This is the first article of a four part series on succession. In this series, we’ll experience the process of succession planning through Farms Forever Inc. and its shareholders.
Will and Hope Etworx started Farms Forever Inc. in 2001 and are still the primary shareholders of the company, however they are looking forward to their retirement at some point. Their daughter Faith and son in law Juan Tafarm returned to the farm in 2008 to build a future. Hopefully insight into their situation will shed light and add value to your own planning process.
Succession planning is an extremely complicated process that can be filled with emotion, financial challenges and stress. The reality is that there no one right answer. Your own plan will be unique and different from every other plan in the industry.
Often the hardest part in the succession planning process is getting started. Many people believe they can make a perfect and simple plan — this believe can serve as a roadblock to even starting the planning process. The farmers that are most successful at succession planning are those that accept the fact that this process will not be completed overnight, and realize that although the plan may have gaps or inadequacies, it will be far superior to operating with no plan at all.
Communication is the pillar for successful business and strategic planning. The planning can begin with either the older generation or the younger generation. Somebody has to come up with a starting plan. Then the other generation has to tweak it. The important part is agreeing who will come up with the initial plan. This is when we came on the scene with Farms Forever Inc.
Faith and Juan Tafarm called us looking for help. They were frustrated with the lack of progress in any succession planning. Their perception was that Faith’s parents, Will and Hope, needed to develop the succession plan. We suggested they meet as a group and discuss the possibility of Faith and Juan developing a preliminary succession plan based on what the farm business could support. Then, they would present this plan to Faith’s parents for discussion.
All four of them agreed that it was not important where they started but rather where they ended up.
Now, Faith and Juan have requested our help in developing options that are viable for the business and then helping them communicate these options back to Will and Hope. Not every option was explored, just the options that resulted in a reasonable level of risk for the farm business going forward.
Although Faith and Juan give consideration to the impact on Will and Hope’s retirement they don’t feel it is their place to determine what Faith’s parents’ retirement will look like. After reviewing the initial options, the onus lies on Will and Hope to express their own retirement plans. These plans may or may not fit with the business. Stay tuned as we work through the considerations and analysis fora both generations and ultimately the agreements and options they elect to use to structure their succession plan. †