Family Business Succession Part 2

Family Business Succession Part 2. I’m Greg Martin with today’s Fruit Grower Report.

Michael Stolp with Northwest Farm Credit Services says there are some important considerations when it comes to passing the family business on down the line. There are some important questions you need to ask yourself.

STOLP: You know the question is what do you want your business to grow into or develop into over the next 5 years. And you know as we talk about vision, people sometimes say well Michael that sounds to be kind of an academic or fluff exercise. It doesn’t have to be. It can have a real meaningful impact on your business.

Another big question is what are the owners priorities?

STOLP: Often times when I work with family businesses I’ll hear from the junior generation; man, I just don’t know where mom or dad are coming from or the junior generation will say man, I just want to grow like crazy. Well that takes capital, doesn’t it? So what we do is we sit down with families and we ask these simple questions.

And Stolp has some quick tips for you to start with.

STOLP: Draw down a scale from 1 to 10 where 1 is the least risky and 10 is most risky and ask the people you work with you know guys on a scale of 1 to 10 what’s our risk tolerance. And then ask yourself this, how does my risk tolerance compare to those other people in my business? And then finally, ask yourself this question; are you too risky, too conservative or just right? Particularly as you deal with succession planning often times without diving into these owner issues what you can do is find yourself beating your head against the wall because owners have varying perspectives with regard to risk and their want to contribute capital to different ventures.

That’s today’s Fruit Grower Report. I’m Greg Martin on the Ag Information Network.