Will Your Farm Business Beat the Odds?
Article By: Michael Wildeck, Ruder Ware
Sustaining a farm business over generations is something to be celebrated, but at the same time can be an enormous challenge. Studies have shown that 78% of families intend to pass their business to their children, and yet only 34% have created a formal succession plan. Even fewer have an up-to-date plan.
Unfortunately for many farm owners, a successful transition of business ownership to the next generation may be more of a dream than a reality. The consequence of failing to plan can be severe. For example: potential farm heirs may leave the farm because they do not see a path to own and control the business; farm heirs may not have the necessary management skills or be unprepared to manage when they have not increased those responsibilities over time, and farm heirs may find that they are unable to buy out non-farm heirs.
Having retired from UW-Extension as an agricultural agent, I had the opportunity to be involved in succession planning for a variety of farm operations. After gaining a better understanding of each farm's financial condition and business profitability, one of the most frequent barriers to moving ahead were family issues. Facilitating communication and discussion on those issues was often difficult and certainly took additional time, but when successful, the results were profound. To see the current size and complexity of some of these farms today, and to know my contribution to that team effort, has been very satisfying. I can only imagine the pride that the farm owners and family members must feel.
I am sometimes asked, "How do we get started in getting a farm succession plan?" My short reply is "Congratulations, you just completed Step 1." I genuinely enjoy talking with farmers about planning for the future. That may include some highlights of the farm operation and family members involved/not involved in the operation. We may also have some discussion about anticipated legal needs, but I have come to appreciate that in most instances it helps to get the attorney involved early in the process. They are like your "coach" through the process. When they have done this dozens of times before, they become exceptionally good at doing this complex work efficiently and effectively.
The main thing is to be proactive and get it done. Be part of the 34% of family businesses that have created a formal succession plan. It is too important to put off.
Michael Wildeck, agriculture consultant, is co-leader of the Agriculture Focus Team at Ruder Ware, LLSC. He is also an emeritus professor, UW-Extension. Ruder Ware, LLSC has locations in Wausau, Eau Claire, and Green Bay.