Today's Harvest
separator
Where Agriculture Means Business

Farm transition planning 101: Starting the conversation

Remember back in high school when you were “interested” in someone and you had the feeling that they were also interested in you? Should you make the first move or should you wait for them to do so? It was likely both an exciting and nerve-wracking experience.

Starting a conversation about farm transition planning is in many ways comparable.

Should the younger generation speak up first to voice their interest in the future of the business?  Is it too forward to assume the senior generation would consider them part of the farm’s future? Is the younger generation’s position “weakened” due to simply asking first? Does this give the senior generation leverage?

Same goes for the senior generation. If they ask the younger generation of their interest in being part of the operation’s future, can the younger generation now dictate terms? Will they then have to “give up” their part in the business sooner or end up with a partner(s)/successor(s) they don’t really want?

In my 35 years working with hundreds of farmers and farm businesses, the worst option is for both generations to want to ask the questions but be unwilling or unable to do so. As a result, what typically happens is the senior generation has a health scare and wants out immediately or the junior generation gets tired of waiting and gives an ultimatum.

So, what’s the ideal situation?

I advise the senior generation to start the conversation about farm transition well before they are ready to actually do so. This makes the conversation much less stressful because it focuses on “someday” not “tomorrow.” It also does not force the senior generation to make a quick decision on their successor, but does give them time to screen and monitor potential candidates. If they do find a potential candidate, they can devote time to mentor them on leadership and business skills.

For the younger generation, they don’t have to wonder whether there is a future for them in the business. In some cases, they may find out that the senior generation has no interest in transitioning the business, as they have decided to sell it for non-ag purposes, close it down or some other plan that does not give the next generation an opportunity to take over. However, if a transition is an option, the next generation will have more time to 1) prove that they are the right choice, 2) build up their financial position and 3) improve their leadership skills.

Starting this conversation should be done respectfully with an appreciation of the benefits that it could bring to both generations of the transition. Plan ahead to hold the meeting away from the farm and make sure enough time is allocated to the conversation so that neither generation feels rushed.

Start the conversation with a thank you (i.e. thank you for our great working relationship). This recognition will go a long way in making the other conversation participant more comfortable and more likely to actively participate.

Farm Credit East business consultants are available to help get these conversations started and to assist throughout the transition process. Contact us today to discuss your unique situation.

Older Grants, Incentives and Cost-Shares for Northeast Producers Newer Structural Changes in Northeast Agriculture