Transfer management, not just assets!
Any farmer can gift their daughter a tractor, the real challenge is teaching her how to make that tractor pay.
Until your family can squeeze out an extra 10% profit, you aren’t ready to have the succession conversation about where the farm is going to be in 10 years.
Farm Succession plans are often written at a hospital’s bedside and this kills farms.The challenge isn’t avoiding tax today, it’s making sure the farm can pay the bills beyond 2040. We believe that before you transfer assets, parents must first transfer management.
We help parents groom talent and set the farm up for success in 2040.
A few unique succession philosophies we have include:
Succession nightmares happen when a one-time family business meeting turns into a decade long feud. Everyone expects that meeting to go “their way” and feelings quickly get hurt because families aren’t used to solving strategic problems together. It’s better for a family to learn to weigh the pros/cons on many $10,000 decisions before a multimillion one. By the family first getting used to making small strategic decisions together as a team first, this one-time conversation goes smoothly.
It’s easy to gift a tractor to your daughter. It’s almost as easy to teach them how to drive that tractor. But to teach them how to make that tractor pay so that they can replace that tractor someday…that’s tough. We don’t make a big deal out of it, but a key theme of our weekly family business meetings is helping parents explain why they have made decisions the way that they have in the past and to subtly help them groom their successors into management. Our clients won’t do exact opposite to what mom/dad have done when it’s theirs and run the farm into the ground.
Good to Great
No matter how good of a successor you have, everyone has weaknesses. We groom successors from good to great. Our program encourages everyone to turn character weaknesses into strengths and become “the best they can be”. This ensures both the management competence and mindset required to be a successful business owner. We groom more CEO’s of multi-million-dollar empires than Harvard.
If siblings are involved, we make sure that they can make decisions together as a team without mom as the mediator…before becoming 50:50 partners (or whatever) on paper. This avoids feuds.
We really believe that a farm’s cost of production has to be near forecasted market lows. If the family is able to make tweaks in management to rapidly drive down costs, then parents don’t pull million’s out of the farm for retirement because everyone is confident in the farm’s future. More importantly the successor has first proven management competence as a CEO by accomplishing this.
Agriculture Strategy works behind the scenes
Succession planning professionals (i.e. accountants, lawyers, financial planners) often refer us farm clients when they sense that succession is going to be a difficult transition for a family. We work with the family for a year and then work with that professional in their areas of expertise (ex. Tax Planning) over a few hours to get a deal papered.They love us because we make their jobs easier.