Beginning farmer Kelly Schramm moved to Western New York earlier this year to start Golden Hour Farm with two partners. The trio is borrowing just over an acre of farmland in North Collins to grow herbs, greens and flowers. Schramm, who comes from a non-farming family, wants to own her own farm someday, which may be possible if she finds a farmer who wants to sell the operation to her.
- Frank Muggia, Guest Columnist
According to an article published in April in the Harvard Business Review, approximately 70 percent of most family-owned businesses last just one generation. Without planning, the succession of the business often proves to be the first failure experienced by the business.
Succession planning is the process of transitioning ownership of a closely-held business. When properly done, succession planning provides for a smooth transition and makes the decision to retire much easier. It gives the business owner the confidence that the business and the employees whose livelihoods are dependent upon it can be maintained, and that the owner’s legacy can be continued.
The succession-planning process should be started early on and consistently reviewed and updated. This will allow for better alignment of the likely differing needs and interests of the parties: that of the existing owner as to stock value and retirement income needs; that of the new owners as to their income and cash-flow needs; and that of both as to the ability of the business to finance the succession plan and maintain its profitability and its continuing financial health. A well-conceived succession plan will assist in its funding and provide the retiring business owner, the new owners and the business itself with better control over the succession process in meeting these often divergent needs and interests. When integrated into the company’s overall business strategies, a well-designed succession plan can serve as an incentive to retain and/or attract key employees and family members to the business, while ensuring the future financial health of the business.
See Also
- Attorneys help in answering, ‘Who’ll run the farm?’
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FRANK MUGGIA, a partner at Harris Beach PLLC, represents businesses in general corporate matters: fmuggia@harrisbeach.com.
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