Ask yourself this, “What does it mean to be a (insert your last name) working for (insert family business)?” Some people immediately think of the legacy and tradition of following in their family’s footsteps, while others go straight to business.
Regardless, without a solid, thought-out succession plan, the chance of the family operation surviving multiple generations is slim. Unexpected accidents may happen, leaving behind chaos; family members may not always see eye-to-eye, resulting in legal fights and destroyed relationships; younger generations may not be equipped to take over when older generations are ready to exit; and the list goes on. Without organization and a plan, things can get messy. And while it is an essential issue for every family operation to consider, succession planning is a topic that is too often danced around because it peels back vulnerabilities to their very core. It’s hard to face the expiration date to the life we live, and it’s even harder to plan for it — but, unfortunately, it’s an unavoidable fact of life.
In this four-part series, we will be working alongside industry experts and your fellow beef producers to help you begin to map out a viable succession plan, beginning with getting the conversation started.
Taking the first step
“There is a huge discomfort in not knowing how things would be taken care of if something unexpected happened,” says Dave Specht, a family-business consultant, founder of Advising Generations LLC, and author of the new book, The Farm Whisperer — Secrets to Preserving and Perpetuating Farms. With years of experience in assisting agricultural operations in mapping out their future, Specht has seen the fulfilling and prosperous rewards when the family works together to carry on their legacy, and harsh consequences that came from an unwillingness to look toward the future.
According to him, one of the biggest roadblocks in getting the conversation started about a succession plan is a lack of understanding between the older and younger generations of the business and hesitancy from both sides.
“Everyone wants to know the same information, but no one wants to bring it up,” Specht explains. “The younger generation wants to know if they can count on the business being part of their future, supporting their family. The older generation doesn’t want to put added pressure on the younger generation to stay.”
Tom Field, director of the Engler Agribusiness Entrepreneurship Program at the University of Nebraska-Lincoln, weighs in, saying it is the obligation of the older generation to take the first step in starting the conversation. Along with teaching, Field is also a co-owner in a family ranch with his two brothers.
“There is a deep obligation to let people know what we’re thinking, and we have a deep obligation to be willing to communicate that,” Field says. “Founders and successors both have rights and responsibility. Successors have the right to make the decision if they want to be involved, and founders have the right to control that enterprise until the day they die. But they both have the obligation and responsibility to communicate their respective positions.”
Even with the initial first step in reaching out to fellow members of the family business, finding what to say is not always an easy task. In order to help producers ease into this often challenging process, Specht developed a mobile app full of family-business-oriented questions to get communication flowing. (Click here to receive if for free) He also advises the business stakeholders to set up a disciplined meeting format so important topics and future planning doesn’t get lost in the day-to-day grind of the operation.
“Organize family meetings with just three to four topics to cover and stick to the agenda,” he says. “This will help establish a pattern for communication. Families tend to fight formalities, but that’s where progress is made.”
From Field’s personal experience in developing a plan with his family and assisting others with their own succession plans, he suggests taking the meetings to neutral ground, whether that be a non-home-based ranch office, parish hall or private community center.
“I’m not a fan of meeting at someone’s home, unless everyone in the business is very comfortable with it, because the owner of the home tends to naturally have the most control,” Field advises.
Field also advises families to pick a leader to start guiding the process, preferably someone who is even-tempered and able to set self-interests aside to keep the conversation moving. And when it comes time for the really tough questions to be asked, bring in a third-party mediator.
“Don’t be afraid to have outside help come in. It can be an Extension agent, veterinarian or pastor who leads you into asking each other, ‘what does the future look like to us?’” he says. “Once you start the conversation, it’s not going to be a fast one; it’s going to take months.”
Timing is never perfect
“My hard-nose advice is don’t wait, because you can’t predict the future,” Field says. “If you wait for the perfect day, that day isn’t coming, so you have to start.”
Specht agrees, urging producers to dig deeper than their own needs and personal comforts.
“Once your desire for continuity outweighs your desire for control, you are ready for succession planning,” he concludes.
In the August issue of Drovers CattleNetwork, part two of the ranch succession-planning series will discuss compensation and involvement of business stakeholders.