Running a family farm business? Three common opinions you may want to rethink

Most farmers spend time on operations, but it’s also important to know when, where and how to maximize the operation.

Many farm families have a hard time talking about the future. Fear, intimidation and superstition cause families to avoid the topic of estate planning. Silence can destroy businesses and relationships from the inside out.

At a recent FCC virtual event, Dr. Tom Deans shared tips for successfully transitioning modern farm businesses while keeping family wealth and relations intact.

Deans addressed three opinions about family businesses and gave his thoughts on whether they are fact or fiction:

1. Every family business should always be for sale

   True. Most farmers are owner-operators but spend most of their time on operations. Financially successful businesses become more successful when owners spend time on the ownership component, figuring out when, where and how to maximize their operation. In farming, this may include acquiring or selling land at opportune times.
   
   Watch his full answer

2. Longevity is a key family business objective

   False. Longevity as an objective sets a difficult standard. If the next generation does not have the same passion, drive and ability as their parents, transitioning the business would set them up to fail. If the next generation chooses not to farm, neither the family nor business should be viewed as a failure. There is no shame in selling a business.
   
   Watch his full answer

3. A family’s business is their legacy

   False. The reality is that we will be remembered for the kind of people we were and not for the businesses we ran.

   When a family farm is gifted to the next generation through an estate, it is emotionally difficult for them to then sell it. They think that the business must continue to be passed on the same way it was transitioned. This pattern gets hardwired and can cause tremendous heartbreak, confusion and wealth destruction.
   
   Watch his full answer

Bottom line

Family farm transition can be an intimidating topic full of myths about farm value, legacy, sale price and more. Addressing these topics helps keep family prosperity and relationships undamaged.

To hear more of Dean’s approach to family business transition, view the full webinar recording.

Article by: Rebecca Hannam

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