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The U.S. Department of Agriculture’s National Agricultural Statistics Service (NASS) reports that family-owned farms remain the backbone of the agriculture industry. 97 percent of the 2.1 million farms in the United States are family-owned operations.1 Family owned businesses are central to the U.S. economy: 90% of U.S. businesses are family owned, and they contribute 64% of the U.S. gross domestic product, and 78% of new jobs created.1
Yet only 30% of these businesses survive into the second generation, and only 12% will still be around by the third.2
One obvious reason is family conflict. But a second reason is perhaps even more influential: failure to design a proper succession plan.Farm owners are typically so busy with day-to-day challenges that they often have little time to think about who will take over the business once they’re gone. But the consequences of having no plan in place could be catastrophic to the family, workers and others who depend upon the farm. For instance:
What a succession plan can do for you.
At its most basic, a succession plan is a documented road map for your business associates, future heirs, and successors to follow in the event of your death, disability or retirement. It can also be used to orchestrate the sale of your business interest and may even help establish the value of your business interest. It may also help:
1 “Debunking Myths About Mom and Pop Shops,” Small Business Trends, https://smallbiztrends.com/2017/03/family-business-statistics.html, March 29, 2017.2 “Planning Is Key When Passing the Family Business onto a New Generation,” The Denver Post,https://www.denverpost.com/2017/04/16/ family-business-new-generation-planning/, April 16, 2017.