JEFFERSON, Ohio — Planning may be one of the most critical functions of management, but that doesn’t mean that long-term transition planning is always a high priority for farmers.

Many farmers may feel uncomfortable planning for the future of the farm without themselves as the prominent player. The issue is often complicated because it affects not only the farm as a business, but the farmer’s family as well.

There are a variety of reasons farmers put off transition planning, said David Marrison, Ohio State University Extension educator in Ashtabula County.

One common reason may be that the “father” never plans to retire. “This could be for a variety of reasons, but the main one is that many farmers have not made adequate plans for retirement,” Marrison said. “It is also tough for many operators to give up managerial control as the lines between dad and boss become blurred.”

When thinking about transition planning, questions often arise about who will manage the business in the future and how much money is needed to make it through retirement.

“Most farmers dream of seeing their legacy passed on to the next generation but postpone initiating a plan for succession, often citing there is not enough ‘time’ to discuss these matters,” Marrison said. “Or, when planning does occur it usually involved grandma and grandpa drafting a will outlining who gets the farm, cows, or Depression glass and then hiding it in a safe place until they die.”

Add in concerns about how to treat each child or heir fairly when it comes to dividing up the farm and how to know if and when children are ready to take over the farm, and the issue gets even more complex.

“Often times, the farm is split evenly between the siblings, regardless of their involvement in the farm,” Marrison said. “But transition planning is more than pure estate planning, as transition planning deals with making sure the next generation is ready to manage the farm, that there are enough financial funds available for all members of the family business and that there is an orderly plan in place for transferring assets from generation to generation.”

Beyond the “simple” division of assets, many farmers are often confused about the legal hoops of passing the farm on without hurting the farm’s financial standing, planning for the farm to be profitable for multiple generations and concerns about the farm having enough equity to retire without selling out.

It’s no wonder farms may often feel overwhelmed by these decisions. But Marrison said the process does not have to be that complex, and there’s no reason for farmers to attempt to navigate these unfamiliar waters alone.

That’s why Ohio State University Extension will be conducting a series of four workshops on Building for the Successful Transi-tion of Your Agri-cultural business to be offered across the state from January to March 2007.

Each two-day workshop is designed to help family businesses develop a transition plan for their business. Sessions will challenge families to examine their business to the core and actively plan for the future. Participating farm families will come together to develop a plan for the farm’s future, discover ways to increase family communication, plan for retirement and learn strategies for transferring management skills and the farm’s assets from one generation to the next.

“Too many times, we see farm families torn apart and successful farms sold to the highest bidder because of the lack of family planning and communication about the future,” Marrison said. While the Small Business Administra-tion statistics show that 78 percent of families intent to pass the business on to their children, only 34 percent have created a succession plan, and 25 percent of these plans consist only of a will.

“In most cases, farm families forget the two most important components of succession planning, those being planning for retirement and for the successful transfer of management” Marrison said.

“The stark reality is that only 30 percent of first-generation businesses survive to the second generation and 15 percent to the third. If you are successful to a fourth-generation business, you are something special, because only 2 percent of businesses make it to this level.”

The first day’s workshop session at each of the four locations will help all members of the family business analyze the current business status, determine where the business is going and plan for the future.

Participants will learn how responsibilities can be shared between generations and how the new generation of managers can be developed.

The sessions will examine the strengths, weaknesses, opportunities and threats to the family business and will help family members develop a shared vision for the future. Family members will be encouraged to honestly communicate when planning for the future.

The keynote speaker will be Bernie Erven, professor emeritus with The Ohio State University.

The second day’s workshop session will focus on the nuts and bolts of transferring a family business from one generation to the next, allowing participants to learn more about business organization structures and strategies, how to treat on-farm and off-farm heirs, how to equitably transfer assets and how to plan for adequate retirement income.

“Too many young folks are leaving the farm because a plan is not in place that looks at making the business a viable operation for all the generations involved in the business,” Marrison said.

“Transition planning should not only be looking at the next generation, but also to the following one as well.”

Scheduled workshops include:

•Jan. 23-24: Carrollton, Ohio
•Jan. 25 and Feb. 7: Archold, Ohio
•Feb. 26-27: Mt. Sterling, Ohio
•Feb. 27 and March 6: Waldo, Ohio.

All sessions will be held from 9 a.m. until 4:30 p.m., with special evening programs at Carrollton and Mt. Sterling workshops.

Registration for two-days is $75 for the first family member and $50 for each additional family member attending.

Registration includes a workshop notebook, refreshments and lunch for both sessions.

Registration is due 10 days prior to the first session at each location. These workshops are possible through a grant from the North Central Risk Management Education Center.

For workshop details, visit ohioagmanager.osu.edu

This farm news was published in the Oct. 25, 2006 issue of Farm World, serving Indiana, Ohio, Illinois, Kentucky, Michigan and Tennessee.