The agribusiness industry has long been the backbone of the American economy. Farmers face a wide variety of unknowns and new challenges each season. Achieving long-term success in this field requires hard work, careful planning and good financial guidance.
One area that requires special focus for agribusiness owners is that of succession planning. In order to achieve financial success throughout the entire life cycle of your farm, it is imperative that you create a clear and thorough plan for passing your business from one owner to the next.
When is the correct time to start preparing your organization for succession? As soon as possible. Here are some tips to get you on the road to a successful farm succession:
Thorough succession planning starts with taking stock of your organization.
Examine your business closely to develop a clear picture of all assets, liabilities, key players, goals and obstacles. Understand who you believe your potential future successor or successors are and speak with them to gauge their interest in taking charge of the farm. Develop a clear idea of what you envision for the future of your farm — from there, you can create a plan for pursuing this goal.
People matter and so do their opinions and feelings.
Clear communication will help to make the succession process as smooth as possible and aid you in avoiding the creation of conflict. Make sure to keep everyone who should be involved in the loop.
If you run a family farm, that means keeping your family members involved, including off-farm heirs. If you work with business partners or investors, they should also be kept involved throughout the succession process.
Train Your Successor
Ideally, your successor will be involved in the succession planning process. If this is the case, work closely with your chosen successor to prepare them to step into their new role. Involve him or her in your decision-making process as you run your operation.
Work to develop their management skills and skills in any other areas that would be helpful. The more you can involve your successor prior to the ownership transfer, the smoother the process will be overall.
Keep Estate Planning In Mind
Estate planning is an important consideration to keep front-of-mind throughout the entire succession process. While it is — and should be — kept separate from succession planning, the two are closely related and oftentimes impact one another.
Plan for Ownership Transfer
Ownership transfer is a complex process. You will need to develop and formalize a detailed plan that includes how and when the succession and transfer of estate will occur. This also includes developing an understanding of the laws that will impact your farm succession.
You should seriously consider working with experts to guide you in making sure all of your bases are covered and to ensure that the process goes smoothly.
Farm succession is no small task. That is why starting early, communicating clearly and drawing on the guidance of experts are such key steps in attaining a smooth and successful transition.