An unexpected emergency or illness generally causes farmers to begin thinking about the next generation that will take over the business. While some Illinois farmers may plan to sell their business when it comes time to retire, others prefer to hand a farm over to their heirs.
Farmers may have spent several decades building a reliable revenue stream. Keeping enough income flowing to comfortably sustain a farm family’s budget typically requires a dedicated commitment. The challenge is recruiting the most interested and motivated heir to learn the business and then take over when necessary. Many family-owned farms face tough choices when deciding on a suitable successor.
Finding and training the next farmer
With a shortage of young adults interested in farming, a proprietor may find it difficult to encourage his or her heirs to begin learning agricultural management. The number of U.S. farmers over the age of 65 compared to those under 35 reflects a ratio of 6 to 1, as reported by The State Journal-Register.
As noted by Forbes magazine, only 52% of families surveyed expect to have an heir take over their business over the next five years. Nearly 50% of those surveyed do not anticipate that their business will remain in the family after its owner has passed away. In line with the survey results, which reflect a variety of U.S. family businesses, the Prairie State’s agricultural community includes many older farmers who would like to retire but do not have an interested successor.
Training a new farmer to effectively manage an agricultural enterprise is a process that may take several years. A hands-on approach could help accomplish a smoother transition. Technology can also be helpful; significant improvements in farming equipment enable fewer workers to handle several acres.
Creating a document for ownership succession
Successful succession planning involves preparing an heir to run the farm without disrupting its existing customers and distribution channels. Preserving a farmer’s legacy rests on careful planning and documentation of a new ownership structure. Distributing income between family members and a farm’s new owner can also become part of a documented succession plan.