Turning over the keys to the kingdom is never an easy task for a business owner. As Lance Woodbury, a Garden City, Kansas, family business adviser and DTN columnist sees it, the scale and risks in today's commercial farming businesses makes parents reticent to cede control too soon. Some may want to stretch the apprenticeship for a decade or more. Likewise successors may feel the need to assert their leadership, even if they haven't earned their parents full confidence. Inability to share responsibility may actually discourage their commitment to the business.
In my monthly Q+A with Lance, we discuss some approaches both senior and junior generation can practice to smooth the process. Feel free to comment if you want to share experiences.
Taylor, DTN: Lance, in recent columns about family business succession you’ve written about both “letting go” and “grabbing hold.” What are the biggest obstacles to successful transitions between generations?
Woodbury, Ag Progress: Marcia, I see two recurring challenges. One has to do with the lack of vision about what the senior generation’s “next chapter” contains. Mom and Dad may not be at the same place with regards to the timing of the transition, or they may have different ideas about what retirement looks like. Maybe Dad doesn’t know what he’ll do next, or worse, his identity as a person is tied to his specific role as leader of the business – which means any transition away from leadership will be very difficult.
The other challenge is articulating expectations of how the transition will take place. Because people have a family relationship where they feel like they know each other well, they make assumptions about how the transition will go, instead of talking explicitly about it or even documenting the plan, which can undoubtedly feel a little too formal or even awkward. Many, many people tell me “I thought it would go this way…” and are disappointed that it didn’t work out as expected.
Well, what did they expect? Did they talk about what they expected? Or did they assume it would “all work out”? I often suggest they act as if they were not family members when planning the transition so it becomes clear how everyone is thinking about the shift. It can feel formal but it prevents problems down the road.
Taylor, DTN: Lance, many families seem to get stuck or tend to stall in the process. If that has happened, how can they get moving again?
Woodbury, Ag Progress: Marcia, I think the key to re-engaging in the process can be aided by three things. First, I encourage people to acknowledge their own emotions and the feelings that may be preventing them from personally moving ahead. Sometimes just naming those emotions and challenges can unlock a willingness to move forward.
Second, I ask people to really listen to their family members’ ideas and concerns. Many times, people are concerned with getting their own point across, or they don’t feel “heard” by those closest to them. Try going into a meeting with only questions – no answers, no arguments, just a commitment to listen to their family members concerns or ideas. If you want to increase the odds this will be a good meeting, invite a trusted non-family member to participate. It will keep everyone more focused and on better behavior.
Third, ask your friends and peers how they managed the process. Every family business goes through transitions, and the chances are that someone you know has solved one of your problems. Talking to them might provide an answer, or might at least spur a new idea that gets you moving again.
Taylor, DTN: It seems there are so many moving parts in a transition. Tax laws, gifting strategies, legal documents, business strategy, employee management, vendor relationships, in-laws…the challenges can seem overwhelming. What practical advice do you have for families?
Woodbury, Ag Progress: First, use a good team of advisers to maintain accountability to the process. A knowledgeable CPA and attorney can provide most, if not all, of the technical advice, and other friends, business advisers or family business consultants can help with the “softer” issues. Ask these people to push you, call you, check-in on you, or even make you feel guilty if you aren’t working on the plan. Remember that a succession plan is always a work in progress, so maintain a commitment to keep working on it and ask others to nag you.
Second, focus on what I call the “first next step.” It’s easy to get overwhelmed when considering all the tasks needing accomplished, but if you keep taking steps in the right direction, you’ll be amazed at how far you can go in a year or two. End each meeting with a plan to solve a problem or to take an identified next step, and with a commitment to meet again. As they say, the easiest way to eat an elephant is one bite at a time!
Third, recognize your progress. I liken this to riding a bicycle up a mountain. If you don’t stop every now and then to look back at the valley floor and how high you’ve climbed, it’s hard to appreciate your progress, because the rest of the mountain is uphill and always in front of you. Recognition of your progress provides the fuel to keep going.
Note: Find all of Lance Woodbury's recent columns at https://www.dtnpf.com/…. He also will present on "Keeping Peace in the Family" at DTN's Ag Summit in Chicago Dec. 5-7. Details at www.dtnagsummit.com.
Follow Marcia Taylor on Twitter@MarciaZTaylor
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