A typical family-run ranch or farm may look like this: grandparents still own and collect rent on the majority of land, parents serve as CEOs, and the third generation works the land as general managers while raising the upcoming progeny at the homestead. All of these positions fit the respective generations’ needs and status right now, but a family business like this needs to be constantly looking to the future – and taking steps now that will allow smooth transitions.

Many family-owned businesses face similar problems: unclear business policies, ineffective communication among generations, and lack of talent right for the job. Ranches and farms have the added strain of reconciling these issues under the same roof as the family hearth and home. A successful way to navigate this rough terrain may be a well-defined succession plan.

Succession planning is about the continuation of leadership within the family business, working in tandem with transition of ownership and a progressive estate plan. The first step to crafting an effective succession plan can entail bringing in outside help, such as a family business consultant. Every company needs good advisors; a family business consultant might be the perfect addition to the support team.  This neutral character can assist the business in many facets, some obvious and others less so.

A family business consultant can approach the company objectively, asking hard questions that are off limits for emotionally-tied family members, such as whether the next generation has enough experience to take the reins yet, or opening the dialogue for senior members to begin passing the responsibilities of leadership. The older generation is often reluctant to acknowledge and appreciate changes in the way business is done. A family business consultant can be supportive of the preceding generation, reminiscing on binding handshake deals, while advocating for the incoming generation’s proposal of technology-driven deal-making and production. Serving as a neutral bridge between generations could catalyze the ranch or farm into a new era.

The family business consultant may suggest writing out a precise succession plan. This document could include the business’ mission statement, family employment policy, and definition of the position of CEO. Putting the mission in black and white can help the operation to continue running with a commitment to family values and objectives.

A transfer of leadership plan that is clear on who holds the leadership positions and what their duties are can help the senior generation mentally prepare for handing over control. It can also help the junior generation, who frequently finds their innovation and abilities curtailed because they are still under the watchful eye of the seniors. By putting the entire operation on notice of who will take control and when that transfer will go into effect, the family can avoid internal strife that could otherwise arise. The transfer plan also helps in a time of crisis, when the business needs clear leadership the most. A family with a transfer of authority scheme has protected itself from having to ask who will take charge; instead, they can move forward during the emergency as a unified front without question of who is leading.

The main priorities of ranches and farms are profitability, acquiring and managing land and accumulating wealth. A successful family operation can achieve all of these things while still enjoying a family dinner together. Putting down in writing the family’s succession plan – including its mission statement, employment criteria, and CEO designation is one way to help achieve that harmony and to ensure the family has a ranch or farm to pass on to the next generation.

Ashley Brown has drafted memoranda on a variety of business transaction matters for organizations in both the public and private sector. She also has experience in reviewing and analyzing a broad range of legal documents, ranging from police reports at the Seattle City Attorney’s Office to consumer complaints at the FTC. Contact Ashley at AshleyBrown@dwt.com or directly at 206-757-8284.