What Happens If No One Does Anything
We talk to a lot of farmers who haven’t started their succession plan for various reasons. Some of the reasons for delaying the decision to begin are: 1) They don’t know where to start. 2) They are not sure who to talk to. 3) They are not sure what their kids want. 4) They do not know how they will pay for it. 5) They do not want to put a financial burden on their kids.
These are all valid concerns but none of them are a good reason to wait to get a comprehensive business continuity and succession plan in place.
Here is what happens when you do nothing.
The shorter the runway – the less options you are going to have and the more strain you are going to put on your family and your operation. The truth is when you do not have a plan – terrible things happen.
Business continuity and succession planning will ensure that your family, farm, and legacy are protected from forces (such as probate courts, the IRS, and family disharmony) that will come into play when no plan exists.
Clarity and certainty are two things that all humans crave. Clarity and certainty cannot be present when there is no plan. The transitioning generation may feel that a transition is impossible. They may not be able to envision how the next generation can pay for it. They may be unsure about how to structure their estate plan because they do not know how to make things fair for all of their heirs. Lack of clarity can cause such a degree of paralysis that everyone in the family just keeps their head down and marches on; hoping that something will come into focus and a plan will become clear.
For next generation farmers, when a succession plan is absent, they may begin to build a backup plan to taking over the family farm. No one can afford to have an uncertain future. If the next generation does not believe you are serious about letting them take over – they will get serious about farming somewhere else. That will take resources away from the family farm and may make the transitioning generation’s financial future less secure.
The longer a family waits to begin developing their comprehensive business continuity and succession plan, the more stress and pressure they will experience. The process of transition should be a marathon. When the decision is made to put off succession planning activities, the marathon becomes a sprint.
Succession planning is a process. It has the same steps for a small farm as it does for a large one. The owners of smaller operations often tell me that they do not need to create a succession plan because they are small. The reality is that operators of small farms often need to be more proactive because a smaller operation often supports more people with less resources.
You may feel that there is a lot of uncertainty to start the process of succession planning, but we would encourage you to get very real with yourself. What is the risk of waiting?
We all know THAT FAMILY who did not plan, ran out of time, and their farm ended up at auction. This is not an efficient way to get out of farming. It is emotionally difficult. It is not tax efficient. It ends the farming legacy of your family and it often ends the ability of a next generation farmer to farm.
If your farm has owners over the age of 50, you should be engaged in the process of planning for succession. If you are unsure about how to get started, please check out the resources located on our website: www.transitionpointba.com. If you prefer to watch videos, subscribe to our YouTube channel: https://www.youtube.com/channel/UCXa-t9qcvQpW1Ly7zUS-PbQ
We want to encourage you to stop putting off the decision to get started. We are here to help.