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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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The old phrase “Blood is thicker than water” usually plays a role in a family business – and I bet yours is no different. A tendency exists to sometimes pay closer attention to the needs and wants of direct family members versus those that are unrelated or related only through marriage (i.e. in-laws) when it comes to thinking about succession planning. BIG MISTAKE!
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"Cast a bigger net and engage the in-laws EARLY in the process.
It will pay mucho dividends”.
For example, a family member not involved in the business may have the goal of owning land outright if and when the time comes to inherit the land as opposed to keeping in the business for productive use. Let’s assume that they do not want to guarantee that the farm will have continued access to that land. Their goals could be harmful to the overall success of your succession plan, especially if one of the central goals is to keep the farm business viable in the future which may require access to this land.
On the flip-side, an off-farm sibling might have no desire to own a piece of the farm and only wants to have certain family heirlooms as part of any inheritance as a memory of their upbringing. If they’re not involved in the discussion at some level, the long-term plans of the business and the goals of the succession plan might assume otherwise – to a great disappointment to the off-farm sibling.
So -- it is very important to involve these individuals in the discussions, but certainly without any guarantees that their every wish be fulfilled. Good luck!
As people age, their attitudes about several issues related to the family business tend to change, both due to their own unique set of life experiences, and their outlook on the future. Family members of different generations often have different views about issues such as debt, new ventures and opportunities for business expansion.
These differences can be sources of disagreements and even conflicts. When evaluating the goals for your family business, it is important to recognize that there may be some distinctly different goals along generational lines that need to be revealed, explored and discussed.
"Parents often talk about the younger generation
as if they didn't have anything to do with it. "
- Haim Ginott
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.
Families that rely on the business for financial support or employment are concerned about its future - obviously.
Succession planning examines this specific situation and concerns itself with planning and action-items that are done “before” the transfer actually takes place. In this way, it is more effective, efficient and less stressful than it often would be otherwise without proper planning. |
Sure some families are perfect and could handle an unexpected or even an expected, generational transfer of the family business…but c’mon, really? It is the rare bird indeed that could make this migration without losing any feathers.
Sometimes it is a fairly easy to unwittingly make decisions without fully recognizing that some heirs have sacrificed and contributed mightily to the financial success of the business. Your plans should be certain to not overlook this sometimes major item when making plans for a generational transfer of your business. Treating all of your children or heirs equitably, rather than equally, can be a difficult decision, and frankly, hard to discern.
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"Discipline weighs ounces while regret weighs tons."
Poor planning can also create undue conflict, prolonged legal battles and division of business assets to satisfy those that simply want to “cash in” ….or for the tax man. There is a lot to think about. Succession planning is not a one-time transaction, but rather a process that can take years to develop successfully.
I am sure some of this stuff keeps you awake at night. These situations happen all the time and have happened for centuries. Although farmers never plan on fully retiring, let alone passing away, odds are good that someday you may not be around.
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