When it comes to the future of a family farming operation, there are two choices: Either the farm business will continue into the future, or it won’t. It’s a pretty clear-cut choice—if you decide that the business will wrap up when you retire, you probably have land, livestock and equipment to sell, loose ends to tie up—and then it’s time to move smoothly into retirement.
Let’s say you’ve taken the other route: you want your family farm business to continue in the future—beyond your involvement. It’s going to take quite a bit more energy and commitment to see that through. A more detailed succession and estate plan for how that will happen will be in order. But what happens to the operation in the meantime—before your legacy plan is set in motion?
Ask the right questions
Your legacy plan’s purpose is to address how your farm will transfer once you retire. But to make sure your business keeps moving full steam ahead when it’s time for the next generation to take over, take a step back first—for a broader view.
Depending on how close you are to retiring, you may still have a number of years to operate your farm business. Ask yourself these key questions:
- What will happen in the business from now until I intend to retire?
- Will the operation continue to move forward in growth mode, even when I’m less involved or not involved?
- Do I have a plan for the overall direction of my farm business?
Make a plan
Farming operations face business threats every day. Outside influences can impact farm businesses, especially in today’s operating environment. Being ready and well-prepared for those influences is one option, says Water Street Solutions Account Manager Lance Burditt. Take time to understand the threats to your business and set up a plan for how you’ll address them. That way, you ensure that your family farm business will flourish into the future—all the way through the transition to the next generation of farm leaders, Burditt says.
Creating a strategic plan for the farm helps farm operators look at the future in a proactive way, dealing with topics like: What will our farming operation be like in the future? Why do we want it to go in that direction? How are we going to achieve our vision for our farm business?
Sync it up
The strategic business plan for the farm must first be in place—and it needs to complement the farm’s legacy plan. When the two plans are in sync, says Burditt, each helps ensure the success of the other—creating more momentum for the business. The farm’s financial goals and benchmarks work best when the farm’s strategic plan contains goals that lead the operation toward the longer-term plan—the legacy plan.
Involve the next generation
Getting the next generation involved in the creation of the farm’s overall strategic business plan can be a good idea, says Burditt, especially when the farm’s future leaders are already involved in the operation.
Understanding why the farm is moving in a particular strategic direction helps the younger generation see what the operation is driving toward, and their part in helping the farm get there. Doing this ultimately leads to greater success for the business and can help when it’s time for the farm to transition to the next generation. That way, the next leaders are already moving toward the strategic goals and objectives in the plan.