For New Farmers
I plan to take over an existing farm business. What are the best ways to accomplish this?
There are advantages and challenges to taking over an existing farm business. Your risk might be lower if you join an existing business, and there may be opportunities to build your skills as you work your way in. A lot will depend on the nature and viability of the business enterprise, and even more, on the nature and success of the relationship between you and the current operator.
Here are some things to consider:
- Regional Farm Link programs can help with making connections between entering and exiting farmers (see below).
- Is the business viable? How will your entry affect viability? Will it be viable into the future? Get information about all aspects of the farm's history. Have a lender or farm financial specialist help you with a business viability assessment and financial projections.
- Do you really want a business partner? Do your individual goals mesh with those of your prospective partner?
- How well do you think you will work together? Ask each other the tough questions about what it would be like working together.
- Investigate and decide on the appropriate business structure. How will income and expenses be shared? Can you build up equity and/or equipment ownership over time by working for the current owner? There are business structures that offer greater or lesser flexibility and shared risk. And, the business structure can change over time. How will assets be transferred?
- Decide upon an appropriate management structure. How will management decisions be made? Think about systems for accountability for each partners' actions. Agreements for transferring management responsibility are likely to change over time, also. How willing is the current owner to let go?
- Be prepared for the 5 D's: Death, Disability, Divorce, Debt, and Disagreement. How will your business agreement be dissolved, if need be?
- Get the business agreement in writing! The technical details for a farm business agreement can be handled by your accountant, your lender, and an attorney.
- Especially in direct marketing enterprises (such as CSA's, farmers markets, restaurants), consider working with the current owners for an overlap period so you can be "introduced" to regular customers. This can be crucial for a smooth transition.
Here is a sample of resources:
Farm Link Programs: In the northeast, there are organizations and programs dedicated to assisting in the farm transfer process. The National Farm Transition Network lists and links you to all the "farm linking" programs in the US. In the Northeast, farm link programs serve CT, ME, MA, VT, NH, RI, NY, NJ, and PA. They offer a wide variety of programs, individual consultations, referrals, publications and other services for farm transfer, accessing farmland, and related topics.
Connect with your local Farm Credit office through the Farm Credit System.
Farmland Transfer and Protection in New England is published by Nesfi, and available from our bookstore.
NY FarmLink publishes both a Senior Generation Farm Transfer Guide and a Junior Generation Farm Transfer Guide.
Search the internet for a Family Business Center in your area. Examples include the University of Massachusetts' Family Business Center, University of Delaware Family Business Center, and the University at Buffalo (western NY) Family Business Center.