Diversifying the Business

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Bringing the next generation back to the farm or ranch may require building the business to support another family. Building the business may come in the form of using the current generation's equity to purchase more land or livestock. But another means of building the business is to diversify, according to Shannon Kubik with Keep Farmers Farming.

“With the next generation, we talk through ideas of what they can do to diversify. So that could be off-farm jobs, crop consulting and crop scouting. It could be starting businesses like selling home-raised beef or other meats or things like that or just other businesses,” explained Shannon Kubik, Legacy Consultant with Keep Farmers Farming.

If going with an off-farm job, expectations and compensation need to reflect the time and dual obligations.

“Ultimately, it just comes down to communication and making sure everyone within the operation agrees upon that time commitment and understands, if this person is working off farm, to make sure that we can really make this operation move forward. We're all in the same understanding of what that means for time spent in the business and outside of it,” shared Shannon.

If the goal is to transition the farm or ranch to the next generation, the family may wish to develop a roadmap to guide the progression of management and ownership.

“It could be that you build a timeline out to understand, for the next five years, they're going to spend 80% of their time off farm to build this other business and 20% of their time on farm to keep moving forward,” said Shannon.

The Keep Farmers Farming Legacy Team can assist families in transitioning the business, providing insight on diversification to finance the strategies. Keep Farmers Farming is a division of the South Dakota Ag Foundation.

Learn more about the Keep Farmers Farming program here.

Taken from a conversation with Pam Geppert from Dakota Farm Talk.