Journal of the NACAA
ISSN 2158-9429
Volume 3, Issue 1 - July, 2010
Determining the Effectiveness of the Ohio Farm Transition Program
- Marrison, D.L., Assistant Professor, The Ohio State University
Breece, D., Associate Leader, ANR, The Ohio State University
Bruynis, C., Assistant Professor, The Ohio State University
Gastier, M., Extension Educator, The Ohio State University
McCutcheon, J., Assistant Professor, The Ohio State University
Ward, B., Assistant Professor, The Ohio State University
Woodruff, J., Extension Educator, The Ohio State University
Zoller, C., Assistant Professor, The Ohio State University
ABSTRACT
In 2007, OSU Extension professionals developed and conducted the "Building for the Successful Transition of your Family Business" workshops. These workshops provided 105 participants with the skills needed to develop a farm transfer plan and to increase family communication. This journal article summarizes the team's post program evaluation of the workshops as well as the six month follow-up survey to determine the transition planning progress and future needs of the clientele. Seventy-eight families responded to the post-program survey and 53 responded (50.5%) to the six month survey. The results of the post program survey and the six month follow-up survey showed the workshops were successful as many positive comments were written by the participants and good mean gains in knowledge gain were achieved. The six month survey indicated the participants made great strides in putting into action the tools they learned during the workshops. Eighty-five percent (85.1%) have had discussions with their family about business transition, 84.8% have improved their communication, and 76.6% have started an estate plan. In addition, 54.2% of the participants held an intergenerational family meeting, 35.4% reported meeting with their attorney, and 33.3% met with their accountant to develop a transition plan. OSU Extension has continued to offer transition planning workshops across Ohio as a result of the surveys. Additional Extension factsheets and curriculum have been authored by the teaching team. Additional strategies for following up with the program participants are also being explored by the team.
Determining the Effectiveness of the Ohio Farm Transition Program
Introduction
In 2007, OSU Extension professionals developed and conducted the “Building for the Successful Transition of your Family Business” program for farms and agribusinesses. This program addressed the human and financial risks that many Ohio farm families face due to a lack of planning for the successful transfer of the farm business. A two-day workshop retreat was developed to help farm families discuss and plan for the future. The workshop challenged participants to critically assess the future of their farm business giving special attention to management transfer, business structure, and estate planning alternatives. It also provided participants with the skills needed to develop a farm transfer plan and to increase family communication.
The main session topics for the first day of the workshop included: transition planning, goal setting, mission statement, SWOT (strengths, weaknesses, opportunities and threats) analysis, and family communication. The second day of the workshop focused on tax management, business structure, and estate planning. Each of these topics were taught using case studies of both successful and unsuccessful transition planning ventures of Ohio farm families. The workshops were held in four regional locations in Ohio (Carroll, Pickaway, Fulton, and Marion Counties) with 105 individuals participating. Twenty-two Extension Educators also attended as train-the-trainers. This article summarizes the team’s post program evaluation of the workshops as well as the six month follow-up survey to determine transition planning progress and future needs of the clientele.
Procedures
Two surveys were developed by the research team to gauge the effectiveness of the OSU Extension’s “Building for the Successful Transition of your Agricultural Business” educational program and curriculum. These evaluation surveys were pilot tested utilizing input from the Extension Educators involved in farm management education. This project was reviewed by the Institutional Review Board at The Ohio State University. Survey data were tabulated, statistically reviewed, and summarized by Ohio State University Extension faculty.
In the post-program survey, attendees were asked a variety of demographic questions about themselves and their farming operation. They were also asked to rate their knowledge gain in a variety of transition planning topics, to report their intentions in completing a variety of transition planning activities, and what information they would like to learn more about concerning farm transfer. Seventy-eight families responded to the post-program survey at the conclusion of the two day workshops.
A six month follow up survey was conducted to determine the progress of respondents in their transition planning activities. The survey was mailed to the 105 participants with 53 usable surveys returned for a response rate of 50.5%. Data were analyzed using the statistical program Statistical Package for the Social Sciences (SPSS). The Extension Educators who participated in the regional sessions and in a state train-the trainer workshop were not included in the survey group. It should be noted that no significant differences were found between the attendees based on the workshop location.
Post Program Survey Results
As part of the demographic questions, respondents were asked to indicate what type of business or businesses they operate. Seventy-four percent (n=58) reported operating a grain operation, 18% raise beef, 14% raise dairy, 10% raise sheep, 5% grow fruit or vegetables, 1% raise swine and 13% indicated operating other enterprises such as a nursery, animal park, tree farm, and timber. The age breakdown of respondents was: less than 25 years old (1%), ages 25-34 (9%), ages 35-44 (10%), ages 45-54 (24%), ages 55-59 (17%), ages 60-64 (9%), ages 65-69 (14%), and over 70 years (17%). The acreage size of respondents was: 1-9 acres (1%), 10-49 acres (1%), 50-179 acres (6%), 180-499 acres (27%), 500-999 acres (28%), and over 1,000 acres (35%). Respondent’s operations had one to four generations involved in the operation with a mean of 1.94. Attendees also indicated they represented the first to the seventh generation with respect to the farm operation since its establishment with the mean being 2.77.
Respondents reported their perception of their level of knowledge of the subjects presented before and after the program on a 5 point Likert scale. A ranking of 1=poor, 3=average and 5=excellent was utilized.
Table 1. Reported Knowledge Gain from Transition Planning Workshops
|
|
Average Reported Knowledge
BEFORE the Program
|
Average Reported Knowledge
AFTER the Program
|
|
|
Subject
|
Diff.
|
1=Poor, 3=Average, 5=Excellent
|
1=Poor, 3=Average, 5=Excellent
|
|
The functions of management
|
0.92
|
Mean = 3.09, SD = 0.78, n = 74
|
Mean = 4.01, SD = 0.57, n = 72
|
|
What is transition planning
|
1.18
|
Mean = 2.72, SD = 0.86, n = 75
|
Mean = 3.9, SD = 0.73, n = 73
|
|
The whole farm planning process
|
1.08
|
Mean = 2.88, SD = 0.88, n = 74
|
Mean = 3.96, SD = 0.65, n = 74
|
|
Importance of a mission statement
|
1.04
|
Mean = 2.76, SD = 1.21, n = 75
|
Mean = 3.8, SD = 0.82, n = 75
|
|
Internal organization of the business
|
0.75
|
Mean = 3.09, SD = 0.81, n = 74
|
Mean = 3.85, SD = 0.69, n = 72
|
|
Use of a SWOT analysis
|
1.36
|
Mean = 2.07, SD = 1.06, n = 71
|
Mean = 3.43, SD = 0.87, n = 69
|
|
Developing goals for the business
|
0.86
|
Mean = 3.18, SD = 0.9, n = 74
|
Mean = 4.04, SD = 0.67, n = 74
|
|
Financial analysis of operation
|
0.74
|
Mean = 3.07, SD = 1.02, n = 75
|
Mean = 3.81, SD = 0.74, n = 74
|
|
Importance of communication
|
1.2
|
Mean = 3.35, SD = 0.85, n = 75
|
Mean = 4.55, SD = 0.6, n = 75
|
|
Importance of family meetings
|
1.47
|
Mean = 2.95, SD = 0.88, n = 76
|
Mean = 4.42, SD = 0.59, n = 76
|
|
Importance of developing the skills of the next generation
|
0.78
|
Mean = 3.46, SD = 0.89, n = 75
|
Mean = 4.24, SD = 0.68, n = 74
|
|
Business organizational structures
|
0.95
|
Mean = 2.99, SD = 0.73, n = 74
|
Mean = 3.94, SD = 0.71, n = 74
|
|
Business transfer strategies
|
1.43
|
Mean = 2.44, SD = 0.9, n = 77
|
Mean = 3.87, SD = 0.4, n = 77
|
|
Financial issues in transferring a family business
|
1.27
|
Mean = 2.58, SD = 0.91, n = 76
|
Mean = 3.86, SD = 0.74, n = 76
|
|
Handling non-business family (fair or equal) members
|
1.11
|
Mean = 2.72, SD = 0.98, n = 75
|
Mean = 3.82, SD = 0.77, n = 75
|
|
Trusts
|
1.07
|
Mean = 2.68, SD = 1.07, n = 76
|
Mean = 3.72, SD = 0.91, n = 75
|
|
Buy-sell agreements
|
1.23
|
Mean = 2.59, SD = 1.09, n = 75
|
Mean = 3.81, SD = 0.77, n = 75
|
|
Life Insurance
|
0.64
|
Mean = 3.03, SD = 0.99, n = 74
|
Mean = 3.66, SD = 0.8, n = 74
|
|
Retirement options for older generation
|
1.01
|
Mean = 2.8, SD = 1.02, n = 76
|
Mean = 3.82, SD = 0.76, n = 76
|
|
Tax issues in transferring farm
|
1.38
|
Mean = 2.55, SD = 0.94, n = 77
|
Mean = 3.92, SD = 0.74, n = 77
|
The largest gains in reported knowledge from the transition workshop were: importance of family business meetings (1.47 gain), business transfer strategies (1.43 gain), tax issues in transferring farm (1.38), use of SWOT analysis (1.36 gain), financial issues in transferring the family business (1.27 gain), and buy-sell agreements (1.23 gain).
Respondents planned to proceed in multiple ways as a result of their attendance at the workshops. Ninety-six percent (n=73) indicated they planned to hold an intergenerational family meeting. Eighty-nine percent (n=66) indicated they planned to meet with an attorney. Seventy-six percent (n=55) indicated they planned to meet with an accountant to develop a succession plan.
Respondents indicated the farm business transfer planning topics they would like to learn more about in future workshops. Responses included: business transfer strategies (38%), trusts (38%), financial issues in transferring a family business (37%), tax issues in transferring farms (32%), buy-sell agreements (29%), transition planning (22%), developing skills of the next generation (17%), family business meetings (15%), handling non-business family (fair or equal) members (15%), whole farm planning process (14%), financial analysis of operation (14%), retirement operations for older generations (14%), business organizational structures (12%), SWOT analysis (8%), internal organization of business (8%), mission statement (5%), developing goal for the business (4%) and functions of management (3%).
Six Month Survey Results
In the six month survey, respondents reported the following business structure which they currently utilize for their farm business: sole proprietorship (66.7%), limited liability company (14.6%), partnership (12.5%), and corporation (6.3%). Under half (42.6%) of the respondents indicated they have investigated a new business structure.
Participants were also asked a series of questions to determine their level of understanding of the different transition planning concepts taught in the workshops.
Table 2: Level of Understanding of Transition Topics 6 Months Following Workshops
|
|
Strongly Disagree
|
Disagree
|
Agree
|
Strongly Agree
|
Not Applicable
|
|
I have a better understanding of transition planning.
|
0%
|
0%
|
64.7%
|
35.3%
|
0%
|
|
I have a better understanding of the farm planning process.
|
0%
|
2.0%
|
68.0%
|
30.0%
|
0%
|
|
I know the different ways the business can be transferred.
|
0%
|
0%
|
83.7%
|
16.3%
|
0%
|
|
I am more aware of the tax issues with business transfer.
|
0%
|
3.9%
|
72.5%
|
21.6%
|
0%
|
|
I have a better understanding of retirement planning
|
0%
|
8.3%
|
77.1%
|
14.6%
|
0%
|
|
I have a better understanding of business planning
|
0%
|
3.8%
|
76.6%
|
17.0%
|
0%
|
|
I have a better understanding of estate planning
|
0%
|
0%
|
81.6%
|
18.4%
|
0%
|
|
I have a better understanding of investment planning
|
0%
|
0%
|
64.7%
|
35.3%
|
0%
|
Respondents were asked a series of questions to determine their progress in adapting the transition planning tools discussed in the transition workshops. Eighty-five percent (85.1%) have had discussions with their family about business transition, 84.8% have improved family communication, 80.9% have started retirement planning, 76.6% have begun estate planning, 75% have started business planning, 73.9% have started investment planning, 68.1% have sought to develop the skills of the next generation, 50% reported they have developed a mission statement, 45% have developed written goals for their farm business, and 36.2% have completed a SWOT analysis of their business.
Respondents were also asked to answer a variety of questions with regards to how they have proceeded with holding transition planning meetings during the six months following the transition workshops. Fifty-four percent (54.2%) indicated they had held an intergenerational family meeting compared to the 96% who indicated at the conclusion of the workshops that they planned to hold such a meeting. Thirty-five percent (35.4%) indicated they had met with their attorney to develop a succession plan compared to the 89.0% who indicated such intentions at the conclusion of the workshops. Thirty-three percent (33.3%) indicated they had met with an accountant regarding transition planning down from the 76% who indicated such intentions at the conclusion of the workshops.
Ninety-eight percent of the respondents indicated their communication with their family and business has improved or stayed the same since their attendance at the transition workshops with 47% reporting improvement. Respondents were asked to cite in their own words, the changes they had made in their communication patterns. Some of the responses included:
- We are a husband/wife team. Little changes such as planning jobs, one week instead of daily. Reiterating what was heard for clarity—investigating savings plans-better bookkeeping to evaluate current situations.
- I have a better understanding of what needs to be done and try to communicate that to family and employees.
- We now have structured, pre-planned business meetings, covering a set agenda. We discuss all points of business interest.
- I have tried to be more open in my communication style.
- We have sat down weekly to discuss setting up a plan to transfer the business.
- I have asked for advice and input. I am trying to give them a better understanding of what I am trying to do and why. I have also expressed my hopes for the future of the farm.
- I am trying to set a time frame of when different items may be accomplished and am trying to be open with all family members in the growth of the operation.
Respondents were also asked to report what item or concept, learned from the workshops, they had been able to apply to their lives and farm business. Some of the responses included:
- Planning is very important.
- Importance of good communication.
- That you never start too early with transition/estate planning.
- Don’t put off too long doing something about transfer planning. Doing something is more important than getting it all done at once.
- Talk plainly to all involved so that everyone’s goals can be met.
- Family meetings. Fair but not always equal.
- We updated our will, health care power of attorney, living will power of attorney, and made a new letter of instruction.
- Making my desire for the future of the farm more clear to my family.
- I hope what I learned is that there is information and there is help available to smooth out this business called transition. It is my hope this can be done and that a death of family member is not the forceful and deciding source.
- Communicate, set goals, get with it.
- The urgent need to be thinking of how to integrate the next generation and to discuss it with them.
Conclusions & Implications
The results of the post program survey and the six month following survey indicate the OSU Extension transition planning workshops were successful as many positive comments were written by the participants and good mean gains in knowledge gain were achieved. The six month survey results shows the participants made great strides in putting into action the tools they learned during the workshops. Eighty-five percent (85.1%) have had discussions with their family about business transition, 84.8% have improved their communication; 80.9% have started retirement planning and 76.6% have started estate planning. Attendees reported strong intentions to have transition planning meetings with their families (96%), attorney (89%), and accountant (76%). Six months following the workshops, 54.2% had held an intergenerational family meeting, 35.4% had met with their attorney, and 33.3% had met with their accountant. This emphasizes the point that transition planning takes time for families to complete. One respondent remarked on the six month survey, “The plain truth is I have not made the progress I should have. Not because of the quality of the information I received. Physical labor seems to consume so much time after paying the monthly bills, there seems little time to plan.”
OSU Extension has continued to offer transition planning workshops across Ohio as a result of the survey results. Additional Extension factsheets have been authored by the teaching team. Additional strategies for following up with the program participants are being explored by the team. Some of the strategies which are being explored include: individual consultations by Educators for participating families and advanced workshops to address the highest need areas expressed by the participants.
Acknowledgement
Partial funding for these workshops and surveys was provided by a risk management grant from the North Central Risk Management Education Center.
References
Building for the Successful Transition of Your Family Business (2008). The Ag Risk Education Library. Final report can be accessed at: http://www.agrisk.umn.edu/Default.aspx