5 Questions to Answer on Your Farm's Legacy

As I work with families wanting to build a legacy business, I have many questions. It's paramount to clarify the intent and commitment of the asset owners. It's paramount they train and choose wisely who would respectfully and passionately continue the business. It's paramount the owners do the legal and financial work to assure the integrity of the business.

So, following are five key questions…and please know there are many more!

Is your business worthy of transitioning?

Financially viable:

Records are accurate, timely and transparent, utilizing computerized systems. Key financial data, reports and up-to-date expenses and income are available.

Sufficient net income needed to support all increases in expenses of a growing payroll. (Increase in expenses is covered in the projected cash flow, not in the net worth value of the business.)

Financial security of the senior generation with assets separate from the risk of the business allows for an easier transfer of business responsibilities and assets. (Seek the advice of a Certified Financial Planner to understand the needs and assure the living and lifestyle deserved. Senior generation may need to keep some business assets under their control for independent assurance.)

Legally viable:

Business structure is in place for liability protection and for incremental ownership transition.

Buy-sell agreement is in place to assure the integrity of the business so it might continue.

Risk management tools are in place for protection of assets and income.

Meetings are held and documented to fulfill compliance.

Personal wills and powers of attorney are completed. Shared if the assets of the personal estate effect the continuation of the business.

Leadership viable:

Current leader models team leadership, confidently carrying out responsibilities for both the farm business and for interpersonal relationships.

Leader positively communicates, coaches, praises, promotes, hires and fires…and addresses and resolves conflict.

Leader has earned the respect and trust of family, work team and the community.

 

Do you really want this business to continue as a viable business?

If yes, this clear decision directs the transition of labor to new management, leadership and ownership. It involves letting go of autonomous authority. It directs your actions and the actions of others.

If no, this clear decision directs your actions and others involved in the business. There will be no false assumptions of the transition of leadership or ownership during your lifetime. 

 

Have you mentored/trained the next generation for management and leadership?

Who has the education, experience, talent, skills, character and personality to lead?

Do you want that person to be the leader (organizational and relationship)?

Does that person want to be the leader of the business (organizational and relationship)?

Will others follow that leader?

Do those leading/managing the business have the assurance of control so that they might manage and grow this business? (Buy-sell)  Or will they be reporting to the governance of off-farm ownership?

 

How will you lead and manage the transition so that you are no longer the leader or manager?

Are you using a Farm Overview and Managing People Chart so that you can document the different areas of the farm and make sure the management of each is incrementally transitioned?

The "#1 Job" of a senior leader is to replace himself or herself.

 

How will you transition ownership of the assets of the business?

Key advisors, including an estate attorney and CPA, are a must and can offer you several options.  They'll discuss structure, valuation of assets, estate taxes, buy-sell agreements, fair and equal, ownership transition and timeframe.

 

So, it's time for you to answer these 5 Key Questions. Then get busy. Do the work of a legacy business.

Jolene


Jolene Brown is a farmer, professional speaker, author and champion for the family owned business. She's from West Branch, Iowa, USA, and travels worldwide sharing leading-edge best practices that have the power to increase productivity, profitability and peace of mind. Her passion combined with her fun-filled spirit and valuable information brings humor, hope and helpful ideas to the people of agriculture. For more information and to check out her speaking availability, contact her at Jolene@JoleneBrown.com, www.JoleneBrown.com

Full Rights Consent.  Jolene Brown LLC, West Branch, Iowa, USA, maintains full rights to utilize the content and/or format of all materials submitted by her for the www.PinkTractor.com website in any future speaking, writing, audio, video or electronic format.

Copyright © 2016 Jolene Brown, LLC. All Rights Reserved
Reproduction granted for PinkTractor.com by Jolene Brown   

Share This

You may also like:

Interested in exploring drone technology? Desirae has four pieces of advice for you...

 

Servant leaders recognize the needs that others have and then get to work on those needs...

 

In honor of National Travel and Tourism Week we're shining a spotlight on how rural tourism has a big impact on farm families.

 

General Manager of Stuart Ranch in Oklahoma and the first female President of the Oklahoma Cattlemen's Association, Terry...

 

The way to make the right tractor-buying decision for your farm operation is to...

 

This slow cooker recipe from The Cooking Ladies...

 

Women in agriculture are leaders in the agricultural industry and are paving the way for a better future in farming.

 

Avoid gnat bites in the family business. Here's an example of some of this week's gnat bites...

 

More things fried and on a stick than you can imagine. Here are some fun State Fair Facts! 

 

In one short answer, Janel does it all for her custom harvesting business. Read More about this Amazing Woman in Ag.