Font Size:

Family Business Matters 12/10 11:56


Family Business Matters 12/10 11:56

Self-Awareness for Success

An effective transition requires knowledge of both strengths and weaknesses.

By Lance Woodbury
DTN Farm Business Adviser

Everyone knows the importance of accountants, attorneys and wealth managers
when planning the transition of the farm or ranch to the next generation. And,
for good reason, as getting the legal, tax and financial strategies wrong can
lead to unnecessary costs and legal problems.

Less frequently emphasized but equally important to the process of
transitioning is self-awareness, or the ability to see your strengths and
weaknesses, and understand your preferences and biases. Being knowledgeable of
your problem-solving style, your family's transition history, your future goals
and your financial needs are the keys to being able to effectively "let go" of
the business. Consider the following reasons each area is important.

PROBLEM-SOLVING STYLE

Each of us has a unique way we approach our daily work. Kathy Kolbe, creator
of the Kolbe Index, outlines four action modes. Some people are more detailed,
some are process oriented, some are more improvisational and some tend to be
very hands-on. Each action mode is valuable and can get the job done, but each
will do the work in a different way. If you aren't aware of the strengths of
different styles, your bias for "your way" limits your view of the next
generation's true capabilities.

TRANSITION HISTORY

When you look back at the transition of the business from the prior
generation, how did it go? Was it an immediate transition because of an
unexpected death or disability, or was it a gradual transition over time? Did
your parents retire and move to town or stay close to the farm? Most
importantly, how did you feel during that transition? Were you frustrated?
Appreciative? Disappointed? Families in multigenerational businesses often
repeat their transition history; after all, it's the only way they've seen it
done. If prior transitions were difficult, recalling those difficulties and the
pain they caused can help you change your transition process for the better.

FUTURE GOALS

For a transition to go smoothly, it helps to feel a pull toward your next
chapter in life. That could be as simple as traveling or spending time with
grandkids spread around the country, or as challenging as doing church mission
work in another country. (My grandparents became missionaries in Japan at age
65.) Your goals might involve improving your health, writing your memoirs,
seeing new places, teaching, serving on boards or even starting a new business.
Without a reason to look toward the horizon, you will focus on the current
business, finding it hard to let go.

FINANCIAL NEEDS

One of the primary reasons for conflict in transitions is the senior
generation looking over the shoulder of the younger generation. That may be
appropriate when the younger generation is in its 20s or early 30s, but not so
much when in its 40s or 50s. It leads to a general feeling that the incoming
generation isn't trustworthy with business decisions.

Trust, however, isn't always the problem. Sometimes, the senior generation
feels like it can't financially let go. It doesn't have a good understanding of
its true financial needs -- in part because the farm has been paying many
living expenses -- thus feeling tied to the farm's income stream. Improve the
transition process by studying your income needs and articulating the sources
of retirement funds. You'll help everyone in the process.

Family business handoffs are notoriously difficult. Gathering information
from your advisers is important, but it's just as vital to gather information
about yourself. If you identify your problem-solving style, your family's
history, your future goals and your financial needs, plus get some help from
your key advisers, you can improve your odds of a successful business
transition.

**

Editor's Note: Write Lance Woodbury at Family Business Matters, 2204
Lakeshore Dr., Suite 415, Birmingham, AL 35209, or email lance@agprogress.com.


(AG)

Copyright 2018 DTN/The Progressive Farmer. All rights reserved.