SuccessionPlanningHowdoITraintheNextGeneralManager.ppt

Succession Planning Strategic Business Planning for Commercial Producers ? Purdue University, Center for Food and Agricultural Business, 2002 Succession Planning: How do I Train the Next General Manager? What is succession planning? …it is a PROCESS that ensures the continuation of a business through the generations. Did you know. . . 90% of U.S. businesses are categorized as family owned. 7 of America’s 8 oldest family businesses are farms. While 78% intend to pass the business on to children, only 34% create a succession plan (for 25% a will is the only element of that plan). 70% of first generation businesses fail to survive into the second generation. 15% survive into third generation. 1% survive into the fourth generation. Steps in Succession Planning Process Understand what succession is Discover expectations Examine options Create a plan Check with experts Finalize the plan Implement the plan Step 1. What Succession Is and Is Not Succession is: A process About family, people and relationships About ownership, management and estate About what is fair Driven by the family values, wants and concerns Succession is not: An event One person’s problem About minimizing taxes About equity Driven by technical issues that are handled by lawyers, accountants, etc. Step 2: Discovering Expectations Should involve all family member (whether in the business or not) Assumptions at any stage about other’s wants or expectations should not be made Say no to secrecy! Step 3: Examine Options Key Questions: What role, if any, will family members play in the succession plan? What can we do to treat all offspring fairly? How can I prepare for either a different role in the business or for retirement? How will the transfer of ownership be handled? How will the successor(s) be trained? How will the change in roles be communicated to stakeholders? Family First versus Business First Fair versus Equal Step 4: Create a Succession Plan Plan for transferring management Plan for transfer