Transitioning Your Dairy to the Next Generation: Communication

Family business succession planning evolves over time, continual planning and open conversations are key to successful transitions.

Many farms have multiple generations involved in the farming operation. Preparing each generation for an upcoming transition of management and assets can be a daunting task that many put off. However, this should be a main priority for the future of your farm. Transition planning involving a limited transfer of assets can be accomplished quickly if all parties are prepared and take an active role in the process. In more complex farming operations, this process can take 5 to 10 years even when done correctly and when everyone takes an active role. In some cases, there could be roadblocks and obstacles that can push the timeline even further out. One way to look at the farm’s transition plan is as a roadmap of what would happen if the owners/operators of a farm were to suddenly become unable to complete the tasks the farm needs to operate. Farm businesses are now more complex and gone are the days of just dealing with it once someone passes. If you are faced with an untimely death, this could result in your successors dealing with long, drawn-out legal battles and severe tax consequences. Acknowledging the need to start is the first step in this lengthy process.

Often, the most challenging part of this process is the communication between parties. To achieve a successful farm transition, all involved parties should actively communicate with one another. Conversations should occur between spouses, farming partners, the next generation, and appropriate business planning professionals. A greater understanding of the role of communication in farm succession planning can help farm families develop workable succession plans that result in productive family businesses while maintaining good family relationships. Depending on your situation, this may seem more feasible on paper than in real life.

Recognizing potential barriers to open and effective communication among family members should be one of your first steps. Make a list of those barriers individually, then come together as a family to rank these from most significant to least based on your family’s situation. An example of potential barriers could include assuming everyone is on the same page regarding expectations/understanding of what will happen in the future. For succession planning to succeed, family members must have a shared understanding. Open communication is crucial for reaching such an understanding.

There are some basic concepts for effective communication with families.

• Regular Meetings — Set aside a specific day/time to discuss issues related to transitioning the farm. Document decisions and unresolved issues.
• Ongoing — Start as early as possible and keep talking/planning until all issues have been resolved and a written plan has been completed. It may take several meetings to accomplish this. The point is to stay with it until you have a plan.
• Participatory — All family members can communicate their wishes, expectations, and opinions. Listen thoroughly to what others are saying.
• Be Clear — Do not assume others know what you mean or want. Everyone needs to state their feelings, expectations, and opinions clearly and make sure everyone else understands them.
• Have Solid Plans — Decisions should be written so everyone can read them and decide whether they agree. Wills, estate plans, financial documents, organizational charts, and job descriptions are all good tools for deciding concrete plans and should be available to everyone involved.

Succession planning should be viewed as a lifelong, continuous process. Family members’ situations change over time, as do family communication dynamics and issues which affect the financial sustainability of family-owned and operated farms. In other words, family business succession planning is not a one-time event; therefore, discussions about succession planning should occur continuously. This is particularly relevant in families hoping to sustain their farms for future generations.

One of the most complex parts, if not the most challenging, of succession planning, is figuring out a “fair” plan that everyone agrees with. It is often simpler to identify decisions whose fairness can be questioned than to guess or assume what everyone would consider a fair outcome or result. Fairness is a personal view that makes utilizing a single solution for all cases and situations difficult. There is no one answer to the question of a fair outcome. Being fair may mean that some people obtain more than others. Being fair can mean that some people will be treated differently than others. Fairness can be considered a target to strive for while being realistic enough to know that many factors can affect whether it will be reached. In family succession planning, fairness enters when deciding about the business, choosing a successor, fulfilling impacts to the business made by some people, and supplementing people who need it.  Did you want to put in a line starting that “Fair isn’t always equal.”?  Not that I think it’s necessary, but it’s often included in these discussions.

In closing, Theodore Roosevelt once said, “In any moment of decision, the best thing you can do is the right thing, the next best thing is the wrong thing, and the worst thing you can do is nothing.” Acting toward transitioning the farm is better than doing nothing at all. There will be times during this stage when stress is high. Remember, you are not alone. If you need to talk to someone, Pennsylvania has an AgriStress Helpline which can be reached by calling 833-897-2474. Penn State Extension and PA Farm Link have a handful of certified farm transition coordinators that can help you in your farm’s transition journey.