<b>By LINDA McGURK<br>
Indiana Correspondent</b> </p><p>

WEST LAFAYETTE, Ind. — Family businesses in the United States certainly have the odds stacked against them – fewer than one-third survive into the second generation and only 15 percent survive into the third generation.<br>
Purdue University’s 28th annual Farming Together workshop on Jan. 25-26 focused on how to avoid some common pitfalls when passing the family business from one generation to the next. And, contrary to popular belief, the key to successful succession planning is not necessarily a good lawyer, but straightforward communication.<br>
“Communication is the underpinning for everything else we’re doing here,” explained Alan Miller, a Purdue farm business management specialist, to the approximately 30 workshop participants.<br>
“A lot of times, people’s questions will be technical – like what to do about tax issues or how you form a C-corporation – when really what they need to do is go back and build effective communication.”<br>
A common dilemma for retiring farmers is how to treat off-farm versus on-farm heirs, and often they take it upon themselves to figure out what to do. Miller said a better strategy is to talk to all family members who will be affected by the decision to see what their expectations are, and what kind of roles they would like to play in the future of the farm.<br>
“It’s a disaster to assume you know what people want, but we see it happening all the time. Talk to people one-on-one instead of calling a big family meeting,” Miller said, adding it’s critical to avoid secrecy in succession planning.<br>
When farmers plan for transfer of management and ownership of their operations, they’re also faced with the “fair versus equal” issue. Some decide to split everything equally among the children, even in situations when one child has returned to the farm and invested years of labor and the other siblings have no interest in keeping it.<br>
“We run into this ‘family first’ idea all the time and it causes the older generation to choose what’s equal, but not always fair,” Miller said. “Some people start worrying about their legacy and forget that they have somebody out there who’s busted their tail off to build value and assets on the farm.”<br>
The workshop also encouraged farm operators to consider the strengths different people can bring into the business and make sure the successor develops the right skills to run it.<br>
“The skill sets required on farms today are different than they used to be,” Miller said. “Twenty or 30 years ago, if you were a good production manager, you could be a good farmer. Now the farmer has taken on the role of a CEO; more of the work is related to relationships with other people and strategic decision-making, and the farmer has to be more attuned to risk management.”<br>
Josh Martin, 21, of Knightstown, Ind., attended the workshop with his father, David, to learn how to ease the succession of the family’s grain farm from one generation to the next. Josh plans to get involved with the farm, which is run by his father and grandfather, after graduating with an agribusiness management degree from Purdue.<br>
“I think keeping the lines of communication open is really important. A 21-year-old and a 70-year-old can have really different ways of communicating. A lot of operations don’t have that great of an age span,” he said.<br>
Josh also said a big challenge, when working closely with other family members, will be setting boundaries between the family and the business.<br>
“(You need to be) able to leave the farm at the farm and not talk about crop prices at the family dinner,” he said. “I think a lot of people fall into that trap.”<br>