An article by Don Hofstrand found in Ag Decision Maker addresses the possible CSFs when transferring the business of a two generation farm. Some of the critical success factors include:
- The parents or older generation must be ready to share with the younger generation. It is often difficult for the first generation to relinquish control to the second generation. Also, the first generation will most likely take an income reduction.
- The second generation must be committed to farming. Sometimes children are inclined to "try it" to please their parents. They must really be committed. Also, one should consider the marital status of the second generation. If he/she is already married then the spouse needs to also be committed to farm life. If the person is single, the fact that a future family member may not like farm life needs to also be a consideration.
- All family members need to have the same vision for the business.
- The business needs to be lucrative enough to support all parties involved.
- Compatibility is also important. The first and second generations need to work well together. They also need to be able to separate personal issues from business issues. When working closely with family members, the lines between personal and business issues can often be blurred.
- Agreements that unfairly favor one family member over another should be avoided.
The article suggests, in the agricultural industry, to establish a trial period of 2-3 years if the parties have not worked together extensively in the past.
Sources:
http://www.extension.iastate.edu/agdm/wholefarm/html/c4-12.html
Turban, Leidner, McLean, Wetherbe. Information Technology for Management Transforming Organizations in the Digital Economy. 6th ed. John Wiley & Sons, 2008.
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