Planning for transition?
Take your time.

by Dean W. Moreau, president and CEO, Yankee Farm Credit

It takes lots of time.
Like most farmers, you probably dream about your children continuing your business after your retirement. Your goal is to run a profitable business, and provide an opportunity for your children. As with most goals, however, preparing to transition your business to the next generation takes a lot of time. Will you and your children be ready? How will you fund your retirement? Will your children be able to buy the business? Will the business be profitable enough to support two families? These are just some of the questions you need to answer. Don't panic. But don't put off transition planning either. Setting goals, deciding where you want to be and planning how you'll get there are the most difficult tasks for any business. Figure out where you (and your children) want to be when you retire, start the process now and give yourself plenty of time to achieve your goal.

"Setting goals, deciding where you want to be and planning how you'll get there are the most difficult tasks for any business."

Example: Yankee took eight years
At Yankee, we also had a long-term goal: To be the best deal in town. Eight years ago, our lending rates were very good, but we still wanted more for our customers. We wanted to reduce our dependency on customer purchased stock and to share our earnings with our members, at the same time. To generate sufficient cash to achieve these goals, we had to make a . few changes and become more efficient - from forming strategic alliances to investing in technology. Of course, our employees just plain worked a little harder, too.

The efforts paid off. Higher profits built a stronger Yankee that could afford a generous patronage program and aggressive stock retirement. In September of this year, customers - all members of our cooperative - received their seventh stock retirement check after we reduced stock requirements from 5 percent to the federal regulatory minimum of 2 percent, with a maximum investment of $1,000. Since 1996, we paid members $9.7 million in cash as we retired their investments, in addition to declaring $12.8 million in patronage refunds. I think our plan worked. Today, I hope you'll agree that Yankee is, in fact, the best deal for every ag business in town. It took us two years to plan and then six years to achieve our goal. My message is that you can achieve your goals, too, if you start planning early and give yourself plenty of time to get there.

Take the first step now
This issue of F.P. magazine looks at the issues surrounding transitioning your family business to the next generation. There is no better time to begin planning than now, and you can do so by clicking here.

This letter appeared in the fall 2001 issue of Financial Partner (F.P.) magazine, Yankee Farm Credit's customer publication. Click here if you would like to start receiving F.P. magazine in the mail.

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