Values, Vision, and Intentions for Farm Succession
All businesses, regardless of size, the product produced, or the service offered, have three components: assets, management, and income.
A farm family business consists of family-owned assets that are managed by the family to produce income for the family. If the current generation’s plan is to transition the farm family business to a succeeding generation, the transition must include all three of these pillars.
1. Transitioning Assets
Assets can be defined as tangible or intangible.
- Tangible assets: Land, equipment, facilities, livestock, and tools.
- Intangible assets: Leases, ownership interests, goodwill, and reputation.
While the value of tangible assets is easier to define via fair market value, intangible assets like reputation often lead to business opportunities that wouldn’t be available otherwise.
Six Fundamental Questions for Asset Transition
The Owner Generation:
- What assets are owned by the current generation?
- How does the current generation own the assets?
- What is the net fair market value of the assets?
The Succeeding Generation:
- Who in the succeeding generation will own the assets?
- How will the succeeding generation own the assets?
- When will the succeeding generation obtain ownership of the assets?
2. Transitioning Management
The management component consists of two parts: Structure and Control.
Structure
Is the farm business a sole proprietorship, a partnership, or a business entity? Business entities are frequently used to manage risk, enhance financial management, and concentrate management efforts.
Control
Control is often the most sensitive part of the transition. Consider these questions:
- Who makes the decisions and how are they made?
- Is it a single individual, or a process of consultation and collaboration?
- Who makes the short-term vs. the long-term decisions?
3. Transitioning Income
How is income distributed to those involved? Common methods include salary, hourly wages, profit sharing, fringe benefits, and expense reimbursement.
Key considerations for income usage:
- Is income used to expand the business?
- Does it fund retirement for the current generation?
- Is it set aside for unanticipated expenses?
The Lynchpins to Planning: Values, Vision, and Intentions
While assets, management, and income are technical and transactional, the “middle step” of succession planning is often overlooked: Where do you want to be? This step requires strong communication and deep reflection. To create a sustainable plan, families must use their values, intentions, and vision as a basis for decision-making. Source
Values
Values are beliefs shaped by our experiences. When values are identified, decisions become clearer.
- Value Systems: These link people by creating shared standards for judgment.
- Priority Shifts: While core values may not change, their priority might. Past decisions may no longer reflect what you value most today.
Vision
“Vision without action is a daydream. Action without vision is a nightmare.” — Japanese Proverb
Developing a shared vision changes succession from a daydream to a concrete idea. Start by answering questions about daily tasks, responsibilities, and income sources for the next 3 to 5 years. If goals and timelines don’t match, more discussion is required before a plan is possible. Source
Intentions
An intention is a goal or purpose you plan to carry out.
- For Owners: Intentions may revolve around legacy. Is it more important that the family owns it, or that it simply remains a farm?
- For Successors: Intentions involve management skills and lifestyle goals, such as vacation time. While seemingly trivial, ignoring these can derail the best transactional planning.
Summary
There is no one-size-fits-all in succession planning. Completing these activities—Values, Vision, and Intentions—is the key to understanding “where you want to be,” which ultimately informs the final step: “how to get there.” Source
Reflection Questions
- Do you have your vision and intentions around your farm succession written down?
- Have you shared your vision and intentions with your spouse, business partners, and family members?
- How do you plan to share your ideas with others?
Recommended Resources
The following worksheets in the Cultivating Your Farm’s Future workbook can help you start these conversations:
- Core Values Clarification Exercise, pp. 27–30
- Intentions for the Owner Generation, pp. 24–25
- Intentions for the Successor Generation, p. 26
- What Does Your Future Look Like?, pp. 31–32
Sources
Author Bio
John Baker, Retired Attorney & Iowa State University Extension Specialist
Joy Kirkpatrick, Farm Succession Extension Specialist, University of Wisconsin–Madison