Hello, northeast Ohio! During the past winter, one of the farm management workshops Ohio State University Extension conducted across Ohio was the “Planning for the Future of Your Farm” series. These workshops were a great way for families to learn how to develop a farm succession plan and to begin to have crucial conversations about the future.
Each farm family is different regarding its goals for succession planning. Family dynamics, physical resources, financial position and managerial styles vary from operation to operation. One of the most difficult issues is determining how to be fair to off-farm heirs without jeopardizing the future of the heirs who have remained with the family business. Other decisions include deciding who will manage the business in the future, how to distribute assets, how and when the senior generation will retire and how the family will deal with the unexpected.
One of the major succession planning oversights is not adequately preparing the next generation to manage all aspects of the business. After all, we are going to live forever, right? Think of it in the context of if you were to die tomorrow. What are the most crucial management functions that will be needed to continue to run the business at a successful level?
When my dad was diagnosed with pancreatic cancer in 2010, we only had seven weeks with him before he passed away. I can tell you a lot of learning was done by our family in those 52 days. Could you be ready to hand over the management keys to your operation in a similar time window?
The pledge
A strategy we share in our workshops is for the senior generation to pledge to teach one thing per day to the next generation. Just imagine how better equipped your son or daughter will be 3-5 years from now if you follow this pledge.
Your knowledge transfer pledge could include lessons on financial record keeping, maintenance on equipment, marketing, taxes, employee management, making cropping and animal nutrition decisions and much, much more. A great strategy is to write your daily “lesson” on a calendar or in a journal. This will help keep you purposeful in the mission to train up the next generation.
Make sure to ask your children for their opinion on what they need to learn. What would they be the most concerned about if they had to take over the business today? You might be surprised on the good ideas they might have for you. Have you taken the time to ask them and to listen? Use their responses to help craft your teaching list.
Your pledge could also include teaching where all the property borders and underground electric, water lines and drains are. I found out where the underground electric line at the farm was the hard way. Yep, we hit it with a backhoe digging up a waterline. The location of this electric line was one thing I was not able to learn from my dad before he passed. After all, we never had a problem with it, so we never discussed it.
Notebooks
For my successors, I am developing two notebooks. The first notebook is a farm resource book. This notebook includes maps, pictures, and measurements of where all the different water, electric, drainage and septic lines are.
Included in this notebook are the tile maps for the farm as well as specifics on the history of the barns, farm equipment and water wells. Also included in the notebook are the crop leases, Farm Service Agency paperwork and copies of the oil and gas leases.
The second notebook I am creating is an estate notebook. This notebook includes copies of my advanced directives, will, trust, life insurance policies, property deeds and copies of all my financial accounts. Our Farm Office Team is in the final development stages of a new estate spreadsheet which will help you in the creation of this notebook. If you would like to receive a copy of this resource when it is completed, you can sign up at: go.osu.edu/excelwithfarms
I hope you make a pledge to better prepare the next generation to manage and lead your family’s farm into the future. The investment in teaching and preparing the next generation will go a long way in ensuring the legacy of your farm.
To close I would like to share a quote Billy Graham who stated, “The greatest legacy one can pass on to one’s children and grandchildren is not money or other material things accumulated in one’s life, but rather a legacy of character and faith.” Have a good and safe spring planting season!
