“Maria, what are you going to write about once you are done with succession planning? You won’t have much to say when that is done.”
I had that conversation with a friend last month. In reality, succession planning never does end.
In 1968, my dad bought grandpa’s machinery for $12,000. Dad became the primary farm operator in the family and grandpa worked for him. My dad and aunts divided the land once my grandparents passed away in the 1990’s. Dad expanded the business over the years, adding hogs, exiting the hog business, adding cattle feedlots and a hay business, and increasing acres rented.
He expanded while not really having an idea of his successor. He figured that one of his daughters might farm or marry a farmer, but things were really up in the air. I appreciate how he kept expanding the business for 45 years without really having a set heir. If one of his children didn’t farm, he and mom expected us to keep the land in the family at the time of his retirement.
I entered the picture in 2012, and we started the succession planning process in 2015. Thankfully things are slower in the winter, and I’ve had time to focus on our long-term planning.
My parents and I finalized the language of both the buy-sell agreement for our operating entity and the operating agreement for the family land. We have gone through several drafts of documents and spent lots of time discussing it with our attorney and accountant. I have spent time this winter keeping landowners updated on this process. Our landowners and vendors welcome our new plans and are excited for me to take more ownership in the business.
Setting up our new accounts has been a monumental task that I probably won’t finish by planting. Filing the corporation and LLC with the state and setting up new bank accounts was easy. However, there are some processes that I thought would be simple that are really pretty complex. For example, rented land is no longer in my nor Dad’s name at the FSA office in 2016, but rather in the new Cox Land and Cattle, Inc., name. In order to change this, the FSA office requires that each landowner write a letter informing FSA of the new tenant. Now that is going to take some time!
Grain elevators, fertilizer companies and implement dealers all require extensive paperwork. I’m currently wading through the paperwork to change our brokerage account and I’ve counted 15 pages so far. My parents operated as sole proprietors until 2016 and used farm money to cover living expenses. They now take a salary and my mom is charged with the task of separating personal expenses from farm expenses. All of these processes have taken much longer than expected, but we are taking them in stride with a positive attitude.
No one ever said succession planning was easy. That’s why people delay it indefinitely.
The opinions of the author are not necessarily those of Farm Futures or Penton Agriculture.