Four Steps Toward Successful Agribusiness Succession
The handoff of an agribusiness to the next generation requires a well-thought-out plan.
Passing on a farm or agribusiness to the next generation can be arduous no matter the relationship between past and future ownership. Danny Klinefelter, Ph.D., retired professor of agricultural economics at Texas A&M University, has witnessed numerous handoffs during his tenure, from modest family farms to suppliers for international brands. Over time, Klinefelter has observed four steps every agribusiness should consider.
See how the handoff of #ag businesses to the next generation requires a well-thought-out plan.
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- Develop Estate and Succession Plans — Start plans as soon as possible so everyone knows where assets are going. If your children show interest in the business early on, consider enrolling them in a management development program at a land grant university. Create a family business council of interested parties who can discuss objectives and map out successor campaigns.
- Outsource Your Trust — Don’t feel obligated to entrust the business to family members who lack know-how in crucial areas. Enlist a team of agriculture-focused attorneys, tax accountants or consultants who specialize in family-owned businesses. Form an advisory board or, if your business is big enough, a formal board of directors. Finally, a peer adviser group of top managers can offer outside counsel that may help.
- Review Your Crew — Conduct regular performance evaluations with your team to set expectations, track improvement, and see what strengths and weaknesses develop over time. When a successor or successors emerge from this process, give them every opportunity to ask questions about the business or make suggestions for improvement.
- Test Your Team — Once you have your successors lined up, put them through testing to gauge personality styles and management capabilities. For operations with multiple successors, this will help future owners work together more efficiently and build on one another’s strengths. Have open discussions about suggestions for self-improvement or expanding the team with the right expertise, from forward-looking CEOs to accountants and marketing experts.