Business Succession- Create a Plan Before You Need One

This article by Christine Gelley was originally published by The Noble Journal Leader on October 29, 2018.

Bernie Erven, Ohio State Professor Emeritus, has consistently promoted the idea that “successful farm succession starts at the birth of the next generation.”

Assuming he is right, that means a great number of farm owners and business operators are behind on starting their business succession plans.

Beth and her flock.

“Successful farm succession starts at the birth of the next generation.”

The whole point of creating a business succession plan is to work through many of the common issues associated with transitioning business leadership before the change happens. Whether the change is forthcoming or an abrupt surprise, having a plan in place prior to needing one reduces both financial and emotional stress on family and business relationships.

The landscape of farm owner and operators will change dramatically over the next twenty years and the business sector needs to get prepared for what is to come. The USDA Census of Agriculture has been tracking the age of farm managers for decades. Data continues to show the average age increasing from one census to the next. The 2012 data showed that the average farmer in the United States of America was 57 years old (Marrison, 2017). Data from 2017 will be released soon.

Kansas State University hosted a Ranching Summit recently that included a segment on changes to anticipate over the next two decades. Guest speaker, Tom Fields of the University of Nebraska, communicated the magnitude of the shift we will soon see with America’s farm and ranch land. He stated that within the next 20 years, 60 percent of America’s farm and ranch land is going to transfer to a new generation, which would be the biggest real estate exchange since the Louisiana Purchase (Veselka, 2018).

Are farmers prepared for this shift? Are you prepared for a leadership shift in your business?

There are steps to follow to help you prepare. They include estate and ownership transition planning, a SWOT analysis, family conversations, asset transfers, staff training, retirement planning, contingency plans, and establishing implementation timetables.

The process of creating a business succession plan can feel uncomfortable, but in the end, it should help create a smooth transition when a business leadership change occurs.

To learn more about business succession planning, consult OSU Extension Fact Sheet ANR-47 “Planning for the Successful Transition of Your Agricultural Business” by David Marrison. It is available online at https://ohioline.osu.edu/factsheet/anr-47 or from your local Extension Office. David Marrison currently serves as the Extension Educator for Agriculture and Natural Resources in Coshocton County and is a nationally recognized teacher in the field of Farm Business Management.

Another opportunity to learn more is to attend an in-person workshop taught by David Marrison over breakfast at 8:30 a.m. on Friday, November 16. This free program will take place at the Noble County Extension Office (46049 Marietta Rd. Caldwell) and conclude at 10 a.m. The program is open to business owners of all kinds.

Please RSVP for the program by calling 740-732-5681 or emailing Community Development Educator, Gwynn Stewart, at stewart.1818@osu.edu before November 12.

Citations

Marrison, David L. “Planning for the Successful Transition of Your Agricultural Business.” Ohioline, The Ohio State University, 8 Feb. 2017, ohioline.osu.edu/factsheet/anr-47.

Milligan, Bob. “Ranch Transfer Is More than a Generational Transfer.” Progressive Cattleman, Nov. 2018, pp. 19–20.

Veselka, Carrie. “K-State Ranching Summit: Embracing Disruptive Technology.” Progressive Cattleman, Nov. 2018, pp. 16–18.

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