Between emotional factors, unspoken expectations, and ineffective communication, a family business can be exceptionally difficult to navigate. A lack of succession planning can destroy a family business and cost Farm Credit a client. In this episode of The Forward Thinking podcast, host Stephanie Barton, VP of Marketing and Communications at FCCS welcomes Wesley Tucker, Farm and Ranch Transition Specialist with the University of Missouri Extension for a conversation about the messy world of family business succession planning. They discuss challenges that are unique to family business, strategies for navigating family and business roles, and actionable tactics that result in successful succession planning.
Episode Insights Include:
Why is succession planning necessary in family businesses?
Too many people are afraid to broach farm succession and its necessary conversations.
A family business may be the most difficult type of business to run.
An overlap of family and business can cause areas of friction that must be addressed.
A separation between family and business relations is essential to effective succession planning.
Estate planning versus succession planning
Estate planning is what happens with all of your stuff after you die.
Succession planning is the continuation of the business after you die.
Estate planning is an event while succession planning is a process.
Generally, succession planning should have started yesterday.
Consider the difference between a road map and a treasure map.
First steps in succession planning
Communication is the first step to getting started.
Consider the plans for the future, no matter how difficult it may seem.
Whatever you do, do something. Don't assume your kids are going to work it out on their own.
Employ a professional team that can advise you.
Family meetings and interviews can help you determine the future of the farm.
Explain the whys behind your decisions rather than leaving it as a surprise after the funeral.
Consider the potential future of family relationships as they will change after your death.
Strategies for effective family meetings
Consider three types of family meetings- farm operation, farm business, and family council meetings.
Business meetings need to happen regularly and before there is a crisis or major decision to be made.
Delegate topics for each member to be in charge of, including compensation, vacation, and scheduling.
Spend more time working on the business and less time working in the business.
Don't expect family council meetings to be fun, but know they will be effective.
These meetings will help to protect family relationships long-term.
Navigating fair and equal heir scenarios
Farm succession is different than other businesses.
Cash flow and wealth accumulation both impact succession planning.
Fair market value buyouts are not going to happen the day after the funeral.
Estate planning and succession planning have to work together.
Timelines for effective transitions
Five phases outline the stages of bringing family members into family farm ownership.
In phases 1 and 2, ownership of the family farm needs to be earned or bought.
Management is available to family members in phases 3 and 4.
Phase 5 transfers the majority of ownership to the next generation.
Transitioning roles for the older generation does not mean total withdrawal from the business.
Generational and gender roles play into successful transitions.
This podcast is powered by FCCS.
Learn more about the FCCS Ag Lending Conference- https://www.fccsconsulting.com/conferences/forum
Connect with Wesley Tucker - Wesley Tucker
