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Corn+Soybean Digest

Passing Down The Farm

The mental picture most farmers have of preparing to pass on the farm isn't very pretty. "They see themselves, hat-in-hand in some attorney's office, being told what to do by a guy who's probably never done a day's worth of manual labor. It's a humiliating situation," says Wayne Messick, business consultant and co-author of the book, "Passing Down the Farm, the Other Farm Crisis."

It doesn't have to be that way. If you have an attitude for action, you'll keep the farm in the family and keep everyone involved feeling good about it, too.

"First, if you take the time to set your objectives, it puts you in control," says Messick.

"Once you've decided what you want to do, there are plenty of attorneys, tax experts and accountants who can do the technical part."

The real issue of succession planning isn't financial, tax- or business-related -- it's a family's ability or inability to talk to each other, he adds. Once everybody's decided whether they want to be a participant, 75% of the equation is solved.

Messick says the process involves seven critical steps:

1) Be willing to ask for help and accept it.

Usually, that starts with Dad.

"I've been sitting at kitchen tables where Mom and the kids are happy with what we've talked about, but Dad just wants to get back on the tractor and get away from it all," says Messick. "The most important attitude, generally, is Mom's. Her willingness to fight-the-good-fight and get the job done is stimulus for Dad's action."

2) Appoint a planning coordinator -- someone to steer the process.

This is the logical next step once everyone has agreed that there needs to be a succession plan for the farm.

"His job is to ask questions, assemble information, talk with everyone involved, etc.," says Messick. "It should be someone directly involved in the business, a family member who has the best interests of the business at heart."

3) Set critically important goals.

"Something I always find interesting is that the business seems to take on a life of its own. But the real objective should be to make the family members' dreams come true," Messick says.

"Are there things you can do today that would be much more meaningful than an inheritance somewhere in the distant future? There may be a daughter living off the farm who wants to start her own business and needs capital. How can that goal be incorporated into the overall plan?"

4) Determine how you can redesign the business to fit the collective picture.

"This is going to the attorney stuff. It's taking action on your goals. If you don't, you've just spent a lot of time talking," says Messick. "The changes are rarely immediate or radical. They're incremental over a period of time. It's a life-long process. You don't just go to a lawyer once, and then it's done. You keep making adjustments as events impact your business."

5) Write down agreements the family has made within its own discussions.

"A famous author once said, 'The palest ink is better than the strongest memory.' These should be a series of relationship agreements on simple issues as well as larger ones. Everyone needs to agree to them and initial them."

6) Establish a timetable for events to occur.

This is one of the most important steps, according to Messick.

"Probably the biggest decision is to have that first family meeting," he says. "By listing priorities for each part of the planning process, assigning responsibilities to various persons and giving the planning coordinator the power to push for results, you'd be surprised how things will stay on track."

7) Schedule regular meetings to review progress.

"I'm not referring to meetings at the coffee shop. I don't mean at the end of a regular Monday morning meeting. And I certainly don't mean those meetings where everyone discusses why someone else failed to do what they were asked to do. I mean special, regular meetings with an agenda that only deals with the planning objectives."

The other option, of course, is to do nothing and let others control what ultimately happens to the family farm.

"Without planning and communication, you have families that end up asking, 'How did nice people like us get in a situation like this?' " says Messick. "The number and kind of solutions to succession planning are finite. And there are hundreds of people who can complete the process. The big problem is to get farm families to talk about it."

In our society, there's great focus on bottom line, he adds.

"If you do something in your business for the love of doing it, you aren't considered forward-thinking. But, if you operate your farm, support your family and enjoy what you do, who's to say you aren't successful?" asks Messick.

"To me, the ones who are successful are the ones who are getting out of their business what they want. If you run your business to achieve family goals, you're more likely to run it as a business because there's so much more at stake."

For more details on making your plan to keep the farm in the family, you can order a copy of Messick's book. Call Family Business Management Services at 216-752-7970, or fax your order to 216-752-4100. The price is $24.95 plus $4 for shipping and handling.

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