Where Are We with
Our Management Succession?

It seems logical to assume that, where the manager and management in general of any family business is critical to its success, the success of that family business into the future depends almost entirely on the ability of the family to transfer management responsibilities to the next generation. However, it is said that only 1/3 of all family businesses successfully transition to the next generation.

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What is the Most Important
Component in Creating your Ag Legacy?

There are many obstacles that prevent families from discussing and planning for transition of the family farm or ranch to the next generation. To name just a few: not knowing where to start, who wants to take over and how, or just a lack of time to sit down and talk. Emotional ties are often an intrinsic aspect of ownership, as well as the founding generation’s identity.

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How Do You Plan For The Cost of Succession?
Most people look forward to retirement with anticipation, often imagining it as the end of their working life. In many cases, the retiree does not plan to worry much about financial planning and investing after retirement. A recent Forbes article describes the reality as far different. “Forty percent of baby boomers expect to work until they die, according to data from AARP.” In order to retire financially secure, you must have a plan. But what should it include and how do you put it together? Are their other details we should be worrying about; which ones?

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When Do You Transfer Management Skills for the Operation?
The right time depends on numerous factors, including who will take over, what skills they have to qualify them, how long the founding generation wants to be involved, whether the operation needs to expand to support more family members, as well as the strategy for passing on these skills and how the family envisions the next generation taking over. Planning early and not only identifying who will take over, but also how that process will unfold is important to the long-term success of the operation. It takes more than just telling the next generation when and how to do things, but also getting into why things are done the way they are.

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Why Don’t Family Businesses Plan for Succession?
Nearly everyone will recognize the importance of a succession plan for successfully transferring a business to the next generation. Doing no planning or choosing to avoid the issues involved almost always leads to disastrous results. However, less than 40 percent of agricultural businesses have a succession plan. What’s the hold up?
   Logic would suggest that developing a succession plan would be an obvious step toward transferring management and business ownership. However, complex forces are at work and, despite recognizing the importance of a plan, most farm owners and managers decide to do nothing about succession.

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Why Grow Relationships with the Next Generation?
There are many challenges to managing the relationships between generations in any family. But consider that the farm or ranch family is unique as a business entity. Often agricultural families are more involved and work more closely than other family business arrangements. One of the most important ways to address these challenges is to establish a culture of open communication, one where everyone feels free to express themselves as appropriate. Where family members are involved from multiple generations, each needs the opportunity to share their thoughts and perspectives on the operation. They also want to feel that they are heard and that their opinions matter.

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What is Your Management Succession Plan?
Farmers and ranchers looking to one day retire know that estate or succession planning includes consideration of taxes, wills, probate, powers of attorney and so forth. They also realize that putting a solid estate plan together likely involves an attorney, an accountant, and perhaps a tax professional. While these details are important in the process of passing on legal ownership of the land and other assets, they do not address the passing on of day-to-day management of the operation. Nor does the approach cover preparing the next generation to take over when the time comes.

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How are you Communicating with the Next Generation?
Lack of effective communication among family members is the root cause of most family business failures. Effective communication between parents and their adult children is essential to a mutually satisfying transfer of a legacy from one generation to the next.

A legacy is the summation of a lifetime of achievement, the context in which that lifetime will be remembered, including: reputation, accomplishments, and a persons’ impact on the world. Good communication skills are essential to establishing the mechanisms for transferring that legacy to the next generation. Furthermore, good communication skills can be learned. Communication between people include both verbal and nonverbal aspects. Facial expression, posture, orientation and voice tone all add richness to the message being sent . . .
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