Transitioning a family farm can take many different routes as the family winds its way toward their goal. The best journeys start with excitement, anticipation, and collective optimism. No matter how your family farm transition journey begins, you should take stock to ensure your family has these four essential ingredients for a successful changeover.
1. Willingness to engage in planning
A successful transition journey begins with a plan. Your family needs to communicate and collaborate to agree on the destination and route. The first step is a full understanding of your current situation from the perspectives of those who will be involved. Next, your family should align around a vision for the future. Finally, develop and agree on a set of actions that the family will undertake to reach the destination. A good transition plan answers three questions: Now? Where? How?
2. Commitment to learning from all generations
Family business is complicated. The interdependence of the business, the family, and the wealth creates challenges other businesses don’t encounter. The more knowledgeable your family, the better your chance of successfully navigating the difficult conversations and decisions. Take the time to learn about the three systems of a family business, and consider the special dynamics of your family. Practice effective leadership, and strong business management, and become a knowledgeable shareholder. Most importantly, learn to communicate effectively, as an individual and together as a group.
3. Patience and discipline
A family farm transition should follow the agreed upon plan. Each action is necessary to prepare the family, the farm, and the ownership for change. Everyone involved needs to hold themselves accountable to the plan and its intended results. For an entrepreneur, patience can be the most difficult ingredient. Find someone in your family who can be the driver, the one that keeps everyone on track.
4. Trusted advisors
Transitioning a family farm to the next generation is not a do-it-yourself project and you will need help. A Transition team can support your journey from planning to execution. A strong facilitator is key, someone who can accompany you the whole way. They will bring structure to the journey and ensure your family is talking about the right things at the right time.
Build your Transition team around a Family Enterprise Advisor that practices family business transition planning. Add professional expertise as the plan requires. You will likely need a valuation, tax planning, corporate structure, legal agreements, and an estate plan. Depending on your circumstances, your Transition team may also assist with conflict management, setting a direction for the farm business, preparing for a change in leadership, managing personal finances and building a process for making good decisions. Your advisor will coordinate your Transition team and ensure they are all acting in concert with the plan.
Reach out to BDO
Studies show the odds of a successful family farm transition are low. To beat the odds, your transition journey should include these four essential ingredients. Our BDO team of skilled professionals are available to assist business families at each stage of the transition journey.