A family farm is much more than land and crops. It is the history, heritage and future of a family.
Sadly, one of the biggest (and most common) mistakes a family farm can make is failing to make an adequate transition plan for the next generation, or the next CEO. Passing on the family farm to the next generation ensures the legacy lives on. Creating a plan for the future long before its necessary will help ensure a successful transition. Essentially, a family farm needs to be run just like a corporation with strategic direction and policy. Even if a child or family member plans to take over, business still needs to come first, which means planning and successful communication.
It can be difficult for the owner of or CEO of a farm to let go of their role, and often will stick around long past retirement age, or be resistant to transition. If the farm has a board of advisors in their management plan, transitioning the outgoing leader into a Board Chairman capacity has numerous benefits. Not only does it create a meaningful role within the farm aside from retirement, it allows the new leadership to benefit from the wisdom of the last leader.
It is absolutely critical for farmers to find a financial planner who understands and specializes in farm management. There are many moving parts financially when it comes to even a small family farm. Naming the heir or successor isn't enough to ensure a farm's legacy stays intact. In order to transition successfully there should be a plan for owned or leased land, equipment, labor, and inventory such as livestock. All these little parts make it crucial to begin planning as early as possible to ensure future success in the transition.
Please don’t hesitate reaching out to me with questions about creating a strategic succession plan for your family. Together, we can create a solid plan for the next generation.