The other day, my Road Warrior travels took me to Columbia, MO, for the Missouri Bankers Association’s annual agribusiness conference. At the end of the session, Barb Buchmayer, a dairy and livestock producer who was a fellow student with me at Cornell University, peppered me with written questions from the attendees. A challenging question was, “What is one do and one don’t you would recommend to younger and older producers?”
Starting with the senior group, the one piece of advice I gave them was to be proactive and not procrastinate on business transition planning. Often the senior generation will wait too long before beginning to plan and execute a transition or exit from the business. The planning process will frequently take an extended period of time, from 12 to 24 months, and it usually requires investments in resources such as an outside facilitator, accountant attorney, and other professionals. This planning has to have a high priority, similar to planting, harvesting and caring for livestock. If one procrastinates on planning, there will be two winners in the end: lawyers, due to their fees charged during emotional and unplanned moments, and, of course, Uncle Sam because of the tax consequences.
Also, I advised the older generation not to treat all family members equally in the distribution of assets, but to treat them equitably. If a young family member has generated positive business profits and net worth growth on the balance sheet, they should be rewarded appropriately. In Canada, many suggest that the junior siblings staying on the farm business who are successful should receive $3 of equity for every $1 received by siblings off the farm. The younger generation away from the farm often receives cash or liquid assets such as life insurance proceeds. These assets have maximum liquidity and flexibility with very little risk. The farm or ranch has a tremendous amount of potential, but it also comes with financial, environmental, legal, and weather risk.
Next time I will focus on nuggets of advice for the younger end of the spectrum.
No I in team
I attended the Missouri vs. Arkansas men’s basketball game with my good friend, John Allen of the Missouri Bankers Association and Dr. Will, a medical doctor on campus. It was interesting to observe the one-on-one versus team basketball dynamics with these two teams. There was a lot of talent, but it appeared that it was about me versus the team. Bob Knight, the famous basketball coach, was the commentator for ESPN for this game. Though I did not get to hear his audio, he must have been shaking his head in disappointment. Remember there is no “I” in the word “team,” and that goes for athletics and business as well!