Managing for Today and Tomorrow Succession, Business, Estate, and Retirement Planning for Farm and Ranch Women Managing for Today and Tomorrow Succession Planning Part Four Developing the Action Plan

Managing for Today and Tomorrow Succession, Business, Estate, and Retirement Planning for Farm and Ranch Women Key Succession Planning Tasks Planning for the gradual shift in management from one generation to the next. Shifting ownership of the assets involved from generation to generation. Anticipating events that could disrupt management and ownership succession.

Managing for Today and Tomorrow Succession, Business, Estate, and Retirement Planning for Farm and Ranch Women Building a Management Team Design a team approach Develop new management skills Cross train Seek a functioning and effective system of routine communications Implement non-threatening evaluation processes

Managing for Today and Tomorrow Succession, Business, Estate, and Retirement Planning for Farm and Ranch Women Developing the Next Generation of Managers “The final test of greatness in a CEO is how well he chooses a successor and whether he can step aside and let the successor run the company.” Peter Drucker

Managing for Today and Tomorrow Succession, Business, Estate, and Retirement Planning for Farm and Ranch Women Turning Over Control Start early to learn each potential successor’s capacity Successor may be in-law, grandchild, or neighbor Ask yourself, “can I live with their decision” Give control over different sectors of the business so the next generation can master each one independently. Rome was not built in a day – your successor’s transition into control should be gradual (but not so gradual that they lose interest)

Managing for Today and Tomorrow Succession, Business, Estate, and Retirement Planning for Farm and Ranch Women Addressing Power Issues Who controls decision making Decision making control should be secondary to the quality of the decisions Decision making under alternative scenarios

Managing for Today and Tomorrow Succession, Business, Estate, and Retirement Planning for Farm and Ranch Women Assuring Fair Compensation Address compensation for labor, management and capital contributions –Especially younger generation members with little or no decision making power

Managing for Today and Tomorrow Succession, Business, Estate, and Retirement Planning for Farm and Ranch Women Valuing Ownership Interest Ownership interest on a fair and equitable basis Review process for establishing ownership interest

Managing for Today and Tomorrow Succession, Business, Estate, and Retirement Planning for Farm and Ranch Women Protecting Minority Owners Minority owners should be protected from the harshness of majority rule

Managing for Today and Tomorrow Succession, Business, Estate, and Retirement Planning for Farm and Ranch Women Encouraging Phased Retirement Encourage older individuals to retire –Level of compensation –Access to retirement benefits –Reduced-responsibility positions on the management team

Managing for Today and Tomorrow Succession, Business, Estate, and Retirement Planning for Farm and Ranch Women Anticipating Disruptions The 5 D’s review –Death, Disability, Disaster, Divorce, Disagreement Legal risk and other liabilities

Managing for Today and Tomorrow Succession, Business, Estate, and Retirement Planning for Farm and Ranch Women Remember to Communicate Satisfying Succession Plans depend heavily on the personal chemistry of the individuals involved The underlying success of any business agreement depends on healthy family relationships More two-generation family business arrangements fail because of poor family relations than any other reason

Managing for Today and Tomorrow Succession, Business, Estate, and Retirement Planning for Farm and Ranch Women Barriers Discussion What are some of the barriers you have discovered in reaching a decision to transition the farm or ranch business or pass a set of assets to the next generation?

Managing for Today and Tomorrow Succession, Business, Estate, and Retirement Planning for Farm and Ranch Women Transition Plan Road Map Accomplishment Beginning EstablishmentCommitmentTesting End Transfer Stages Transfer Process Child Parent Divide Income Transfer Management Transfer Ownership

Managing for Today and Tomorrow Succession, Business, Estate, and Retirement Planning for Farm and Ranch Women Your Action Plan Family MeetingDate: _________ Goal SettingDate: _________ SWOT AnalysisDate: _________ Advisory TeamDate: _________ Decision pointDate: _________ – Are you going to transfer a farm business, – Or are you going to distribute assets? Transition PlanDate: _________