We have just return from the Farm Futures Summit in St. Louis. It was a great meeting. We had an excellent slate of expert speakers and were delighted to see an outstanding group of agricultural producers from over 20 states on hand.
In speaking with producers at the Summit last week, I learn a couple things that I want to pass along.
- Sometimes, you want to transition, but there is not enough profit to support it.
- Sometimes, you want to transition, but the conversation between family members becomes a barrier.
If you want to transition to the next generation but don’t know if there is enough profit, where do you turn?
I would suggest you start with a cash flow analysis. Look at where money comes into the business and where it goes out. If you have good records, this should be pretty easy. Maybe you want to consult with your banker, your fee-only financial planner, or your tax professional. An outside perspective could be very helpful.
Everybody is counting on a healthy cash flow to make things work. The senior generation needs to be sure there is adequate income for their needs. The junior generation does not want to enter into this business if it cannot meet their needs.
Start with good information and then you can get moving on a plan to reach success.
If you want to transition to the next generation, but you struggle communicating between the generations, where do you turn?
Sometimes having a third party can make it easier. I suggest you think about meeting with a trusted advisor to act as your facilitator. As a kid I remember that my mom and dad were always much nicer when we had company. So, maybe a third party can help you get a dialog going.
Many of my clients report that having a non-family member in the conversation about their goals makes things easier. Everybody has a neutral party they can speak to as they are trying to sort things out. Sometimes it’s easier to deal with important issues if you address yourself to the third party and not the family member.
If this blog has got you thinking about your own situation, get in touch with my office (email@example.com).
Investing in a knowledgeable advisor and thinking about answers to key questions before putting pen to paper can make creating a farm estate plan much less complicated. Use the Penton Agriculture free report, Farm succession planning: Customizing a farm estate plan to get started on your own plan.
The opinions of Rich Dunn are not necessarily those of Farm Futures or Penton Agriculture.