On the farm, making the transition from one generation to the next can be pretty stressful. There’s a lot of work that has to happen before the next generation can take over the farm 100%. Some people think that if your parents own a farm, then you just automatically get it once you’re older….it’s not that simple. There are actually a lot of legal issues to take care of before anything happens.
If you don’t have everything in order, then things can go wrong rapidly. A family business consultant, Amy Wirtz said that only about 30% of family businesses transfer from the second generation to the third successfully. She also said that the statistic drops to under 13% after the third generation.
According to accounting and legal experts, there are three very important guidelines to keep in mind while making the transition. You need to communicate, articulate goals, and revisit the plan.
Communication: You need to be very transparent when it comes to any issues on the farm and make sure to keep open lines of communication from generation to generation. The key is to make this process as smooth as possible.
Articulate Goals: Remember that it’s not just about the goals of the people currently on the farm, it’s also about the future goals of the next generation. Keep an open mind.
Revisit the Plan: Don’t just let the succession plan sit on the top shelf of the closet because then it’ll never change. Keep updating it as things evolve on the farm. You need to make sure that everything is accounted for. Bottom line, it’s not a bad idea to at least take a look at it once a year so you don’t fall behind.
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