Chris Stelzer, author of the book "Mob Grazing: 21st Century Grazing Management" and owner of Agricultural Insights reached out to me to spend some time talking about strategic planning, financial management and succession planning for America's farmers and ranchers. Listen to the Financial Planning with Jim Casler discussion with Chris Stelzer. It will be available for two weeks, thereafter it will only be offered to Chris's lifetime members. Visit Chris's website to learn more about today's best grazing management practices and a copy of Chris' free Mob Grazing e-book Thanks Chris. I really enjoyed it and hope your listeners find value in some of the things we discussed. |
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...and Creating an Action Plan
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Once your farm ownership and management team have worked through a process of identifying their individual goals for the business, it is time to bring them all together into your overall business and succession plan for your farm business. If you don’t already have them, this is the PERFECT time to begin conducting strategic business and family meetings.
The meetings don’t have to be anything too formal, but they should include the current and future core management teams of your farm business. Everyone could take time to share their individual goals. It may be surprising to some people how many goals they have in common. Sometimes, it is helpful to have a neutral third party help conduct the first few sessions to help break the ice and create a less intimidating environment for younger or less experienced family or business members.
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REVIEW: The last several posts have included information on developing and sharing long-term and short goals and how generational differences in goals and family, especially in-laws, can have an impact on your business. For a review or primer, check them out. |
A logical next step is to identify those goals that are in common and those that are significantly different. Some key questions could then be asked:
For Common Goals: |
"A goal without a plan is just a wish." |
- Are they all in the same time frame? (Is one person’s short-term goal another person’s long-term goal?)
- Do all members have the same priority for the common goals? How would each person rank them?
- Who will be the key person or persons involved in deciding upon and/or implementing each of the common goals?
For Unique Goals or those that are not the subject of common agreement among the family:
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A good analogy to use when thinking of goals and the planning process is that of planning a long driving trip. When planning a trip, most folks use a map to plan their route.
By connecting these points (or goals) together, the planner can arrive safely and effectively at the final destination, while accomplishing the desired outcomes for the trip along the way. Just as when planning a road trip you must plan out your trip by connecting a series of points on a map, a farm succession plan must use a route of key decisions and actions to be successful.
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“You can't plow a field simply by turning it over in your mind.” |
"Vision? Who has time for vision? I'm busy running a business!"
When you or someone in your business begins the process of planning for the future of their family business, it is important to thoughtfully consider the goals for the plan and the business as a whole.
Well hold on cowboy! This approach usually leads to an incomplete plan, or a plan that fails to recognize the needs and desires of ALL key members of the business. A more formalized process of setting and prioritizing goals for the farm succession plan can help ensure that the resulting plan best fits the unique needs of the business-owning family.
Vision, Mission and Goals are a big part of the ongoing succession planning process. They provide direction in developing a plan. The process of establishing both family and business vision, mission and setting goals can help owners, managers and family members understand their priorities better. A well-developed set of vision, mission and goals becomes the basis for many decisions that are made in a business or farm succession plan.
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Reduce your plan to writing. The moment you complete this, you will have definitely given concrete form to the intangible desire. |
- It’s hard work,
- Requires you to dedicate a solid 2-3 hours to the process,
- Is possibly something you may have never done before and,
- Is usually worth the effort.
Personal Financial Requirements
“What is the feasibility of achieving the financial goals of all family members?” |
In farm succession plans involving family members already working in the business, the succeeding owner’s equity interest in the farm business can be increased by profits earned over time, by gifts of assets from the current owners, or one of the many various combinations thereof. Business AND personal finances and the ability to achieve personal financial goals must be addressed and contemplated if you plan to successfully pass down the family farm business.
A plan that follows the “Things will all work out” methodology is usually fraught with future challenges. Imagine that! The size of family farms today and the amount of money involved deserves a little more consideration. Don’t you think? |
Time Horizon
The current owner usually continues to be involved in the business and can assist in meeting the challenges that all businesses confront from time to time. The succeeding owner then uses this time to continue to learn management decision making skills while a mentor remains for guidance and wisdom, but not necessarily for making the decisions.
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“This isn’t a one and done kind of scenario. Experience demonstrates that the best farm transitions involve a specific plan and allow time for everyone to methodically transition their roles within and outside the business.” |
Allow Room for Changes
Although any plan anticipates a successful outcome, it is not unrealistic to think that your family farm succession plan may need to be revisited from time to time. Therefore, your plan should include an opportunity for everyone to make mutually agreeable changes if certain things happen. It needs to be flexible. For example, what if the succeeding owner dies or becomes disabled or some other event occurs that affects the business’ ability to fulfill the promises made in the agreement.
Does your current transition plan have flexibility to adapt to unforeseen changes in circumstances? |
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