1. Annie’s Project – Education for Farm Women
Annie’s Project – Education for Farm Women a 501(c)(3) organization.

2. Succession Planning Part Four
Developing the Action Plan

3. 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

4. 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

5. 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

6. 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).

7. Addressing Power Issues
Who controls decision making?
Decision making control should be secondary to the quality of the decisions.
Decision making under alternative scenarios
The issue is who controls the decision making process
From a fundamental planning perspective, ideally, create an environment in which the decision making power is secondary to the quality of the decision
Organizational structure sometimes dictates the decision making structure. The corporation present the most rigid structure.
The succession plan should contain an audit procedure that focuses on the quality of the decisions. (evaluation and review of decisions made)
Example:
In 1968, a farmer died unexpectedly at age 48 leaving a spouse (who received 48 percent of the stock in the family farm corporation) and four sons (each of whom inherited 12 percent of the stock). The sons have generally voted as a block since that time to pursue an aggressive expansion strategy with no dividends declared. The mother is extremely unhappy that her stock, now worth more than $1 million, has produced no income in nearly 30 years. She is confident that her late husband never once thought about who would have the whip hand of control.

8. Assuring Fair Compensation
Address compensation for labor, management and capital contributions
Especially younger generation members with little or no decision-making power

9. Valuing Ownership Interest
Ownership interest on a fair and equitable basis
Review process for establishing ownership interest

10. Protecting Minority Owners
Minority owners should be protected from the harshness of majority rule

11. Encouraging Phased Retirement
Encourage older individuals to retire
Level of compensation
Access to retirement benefits
Reduced-responsibility positions on the management team

12. Anticipating Disruptions
The 5 D’s review
Death, Disability, Disaster, Divorce, Disagreement, Disengagement
Legal risk and other liabilities

13. 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.

14. 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?

15. Transition Plan Road Map
Accomplishment
Beginning
Establishment
Commitment
Testing
End
Transfer Stages
Transfer Process
Child
Parent
Divide Income
Transfer Management
Transfer Ownership

16. Your Action Plan Family Meeting Date: _________
Goal Setting Date: _________
SWOT Analysis Date: _________
Advisory Team Date: _________
Decision point Date: _________
Are you going to transfer a farm business,
Or are you going to distribute assets?
Transition Plan Date: _________