax planning is an important element of a comprehensive succession plan, in a decision-making process it should not become the tail that wags the dog. Take a look at "Slipping Past the Estate Tax" (Maureen Farrell, Worth magazine, December 2006). This is an excellent primer for the potential estate tax issues we all face as business owners.
Timeless advice
14 Critical Questions for Succession Planning appeared in Successful Farming in July 2005. The article by writer/editor Cheryl Tevis recaps a presentation by John Baker (administrator of the Iowa State University Beginning Farmers Center). Baker makes excellent points, and his 14 questions are well worthy of consideration. Baker further states: "The urgent is the enemy of the important. Routine farm activities get in the way because they are more urgent. But they're not more importa...
When the family works off the farm
Increasingly, we encounter scenarios in which a loyal employee is the strong successor candidate... particulary when the owners' children have established careers off the farm. Grooming a non-family member to take the reins of the farm or agribusiness may offer some advantages: A non-family candidate understands that employment is based upon performance, attitude, and aptitude. An outside candidate may be selected for their qualifications, rather than as a genetic righ...
Successors on deck
There never was a born farmer. As the saying goes, "If it were easy, everyone would do it." We all need help and guidance to master the responsibilities of our chosen occupation. The early selection and development of an excellent successor is a priority. Mastery cannot be fast-tracked. It's important to map out and formalize the process. This compels you to commit in writing specific expectations for each manager candidate. Each plan is tailored to the skills of the individu...
When do you plan to retire?
Ask a farmer that question, and chances are he'll chuckle and make a comment like, "Who'd run the place?!" or "What else would I do?". All the while, he's just hoping to avoid the real issue - that he's completely unprepared for retirement. A farmer wants his agribusiness passed free of encumbrances to the next generation, but needs a plan designed to allow financial independence for his own retirement. Retirement planning can seem like a chess game in which a move here...
By default or by design...
Points to ponder... Some people live by default, their actions prompted by the crisis of the moment. Any business owner is most successful when specific objectives are defined, and pursued through focused purpose. Detailing goals is a form of sharing one's vision. It is through this sharing that we find inspiration, and achieve lasting rewards from our work. Enlisting others to participate in defining objectives ensures the energy and commitment necessary to complete th...
5th Generation and Going Strong
Check out this story (Still in Kansas) from Agriculture Online about a couple farming the land that great-grandpa homesteaded. Young Aaron Beaton says, "I am very optimistic about the future of farming. There are fewer and fewer young farmers returning to farm," he says. "That means there will be opportunities for those who do return. You will still have to prove you are capable of managing a successful operation, but the opportunities are there." Don't we all love to ...
Good Info: Maintain Your Family Business
Take a few minutes to read "Maintain Your Family Business" from Construction Equipment Distribution magazine (January 2007). With the tagline of "How to keep your family business viable for years to come", author Mary Sedor makes some excellent points about succession planning business. (Printed with permission from Associated Equipment Distributors.)
Recognize your strengths and build a legacy
Ever wonder why, as Jackie Gleason put it, "The past remembers better than it was lived"? The early 20th century, though simplistically appealing, was also abysmally primitive. It was an era of tuberculosis, typhoid, child labor, child death, 12-hour work days, tenements, slaughterhouses, and outhouses. 100 years ago, you would count yourself lucky if you lived to be 50. One in four children died before age 14. Cities were polluted with black soot and smoke (poisonous air bein...
Communication is the key
When visiting with the owners of farms and agribusinesses, I probe for the needs of each specific family unit. By asking owners to create a word picture of their ideal scenario, we can take a look at future roles in the family business. Many consider this to be a tough assignment. Family business owners may spend more time rehashing the Super Bowl, discussing the neighbor's new Chevy, or ruminating on political woes than they spend considering their own succession concerns. Yet, without ...
#1 priorities for your agribusiness
If you are preparing to enter into the succession planning process during 2007, you may be wondering about what to expect. As a refresher, first consider the elements of a comprehensive plan: Sustainable Business Model Leadership Development System Wealth Creation & Capital Management Retirement Option Design Estate Planning The following items should be your top priorities; the assumptions from which any discussion and action will begin: Integrity o...
Take action!
You've reviewed, revised, and polished-up your business plan. Will the plan return to its creaky file drawer now... or will it go to work for you in 2007? Do you have an Action Plan to support each Goal? A detailed Action Plan must be designed to support each objective in your business plan. The action may be a simple to-do list or a full-blown manual, as appropriate to the level of detail involved. Action Plans will allow you to concentrate your resources, time and production inputs to ...
Honor your unique heritage
The distinctive history of your agribusiness should be documented to provide a reference point of its founding culture and philosophy. As you develop a sustainable business model, consider including a brief company history as one component of your written plan. How and why was the business founded? What unique characteristics set apart your farm/agribusiness? Upon what special strengths was your business built? By recording the origins of your farm or agribusine...
A vision for future generations...
Virtually every owner of a family business has a mental image of how the farm or agribusiness should look and 'feel'. It's difficult to articulate this vision, yet some key objectives may be watered down if subsequent generations lose the precise concept of what grandpa had in mind. It's well worth the effort to explore your vision for the business and set it to paper as a fundamental element of your business model. Consider these questions as you form your vision statement: What v...
Take time to consider the big picture
A new year is almost upon us! If you haven't already been doing so, this is a great time to dust off the business plan and take a fresh look. How did things go for you in 2006? Do you need to revise some areas of focus or pencil in additional goals for 2007? To develop through multiple generations, businesses must build and abide by a defined model for success. It's exciting to monitor the progress of your business. A review of your plan can fuel the fires to work harder, and will al...
Equal isn't always the best approach
Most parents take pride in treating their kids equally, yet when it comes to succession of a family agribusiness, that may not be the best path. If all of your children are passive (not actively involved in the business), it may indeed be possible to equally divide ownership. With the kids as shareholders to a corporation, operational responsibilities would be handled by a third-party manager. If, however, some of the children are active in the business and others are passive, consid...
Buy/Sell Basics
Wondering about whether a buy/sell agreement is appropriate for your situation? Its purposes are broader than many owners realize. Here's a brief primer... A buy/sell agreement covers the transfer of your business interest to new owners. It includes the conditions of business transfer and the method of valuation. More specifically, a well designed buy/sell agreement should: 1. Ensure the continuity of your business. Succession is about transitioning your business to the next ge...
Got a plan?
A complete business plan includes a concise image of the value the business provides to the customer. A company cannot be all things to all people, yet it can be everything to some. A business plan is a set of instructions for bringing this vision to fruition. In agribusiness succession, a large percentage of owners want to sell their business, but hesitate due to a lack of value or marketability. It is suggested that one invests time and resources into developing something that is un...
A Prepared Successor is Key to Agribusiness Success
By all accounts, agribusiness is big business. Yet the emotional issues of family seem to confound many of the decisions made by the owners. One of the more delicate choices is the selection of your most qualified successor. Will you transition to a family member, to a trusted employee, or to a promising outside candidate? Regardless of your choice, a successor will need years of guidance to master the rudiments and responsibilities of management. To become an excellent manager i...
Promote Planning to Preserve Tradition...
Comprehensive succession planning is the foundation upon which a successful multigenerational family owned business is built. Each phase in the process is measured by what is best for the owner, the family, and the business. Sustainable Business Model A well-prepared business design contains instructions for bringing the owner's vision to fruition. A complete plan enhances business stability, promotes growth opportunities, communicates confidence, and positions leadership for the ...
Moving forward together...
Plan Success. Enjoy Life! Welcome to Legacy by Design's blog, a discusssion center for succession planning. Farmers, agribusiness owners, and other succession planning professionals - we invite you to come back often, to offer your opinions, to share your challenges, and to celebrate your progress toward creating a lasting legacy. ~ Kevin