managing for today and tomorrow

Managing for Today and TomorrowBusiness, Succession, Retirement and Estate Planning for Farm and Ranch Women

Managing for Today and Tomorrow

Succession PlanningSession Four

Block Two


Succession Planning


Objectives• Constructing a Succession Plan• Review tools• Tie together the tools used in a transition plan• Planning the transition plan• Discussion of barriers• Action plan – Your transition plan


Constructing a Succession Plan• 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


Building a Management Team• A team approach• Developing management skills• Cross training • Develop a functioning and effective system of

routine communications• Implementing a non-threatening evaluation


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


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)


Power Issues• Who controls decision making• Decision making control should be secondary

to the quality of the decisions• Decision making under alternative scenarios


Anticipated Disruptions• The 5 D’s review– Death, Disability, Disaster, Divorce, Disagreement

• Legal risk and other liabilities


Assuring Fair Compensation• Address compensation for labor, management

and capital contributions– Especially younger generation members with little

or no decision making power


Valuing Ownership Interest• Ownership interest on a fair and equitable

basis • Review process for establishing ownership

interest


Protecting Minority Owners• Minority owners should be protected from the

harshness of majority rule


Encouraging Phased Retirement• Encourage older individuals to retire– Level of compensation– Access to retirement benefits– Reduced-responsibility positions on the

management team


Are plans being made for retirement?• When do you wish to retire?• How much $ will I need in retirement?• How is and how will the family business help

for retirement?• What additional retirement sources are available

to each family member?


Succession Plans• Depends 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


Tools• Succession Planning• Estate Planning• Business Planning• Retirement Planning


Asset Transfer

Estate Plan

Farm/Ranch Transition Plan

Transition Plan


Transition Plan


Withdrawal

Beginning

EstablishedCommitment Testing

End

Transfer Stages

Transfer Process

Child

Pare

nt Divide IncomeTransfer Management

Transfer Ownership


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.


Your Action Plan• Family Meeting Date: _________• Goal Setting Date: _________• SWOT Analysis Date: _________ • Management (Advisory Team) Date: _________• Decision point Date: _________– Transition plan _________– Asset distribution _________

• Transition Plan Date: _________


Resource Materials


Managing for Today and Tomorrow• Presenter• Address• Phone• E-mail

managing for today and tomorrow

Documents

succession planning

estate planning

succession planplanning

ranch womenconstructing

ranch businesses

succession planreview

ranch women7each person

small proportion of