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Cultivating Multigenerational Success in the Agricultural Community
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Blog
The Right to Rise
A recent Wall Street Journal editorial written by Jeb Bush and titled ‘Capitalism and the Right to Rise’ expounds on the core concept of economic freedom, “the right to rise.” The column goes on to explain that the right to rise doesn't need a “libertarian utopia to exist. Rather, it requires fewer, simpler and more outcome-oriented rules.” The author opines that “government’s role is not to shape the marketplace but to help prepar...
Helping Farm Families Take Action
Keeping the land in farming, ensuring a reliable food source and continuing America’s agricultural leadership depends on how we address this ‘farming crisis.’ We must devise ways to transition the farm to well-prepared next generations as a going concern. Though I applaud Missouri’s efforts, and agree with the intent, succession of the farm from one generation to the next will be based on the actions of our family farmers. The decisions you make and the actions you...
It Should be Obvious, But It Isn't
Recently, I was reviewing “Agriculture’s Strategic Role in Feeding and Fueling a Growing World,” a 2008 report from the Farm Foundation. It states, “Public understanding of agriculture has changed significantly over the last half century. The segment of the population engaged in agriculture has dwindled so that farm households now represent only a small share of all households in the United States. At the same time, many consumers are increasingly concerned about how...
Maximizing the Opportunities
From Legacy Moment eNewsletter (02/11/2011) Please join us for future issues, delivered via email each Friday Farmers in America and around the world will increasingly be challenged by six trends that will affect farm production and our ability to satisfy a growing demand. "Agriculture’s Strategic Role in Feeding and Fueling a Growing World" (from Farm Foundation) outlines the challenges that we must address at a global level: ...
Weathering the Onslaught
Farming is the quintessential family business. Family farms are the backbone of America’s sovereignty. We lead the world in food production. In the 2010 edition of “America’s Diverse Family Farms,” the USDA tells us that "Ninety-eight percent of farms [in the U.S.] are family farms, and they account for 82 percent of [all] farm production." Watch Leave a Legacy TV Ye...
Planning Secret #3: Overcome Obstacles
The third secret to planning success is: Overcome Common Obstacles At some point in the succession planning process, each family will have to face and then devise solutions to five common challenges: Watch Leave a Legacy TV Equal versus fair Active versus inactive In-laws Financial insecurity The unknown A succession plan mu...
Writing an Employment Policy
An employment policy should clearly define the rules of engagement for a family member who may be interested in working in the family organization. The employment policy should be clear and concise. It should spell out, in specific terms, the conditions in which a person may seek an employment opportunity. All too often, parents are held to unrealistic expectations when it comes to employing family members in a farming operation. We all know that communication is the key to success when deal...
The Future of the Dairy Industry
From Legacy Moment eNewsletter (10/29/2010) Please join us for future issues, delivered via email each Friday I recently asked Jim Ostrom, a partner in several large Wisconsin dairies, to share his view of the future. His response was candid, but not startling. Jim said, “I believe the dairy industry is going the way of other livestock industries. The feeder cattle industry, the hog industry, the poultry industry have all consolidated. The largest 25 producers in all those indust...
Common Issues Regarding the Equal Versus Fair Conundrum
From Legacy Moment eNews (July 02, 2010) Please join us for future issues, delivered via email each Friday Though each family’s succession situation is unique, there are a number of factors most owners should consider as they weigh the equal versus fair question: Watch Leave a Legacy TV Does the owner want the active children ...
A Case of Unequal Transfer to Active and Inactive Children
From Legacy Moment eNews (June 25, 2010) Please join us for future issues, delivered via email each Friday. John S. owns 100% of a C corporation that operates a very successful farming operation. John is a widower with four children. His oldest son, Jason, is a full-time employee of the operation. His other three children, Jane, Ken, and Julie, work outside the operation and are not involved in the business. John would like Jason to receive his full ...
Why You Need a Buy/Sell Agreement
From Legacy Moment eNewsletter (February 19, 2010) Please join us for future issues, delivered via email each Friday. The buy/sell agreement is one of the most important tools for maintaining the integrity of a business entity. A properly written and executed buy/sell agreement will: Prevent inactive owners from gaining an ownership interest Ensure ownership continuity in case of death, disabilty, disso...
Overcoming Obstacles
He’s one of my favorite authors. Whenever a challenge seems insurmountable, I refer to James Allen’s As a Man Thinketh. This little book is both instructional and inspirational. It is motivating and reassuring. It is founded in principle and full of advice. As I sat down to write this entry, I flipped to a highlighted section and started reading, “Even if he fails again and again to accomplish his p...
A Light at the End of the Tunnel?
For the agribusiness owner, retirement should be a light at the end of the tunnel. For some it’s a sense of freedom and reward. But, for others it’s an oncoming locomotive at full speed. Regardless, any business – be it a farm, agribusiness and large operation – is only as valuable as the return (monetary, and beyond) a person is able to derive from ownership. It’s not uncommon for an owner, after 40-s...
No Plan for Contingencies
The final installment of the twelve most common mistakes agribusiness owners repeat: The potential devastation from an untimely death, unforeseen disability, unfunded long term care stay or uninsured health insurance claim, is not worth the risk. This threat can be financially devastating to even the most financially sound proprietor. Planning for sudden and devastating contingencies is critical to business financial health, employee peace of mind and your family’s fi...
Allowing Emotion to Dictate Business Decisions
The fourth of twelve most common mistakes that agribusiness owners repeat: They enthusiastically participated in the succession planning consultation. For this middle-aged couple it was a first visit. We discussed their succession intentions and talked about the family legacy. We talked about the future and their two children. Sarah, now 27, had attended a very reputable Ag school, graduated with honors and was almost to her fifth anniversary working full-time i...
Succession Planning - the Basics...
Planning Ahead for your Farm Transfer from the Pennsylvania Center for Farm Transitions provides a good concise summary of succession planning for farm families. The article begins, "Because of the complexity of farm transfers, they require considerable thought, discussion, and planning beforehand... With the plan developed, when retirement starts to approach, your farm and family will be ready to make a transfer that not only meets everyone's needs but is transacted smoothly and with a...
Design Your Retirement
USDA recently released its 2007 Rural America at a Glance report. One segment addresses the critical trend of Challenges from an Aging Population. The points made include that, "Growth rates from aging-in-place... will triple among the nonmetro older population from 6% in this decade to 18% in the 2010s." Furthermore, "Compared with their metro counterparts, nonmetro older Americans generally have less income... creating greater demand for... financial assistance." Far...
Strategizing for Agribusiness Retirement
The University of Nevada Reno Cooperative Extension offers good information on "Retirement Strategies for Agribusiness Owners." Authored by Kynda R. Curtis and Margaret W. Cowee of the UNR College of Agriculture, the article covers concerns that are specific to farm and ranch households. A few excerpts: "Due to the nature of farm business, farm households have different savings habits and more diverse financial portfolios than typical U.S. households... Retirement planning...
Retirement... some day!
If you are a family business owner, additional pre-retirement elements come into play - including all-important decisions about owner and management succession. Because your family identity, as well as your household financial support, is tied to the business, there is an even greater depth of consequence to the objectives. Among the issues to be considered are: - When do you wish to transfer ownership? - How can you maximize wealth accumulation (Investment program? College ...
Choose to Save.
American Savings Education Council's "Ballpark Estimate" is a quick planning guide to help you gauge your progress toward your retirement goals. Incidentally, ASEC also has a great menu of calculators available to help you with decisions on everything from mortgage rates to college savings. You may find some of these tools to be useful to you as you design your succession and retirement objectives.
Goal: A smoother transition
"Sooner or later, everyone wants to retire." So begins Succession Planning Issues for Family Businesses by Susan Ward on Small Business:Canada. Ward lists six specific succession planning tips for family businesses, which we summarize here. (I recommend that you click though to the linked article to read the complete version.) "1) Start business succession planning early. 2) Involve your family in business succession planning discussions. 3) Look at your family real...
It's time to get started
Why some families postpone the inevitable from the Toronto Star (Ellen Roseman, February 25, 2007) outlines a complex family business scenario. No two sets of family circumstances are alike, and each may change from one year to the next. Comprehensive, guided succession planning addresses the needs and wants of each participant as your vision becomes reality.
When do you plan to retire?
Ask a farmer that question, and chances are he'll chuckle and make a comment like, "Who'd run the place?!" or "What else would I do?". All the while, he's just hoping to avoid the real issue - that he's completely unprepared for retirement. A farmer wants his agribusiness passed free of encumbrances to the next generation, but needs a plan designed to allow financial independence for his own retirement. Retirement planning can seem like a chess game in which a move here...