Start the Transition Conversation
By Kindra Gordon
INDIANAPOLIS, Ind. (Nov. 6, 2016) — Eighty percent or more of family businesses indicate they want the family business to be passed on to the next generation of family, but less than 20% of those businesses usually have a formal written succession plan in place.
That sobering statistic was shared by Barbara Dartt as she led an Angus University workshop on Nov. 6 focused on family farm succession planning. Dartt was trained as a veterinarian, is the third generation to have worked with the Michigan Extension system, and today works with families in the Upper Midwest through her role with The Family Business Consulting Group.
Dartt noted that tension exists in family businesses because family expectations and business demands are fundamentally different.
She asks her clients to begin by recognizing there are three circles that intersect for a family business — family, business and ownership. Some individuals may have all three roles, while some individuals may only be family and business and are not yet ownership. Family members who are not in the business may only be in the family circle. As a result of these different roles, there are different perspectives, and Dartt emphasized that it increases the need for communication and decision-making structures.
One of her top tips to aid communication and decision-making is to have a designated — and neutral — place where the family can hold regular meetings.
One of the first items of business should be to align the family’s commitment to the business. This involves identifying if the current owner is prepared to step aside, and if a qualified successor has been identified and is being trained.
Also of utmost importance, according to Dartt, is for families to identify their guiding principles, which include values, vision and purpose. She suggested asking, “What does the family expect from the business? What do we want to create together? What’s our purpose?”
Dartt noted that ownership transition should never be the first step in family business succession. Instead, the process of transferring management and leadership should come first.
Dartt also emphasized that a third-party facilitator can be an important tool in this process. “They are someone to hold the family to a deadline and to keep them moving forward with this process.”
As a last bit of advice, Dartt encouraged those in the audience to get the next generation of family members working together. She noted, “Cousins working together as teens on the farm puts relationships in place you can’t replicate later. Even if some of those cousins don’t intend to return to the farm, the time they spend there provides a good education.”
View the PowerPoint for this presentation. Learn more about Dartt at www.thefbcg.com/dartt/.
Dartt’s presentation was one of the Angus University Workshops sponsored by Merck Animal Health Nov. 6 at the 2016 Angus Convention. For additional coverage of the Angus Convention, tune in to The Angus Report on RFD-TV the week of Nov. 21 and watch for coverage in the Angus Journal and the Angus Beef Bulletin. Summaries, speaker presentations, photos, videos and much more can be found online at www.angus.media.