Still Looking for Answers?

Recently, I received an inquiry from a magazine editor asking to interview me about my experiences in succession planning for farmers and agribusiness owners. As in similar instances, this editor explained that, ‘many of the agribusiness owners in the association don’t have a plan for succession, don’t know where to start, and don’t know who can help.’ In this case, he asked:  

  1. “What do you suggest to owners and involved family members who want to start planning for succession?”

I recommend they start with a conversation usually among owners and family members working in the operation about their goals. What I’ve learned is most owners want to:

  • Create a retirement option that allows them to continue working in the business while enjoying the lifestyle they’ve come to appreciate.
  • Control the land and other real estate assets as the foundation for their long-term financial security and then provide a smooth ownership transition to their lineal descendants. 
  • Design a plan to transition the ownership of the operation to family members in the next generation who are active and involved in the business.
  • Provide equitable benefits for all of their children and a meaningful legacy for their grandchildren. Some may also want to provide for special interests and/or charitable intentions.
  • Mitigate or completely eliminate their exposure to financial obligations and accompanying taxes when transitioning real properties in an estate plan.  
  • “Are there any emotional aspects you recommend the family settle before engaging in the planning process?”

No; the entire process is steeped in emotion. Planning for succession involves family, careers, money, heritage, lifestyle choices, status in the community, inheritance, opportunities, and obligations. Emotions are an important and unavoidable part of the process. Emotions are not rational; they sometimes make us do things we wouldn’t otherwise. However, emotions are necessary for a successful planning outcome. It’s those nurturing emotions that make us commit to this process and see it through to worthwhile outcome.

  • “Who should be on the team and how do you know if they’re looking out for your best interests?”

This is really a two part question. The first relates to the professional team that may be involved in the process and the second is about looking out for an individual’s ‘best interest.’ Both parts are important, so I’m going to answer them separately. As in regards to who should be on your team? You should have a professional who acts as your facilitator and guides the family through the succession planning process. Your facilitator will usually represent one of the professional disciplines that are integral to the process, i.e.: legal, accounting, finance, or business consulting.

The following questions may be used to interview potential facilitators:

  1. How do you help your clients achieve their succession planning goals?
  2. How will you address my key succession planning concerns?
  3. Do you specialize in succession planning? 
  4. Who is on your extended team and what are their qualifications?
  5. Why did you become a succession planning consultant?
  6. How do you get paid?
  7. How do you measure success?

Regarding “your interests,” each person involved in the process will have a personal interest in the outcome. That interest runs the gamut from money to inheritance, pride to career choices, and on and on. However, unrestrained self-interest is the beginning of the end. The only thing that does not have a voice at the table is the operation and it’s the operation that endows the family. The primary job of your facilitator is to become the voice of the operation, make sure everyone understands that it must be cared for and strengthened in order to continue providing for the family and those loyal employees who depend on it.

  • “What does a successful timeline look like in succession planning?”

There is no such thing as a typical timeline. It’s more important to make steady progress and work toward achievable objectives. The succession planning process includes four integral elements including:

  1. Financial Plan – Providing a financial roadmap for the owners and dependent family members.
  2. Ownership Transition – Combining financial, tax, and estate planning strategies to design the most effective transfer to the next generation.
  3. Leadership Structure – Structuring the business and preparing next generation family business leaders to manage the operation. 
  4. Estate Tax Plan – Planning to efficiently and effectively transition the estate and provide dependent support in case of premature death.
  • “What would you say are three key aspects to successful succession planning?”
  • Focus on common goals – Though every person will focus on ‘what’s in it for me,’ to win at succession planning the family must focus on common goals and making sure the business operation remains strong.
  • Learn to communicate – We all talk, but learning to communicate is first about listening to others. It’s about sharing ideas in a constructive manner, accepting no for an answer, and respecting the each other.  
  • Take action and make progress – Every meeting should end with a next meeting scheduled. Every action should have a person responsible for making it happen. Every person should be willing to shoulder some of the load.

STILL LOOKING FOR ANSWERS?

Recently, I received an inquiry from a magazine editor asking to interview me about my experiences in succession planning for farmers and agribusiness owners. As in similar instances, this editor explained that, ‘many of the agribusiness owners in the association don’t have a plan for succession, don’t know where to start, and don’t know who can help.’ In this case, he asked:  

  1. “What do you suggest to owners and involved family members who want to start planning for succession?”

I recommend they start with a conversation usually among owners and family members working in the operation about their goals. What I’ve learned is most owners want to:

  • Create a retirement option that allows them to continue working in the business while enjoying the lifestyle they’ve come to appreciate.
  • Control the land and other real estate assets as the foundation for their long-term financial security and then provide a smooth ownership transition to their lineal descendants. 
  • Design a plan to transition the ownership of the operation to family members in the next generation who are active and involved in the business.
  • Provide equitable benefits for all of their children and a meaningful legacy for their grandchildren. Some may also want to provide for special interests and/or charitable intentions.
  • Mitigate or completely eliminate their exposure to financial obligations and accompanying taxes when transitioning real properties in an estate plan.  
  • “Are there any emotional aspects you recommend the family settle before engaging in the planning process?”

No; the entire process is steeped in emotion. Planning for succession involves family, careers, money, heritage, lifestyle choices, status in the community, inheritance, opportunities, and obligations. Emotions are an important and unavoidable part of the process. Emotions are not rational; they sometimes make us do things we wouldn’t otherwise. However, emotions are necessary for a successful planning outcome. It’s those nurturing emotions that make us commit to this process and see it through to worthwhile outcome.

  • “Who should be on the team and how do you know if they’re looking out for your best interests?”

This is really a two part question. The first relates to the professional team that may be involved in the process and the second is about looking out for an individual’s ‘best interest.’ Both parts are important, so I’m going to answer them separately. As in regards to who should be on your team? You should have a professional who acts as your facilitator and guides the family through the succession planning process. Your facilitator will usually represent one of the professional disciplines that are integral to the process, i.e.: legal, accounting, finance, or business consulting.

The following questions may be used to interview potential facilitators:

  1. How do you help your clients achieve their succession planning goals?
  2. How will you address my key succession planning concerns?
  3. Do you specialize in succession planning? 
  4. Who is on your extended team and what are their qualifications?
  5. Why did you become a succession planning consultant?
  6. How do you get paid?
  7. How do you measure success?

Regarding “your interests,” each person involved in the process will have a personal interest in the outcome. That interest runs the gamut from money to inheritance, pride to career choices, and on and on. However, unrestrained self-interest is the beginning of the end. The only thing that does not have a voice at the table is the operation and it’s the operation that endows the family. The primary job of your facilitator is to become the voice of the operation, make sure everyone understands that it must be cared for and strengthened in order to continue providing for the family and those loyal employees who depend on it.

  • “What does a successful timeline look like in succession planning?”

There is no such thing as a typical timeline. It’s more important to make steady progress and work toward achievable objectives. The succession planning process includes four integral elements including:

  1. Financial Plan – Providing a financial roadmap for the owners and dependent family members.
  2. Ownership Transition – Combining financial, tax, and estate planning strategies to design the most effective transfer to the next generation.
  3. Leadership Structure – Structuring the business and preparing next generation family business leaders to manage the operation. 
  4. Estate Tax Plan – Planning to efficiently and effectively transition the estate and provide dependent support in case of premature death.
  • “What would you say are three key aspects to successful succession planning?”
  • Focus on common goals – Though every person will focus on ‘what’s in it for me,’ to win at succession planning the family must focus on common goals and making sure the business operation remains strong.
  • Learn to communicate – We all talk, but learning to communicate is first about listening to others. It’s about sharing ideas in a constructive manner, accepting no for an answer, and respecting the each other.  
  • Take action and make progress – Every meeting should end with a next meeting scheduled. Every action should have a person responsible for making it happen. Every person should be willing to shoulder some of the load.

Planning for succession is not a passive activity; success comes to those families who pitch in with a shared determination to create something bigger than self. 

Planning for succession is not a passive activity; success comes to those families who pitch in with a shared determination to create something bigger than self.