This past week I had the pleasure of being involved with my 8th Young Farmer/Rancher Executive Institute sponsored by Farm Credit Services of the Southwest.
Take the spiritual Red Rocks of Sedona, AZ, along with a learning environment with younger and older generations in attendance, and you get a charged exchange of ideas.
Don Jonovic, the highly reputed family business planner, and I facilitated the conference. One of the main points Jonovic stresses in family business succession is that both generations need to know each other’s return expectations. Thus, we asked each generation separately to give rate of return on assets expectations.
The younger generation expressed that numbers such as 15, 9.8, 10 and 8% would meet their expectations. When the same question was asked of the senior generation that ranged from 45 to 65 years of age, numbers such as 4-5%, 10% and meeting principal and interest payments were expressed. Some in the senior group indicated that it was okay to just breakeven if it fits lifestyle expectations.
Isn’t it interesting to note the generational differences? As one ages, you become more conservative and, in some cases, treading water is sufficient. The bottom line is that in your next family meeting ask this question, determine the differences, and develop strategies to meet each generation’s goals.
On a side note, the same question was asked of the lenders and the two PhD’s leading the group. The answer: 7% and 8%, respectively.
Side Notes
If you ever get a chance to go to this area of the country and see the Red Rocks and the Grand Canyon, you will not be disappointed – if only people would shut off their cell phones in the Canyon.
My friends’ horse from Sacketts Harbor, NY, won the Preakness. If I had only invested in the horse instead of cows!
My e-mail address is:sullylab@vt.edu
Editors' note: Dave Kohl, The Corn and Soybean Digest Trends Editor, is an ag economist at Virginia Tech. He recently completed a sabbatical working with the Royal Bank of Canada. He is now back at Virginia Tech with his academic appointment, which is teaching, extension, and applied research.
To see Dave Kohl's previous road warrior adventures type Dave Kohl in the Search blank at the top of the page.
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