Kevin Spafford, founder, Legacy by Design, LLC and eLegacy Connect, spoke to a packed room of farmers at Commodity Classic in San Antonio. He outlined keys to effective farm succession planning, as well as tips for a succession plan and other ideas to use at family meetings when planning a successful farm transition.
“Seventy percent of the farms and agribusinesses will fail during transition,” said Spafford. “If we can talk about the fears of succession planning, we can start to deal with it.”
He also noted that 70% of farmland in the U.S. will change hands in the next 20 years. With that, he offered farmers five keys to effective succession planning.
1. Have a model. “We fail because we have no plan, or a flawed plan,” said Spafford. He said a written succession plan includes five components:
- Ownership transition
- Leadership development
- Financial security
- Estate tax provisions
- Annual reviews
2. Overcome obstacles. “Obstacles to planning include: equal vs. fair, in-laws, control, financial security, family harmony,” said Spafford.
3. Common goals. “You need goals everyone can agree on,” he said. A few goals Spafford offered to the farmers at the Classic were:
- Improve operational integrity
- Enhance the family’s financial security
- Prepare the next generation to lead
4. Good communication. “You can’t be a driver and a participant,” says Spafford. “A meeting needs to create a safe environment. Don’t personalize, follow the agenda, don’t dredge up the past, listen to learn. Anyone can call a time out,” he says.
Spafford suggest having a facilitator at the meeting, and having it at a neutral location. At the meeting, he offers these tips:
- Distribute an agenda
- Establish ground rules
- Assign roles/responsibilities
- Agree on action
“Nobody likes meetings,” he says. “But we do like the outcome.”
5. Commitment. You have to make a commitment to the process. “We want to honor where we’ve been,” says Spafford.
Get more information and contact Spafford at eLegacyConnect.com.