Market News & Headlines >> Brock Consultant Katie Hancock's Blog: Be A Successful Successor
Insights from Brock Associates Consultant Katie Hancock
It is estimated that less than one third of farms have a designated successor in the family. This suggests two things. One, there are opportunities to farm. Two, it doesn’t have to be a relative to provide the opportunity. I have survived two farm successions before the age of 30 and have learned from both my good and bad experiences. I want to share what I’ve learned about how to make the most of farming opportunities. This applies to anyone looking to be the farm successor.
Last week I spoke at a farm meeting held by Anderson Grain. In a panel discussion, I stated the biggest issue for the future of the next generation of farmers is that young farmers are spending too much time driving a tractor and not enough time learning about the business. While the production aspect is equally important to me, especially when first starting to farm, the older generation is not spending enough time teaching financial and marketing strategies- even though that’s what they’re looking for.
The generation looking to retire is not only concerned about financial implications like taxes, but also if the successor is able to handle the business end of the operation. You would be surprised at the number of farm managers and owners that are willing to help the successor get started. Many are willing to slowly transition the equipment and land to lessen the financial blow, but need to know the successor has the ability to manage risk. Without managing risk, the farm owner fears his or her transition will result in great losses. They think: “If I help you get equipment and land, then I want to know you are making sound marketing and management decisions.”
Specific suggestions I have include the following:
Don’t take an opportunity for granted. Just because you are from a farming family doesn’t mean that farm will be yours someday. You may have a special opportunity others don’t, but it won’t be there if you aren’t willing to learn and plan accordingly.
Ask for the opportunity. You have to ask if there is an opportunity to be the successor--even if you’re already in a family business. This sounds obvious, but until someone knows what you want to achieve, they can’t help you get there. Plus, you don’t want to waste your time if it turns out your goals aren’t realistic.
Don’t be afraid to ask a non-relative. Just because you aren’t a blood relative doesn’t mean you can’t build a relationship similar to family in which you are helped. Sometimes a non-relative hasn’t even considered you as a potential successor. But they might be willing to consider.
Request a plan. If you want to farm, you will have to be politely aggressive in making a transition plan. Say, “I want to farm and I want you to help me get there.” Sometimes it just takes a push to get the owner in mindset of teaching what you need to know. If the owner is not willing to make a plan, chances are your opportunity will be elsewhere.
Ask for advice. Owners, farmers, and ag professionals want to help, but you have to be the one to seek it out. What do you expect of me? Where do I need to improve? Learn what you don’t know and build on it.
Learn to manage risk. Go to business meetings, ask to see the financials, and learn what has made that business successful. For example, this year we held a Brock Associates “Commodity Classroom” meeting to teach the basics of commodity marketing. Business education is helpful even if you aren’t running the business yet.
Succession plans are tough. I lost my first opportunity to farm in my family’s business and yet found another. It wasn’t what had I planned, but has worked out well. If you see the handwriting on the wall is not in your favor, keep looking. It’s not wrong to take a different route. Find opportunities that await, make a plan, and learn to manage risk.
If farm succession is topic you’re interested in, join us in New Orleans before the 35th Ag Economic Symposium. Jolene Brown is a leading expert on the topic and will run a 3-hour workshop on the topic. Click HERE for details on AES, click HERE for Jolene’s webpage.
Email Katie at [email protected]