5 Keys to Prepare Your Farm Business for Transition
1. Communicate
Begin discussing the future of your farm business now. Get everyone’s goals, objectives, concerns and questions on the table for consideration. Assuming what people are thinking and feeling about the business often leads to misunderstanding and will be detrimental to the whole process.
2. Evaluate
Complete a business evaluation from a financial and production perspective. This evaluation will help identify potential problems in these areas. It is critical to know if the business is earning profits, growing net worth and has the capacity to support another generation of owners and managers.
3. Build a Team
Identify trusted advisors who can provide important advice during the business transition process. Depending on the transition’s level of complexity, several advisors will be helpful to you in identifying and clearing the hurdles you may encounter. These advisors include an attorney, lender, accountant, consultant, financial planner and others who can provide valuable counsel.
It is very difficult for a family or business member to act as the facilitator of the transition team because he/she is busy running the business. Selecting a team leader or facilitator to direct the team is an important consideration.
4. Invest
Expect the process to be an important investment of resources, securing the farm business’s future that you spent a lifetime building. The transition process can take anywhere from six to 18 months to complete. During this time, expect to spend several hours in meetings with advisors, more or less depending on the complexity of your transition.
In addition, there will be some level of financial investment for the services advisors provide. It may take several thousand dollars to complete the transition process. There are financial resources available in some industries to help farm families complete a transition plan. Your advisors may be able to identify and acquire these grants.
5. Get Started
Begin the process by developing a timeline of when you want to complete your initial transition plan. Keep in mind it will take several months. There will be many tasks to complete by the business owners as well as the advisors. Plan meetings when the business is less busy with day-to-day operations. Appoint a team leader to keep the process moving.
Putting these ideas into practice will get you started on the right foot with your farm business transition process, and ensure a properly completed and implemented transition.