Earlier we discussed the importance of transferring management to the successor generation. However, we did not delve into the details of making this transfer successful. To help with this process the University of Wisconsin – Madison Division of Extension Farm Succession educators developed the Control of Farm Management Decisions Worksheet. This worksheet allows the farm owner and successor to rank how important the following are to them
- To be involved in the daily operation of the farm business?
- To be involved in the production decisions for the farm business?
- To be involved in the marketing decisions for the farm business?
- To maintain some financial control of the farm business?
Once each generation has identified how important the above items are to them today, they are asked to think about how important they may be in 3 years and in 5 years. Once the ranking has been established it is time to talk about what is most important to the owner and most important to the successor. The owner and successor can then utilize the rankings they provided to work on the “Planning Transfer Control” page of the worksheet. If marketing the farm’s soybeans is not very important to the owner generation but it is to the successor then this should be listed as a management decision that will be transferred immediately to the successor. Working on each management decision by order of importance gives the two generations the ability to develop a transfer plan that allows each to hold on to what they feel is the most important, and to make compromises about others.
When working through developing a plan to transfer management decisions it is important to realize that management decisions should be transferred incrementally. In the worksheet the owner and successor can select what will be transferred in a year, in two years, and in three years.
Having a framework of when management decisions will be transferred will give both the owner and the successor generations peace of mind. Through the incremental transfer of management, the owner generation can gain confidence in the successor generations ability to make decisions that will result in the continuation of the farm the business and their legacy. The successor generation gains confidence in their farm management decision making while utilizing the safety net of the owner generation. At the end of the transition period, the successor should feel confident in their ability to make management decisions in all aspects of the farm business.
