(BPT) - Kory Hagen, who runs a 1,000-acre corn farm in Iowa, had to take over the family business in his early 20s when his father suffered a stroke. Unexpected tragedies, like Hagen's, can be challenging but proper planning can ease the burden of passing down a business from one generation to the next.
Luckily for Hagen, he'd worked the fields with his father for years. When it was his time to take over, he learned to run his farm efficiently and sustainably with a five-man team. He found ways to modernize the operation, focusing on no-till farming, which benefits the environment. Today he makes most of the decisions, but also relies on a small team of advisers, including a banker and an accountant Hagen has known since eighth grade.
'It was hard going from farming with my dad to being on my own,' Hagen says. 'But I'll always farm, no matter what. It's very peaceful; and once it's in your blood, it's there for life.'
Farmer Glenn Heard has experienced both sides of farm succession. He gradually took over his father's farm in Georgia - a 16,000-acre operation growing cotton, peanuts, sweet corn and carrots - and now plans to pass it to his son.
'We did it differently than most farm families,' Heard says. 'I started my own farm as a separate operation and shared equipment with my father. My operation got bigger after I acquired land from outside farms and from my father as he transitioned out of the business. By 1995, I was able to take over his farm completely.'
Heard hired dependable farm managers to oversee operations and is now grooming his son to take over in a similar way, getting him started on his own farm and sharing equipment.
For growers like Heard and Hagen, it's a common dream to pass on farms to family. Farmers can succeed with careful planning that includes their next farm leaders. Parties must navigate local and state tax structures, transfer fixed capital assets and land, create retirement strategies and have difficult conversations with partners and family members.
'A farm is more than just an enterprise - it's a way of life,' explains Lynn Sandlin, business intelligence manager for Syngenta. 'Elder farmers think of it not just as a business, but a legacy they're leaving for their children, grandchildren and so on.'
Sandlin urges anyone pursuing farm succession to consider everything required by the complex process. To succeed, it's crucial to plan methodically and understand every necessary decision.
Retired professor of agricultural economics and Texas A&M University Danny Klinefelter, Ph.D., offers four steps to follow.
1. Develop estate and succession plans
- Start planning as soon as possible, so everyone involved knows where the assets are going.
- Children interested in the family business should consider enrolling in a management development program at a land grant university.
- Create a family business council of interested parties to discuss goals and plans.
2. Outsource your trust
Don't feel obligated to entrust your business solely to family, especially if they lack knowledge in crucial areas. Instead:
- Enlist a team of agriculture-focused attorneys, tax accountants or consultants who specialize in family-owned businesses.
- Form an advisory board or even a formal board of directors.
- A peer adviser group of top managers can also offer outside counsel that may help you and your successors.
3. Evaluate your successors
- Conduct regular performance evaluations within your team to set expectations, track improvement and assess everyone's strengths and weaknesses.
- When one or more successors emerge, give them every opportunity to ask questions and make suggestions.
4. Test your team
Once you have successors identified, assign group tasks to gauge personality styles and management capabilities. Especially for operations with multiple successors, this will help them work together efficiently and build on one another's strengths. Have open discussions about self-improvement or expanding the team with the right expertise, from forward-looking CEOs to accountants and marketing experts.
To learn about agricultural development, today's challenges in farming and more, visit www.syngentathrive.com.