Preparing for farm transition
Is your farm in transition?
The answer is yes.
Without knowing anything about your operation or family situation, farm business specialists will tell you that your farm is in transition - it’s unavoidable. Markets change, technology changes, and you’re changing too. The only constant in farming and life is change.
Recognizing that you, your family and farm business are on a moving train is the first, and sometimes hardest step in the farm transition process. Things are happening, whether you acknowledge it or not. But being aware of your farm’s evolution puts you in control.
Be honest about where you’re going. A preparation mindset is the first empowering step on a pathway to transition.
Planning early gives you more options
It’s common to put off discussions about the future. But without a plan, your family will be left with assumptions about how a transition might play out. Many scenarios can put your planning on pause:
- You have a hunch that the kids are divided on what to do with the family farm, and you’re afraid that the topic will tear the family apart.
- You’re unsure you’re ready to leave and give up control of day-to-day operations or major decisions or whether your successors are prepared to assume that responsibility.
- You’re ready to take over, but sense that your parents have no intention or plan to retire.
- You don’t know where to start because it’s overwhelming.
You can’t prepare for transition if everyone involved is walking around with a different vision of how it might unfold. Two farms may look similar on paper but may choose different paths. If you feel your family is unique, you’re right. But there are creative solutions that other farm families have used that you can learn from to make even the stickiest situations work. And many of the best strategies take time. Putting off the discussion just gives you fewer options and leaves you unprepared for unforeseen developments.
Make preparation a priority
You can plan a farm transition - or it can be forced on you. Unexpected death or illness can force hard decisions that may not be the best for farm and family. Farm transition planning that starts at a funeral is a worst-case scenario. Start now when you’re not in crisis. More time creates options and provides business clarity.
1. Have a conversation with yourself
Whether you’re the senior generation looking to the next phase of your life, or a young person wanting to plan a future on the family farm, start with self-analysis and write down your thoughts.
Senior partner: Recognize you may have to relinquish some control and management, and that your working lifestyle will change through the transition process. Letting go is hard for many farmers, but mentorship and sharing management is key to business continuity.
Upcoming generation: Think about your future plans. You may be looking for a quick handover of control and assets, but a slow, phased approach to transition may be more realistic.
For all involved: Being able to have difficult conversations will help your family and business thrive. Ask yourself the hard questions at the beginning, and be prepared to share your thoughts openly as a family and business. It also helps to put yourself in the other person’s shoes. And rehearse talking about tough things - knowing how you feel and being able to articulate it clearly allows you to be more open and understanding.
Think it over and write it down
Find a time and quiet place to think. Answer these questions and put any additional thoughts down on paper:
- What do I want to do with the next phase of my life?
- What’s my vision for the farm and my involvement?
- Where do I want to live?
- How much do I need to live?
- Where will I get my income?
- Can the farm support multiple generations?
- How do I see the transition process moving forward?
- What are my core values?
- How do I exhibit these core values on the farm?
- How will my values guide me in a successful farm transition?
Exploring these questions will give you a starting point for discussion with others. Language is important. For some farmers, calling the next step a transition instead of retirement can help frame things in a less threatening way and may calm fears that they’ll be excluded abruptly. Transition suggests there’s still room for the senior generation to contribute by mentoring and teaching the younger generation. For the family farm to generate multi-generational wealth, it requires leadership, more than it has ever been called upon in the past.
Try these transition conversation starters.
2. Follow up on your personal plan with others
Once you’ve settled on a plan in your mind, it’s time to start talking with others.
Your first conversation should be with your spouse. Farm transition specialists regularly meet 70-year-old farm wives who loved the farm but feel they’ve done their time. They want to move off-farm and live a different life in retirement.
Husband and wife need to be on the same page. Whether you’re looking to step away from the farm, or get more actively involved and eventually take over, don’t assume you know what your spouse is thinking or that you have a clear picture of their dreams for the future.
Much of farm transition planning is unravelling assumptions. “I assumed this is what you wanted,” can be the opening line to an emotional discussion. Unspoken expectations are the silent killers of transition plans. Agriculture has a history and very common pattern of assumed succession. Either the parent assumes a particular child will farm, or a child thinks they’ll get the farm - but they’ve never had a conversation about it.
3. Schedule regular, intentional family meetings
Invite everyone to a relaxed setting where they can share their ideas but make it clear that it’s a business meeting. Separate business and family for this discussion.
Invest in building a vision for the transition plan. Spend more time talking about hopes and dreams than balance sheets. Save the lawyer and accountant for another day. Instead, find out what people want for their future. Invite everyone (including spouses) to share their thoughts. You all don’t have to agree - the goal is to reach clarity and understand everyone’s position.
As you set up future transition meetings, designate a special time apart from regular conversations. Day-to-day operations tend to overshadow long-term strategic planning. Farm transition requires everyone’s full attention.
Consider booking quarterly strategic meetings only focused on farm transition activities, especially during the planning stages. Give everyone around the table a job by making them accountable for part of the agenda, whether it's research or leading a topic discussion.
Allow time between meetings for reflection and research and to consider what others are saying. Some people think better out loud, but others need time to process. Scheduled meetings ensure the process doesn’t stall. Don’t be afraid to bring in an outside facilitator to ensure the meeting stays focused and productive.
These three steps are not about finalizing a transition plan. They’re to prepare everyone for the process. Introspection, comparing visions with spouses and conversations with the family sets the stage for successful transition planning.
Homework – Read Crucial Conversations
According to authors Kerry Patterson, Al Switzler, Joseph Grenny and Ron McMillan, a crucial conversation is, “a discussion between two or more people where (1) stakes are high, (2) opinions vary, and (3) emotions run strong.” Unfortunately, no matter how well you talk about and execute your transition plan, the process will involve crucial conversations. Buy the book and practice what they preach.
Show them your passion
Are you itching to get the process moving? Share your farming dream and vision with your parents or aunts and uncles. A lot of transition advice and training is for farmers nearing the end of their careers. But if they’re unmotivated to initiate the conversation, it’s up to the younger set to step up and share their thoughts.
Present a business plan and vision to show you’re prepared and have thought about transition. Be curious and ask questions. Find out what the senior partner thinks of your story and ideas.
Know the 60-30 rule
A common concern from the senior generation is that starting the transition process means a quick exit from the business. The senior partner might see value in planning ahead - but not if it means losing control of the farm.
Some transition planners point to the 60-30 rule. It helps senior partners decide if it’s time to implement their transition plan and begin sharing ownership.
If you’re 60, and the senior partner, stop hesitating. You should have a plan that outlines how and when ownership will transfer, and the wheels should be set in motion. If your child is 30, but you’re only 55, it’s still time to start moving ahead on the plan.
Transferring management responsibilities should start earlier, but the actual transfer of growth opportunities and ownership should be underway by the time the 60-30 rule comes into play.
Studies show that when a child reaches age 30, they need to know their value on the family farm and whether they have security and a future there. If they’re treated like an employee at 30, they may question if it’s worth sticking around.