Transition Timeline

Transition Timeline Overview

After completing this session, you will:

• Identify a desired transition date and definition of transition.
• List retirement funding sources from within and outside the business.
• Share transition plan with other in the business and discuss

Many of our producers don’t plan to retire in the traditional sense but do plan to reach a point where they’re not needed for day-to-day operation of the business (because the next generation is handling things). Each person’s definition of transition is unique, and it is important for each key leader in the senior generation to clearly define and set timelines for their transition. 

• Identification of successors or potential buyers.
• Definition of roles, responsibilities, and development plans.
• Asset transfer strategies, sources of retirement income, and tax mitigation.
• Employee, customer and family member communications and preparation. 

Developing Your Management Transition Timeline

The first step for senior generation business leaders in this part of the strategic planning process includes exploring the following:

• Transition Timeline: Defined as a point in time when you will be doing something distinctly different from your current role. This reflects the owner’s personal goals and desire to begin transition from the business at a specific date and/or age.
• Definition of Transition: Clearly define your next chapter and what you’ll be doing inside and outside the business. There are many ways to transition from the business. In some instances, this is a complete exit from the business with more time for travel, family and hobbies. In other instances, the transition may be phased out over time and include some type of role in the business (i.e. part-time employee, consultant, Board member, etc.).
• Funding Sources: Developing an inventory of funding sources is helpful to prepare for the financial realities of retirement. Funding sources often include proceeds from the business, such as lease income, purchase proceeds and/or crop/livestock share arrangements. Other common sources include savings, investments and social security. 

Sharing this information with partners and potential successors is an important step. It informs the planning process for the business and removes uncertainty for those interested in owning and leading the business in the future. Another benefit includes a shared understanding of proposed funding sources from the business including potential lease rates, purchase agreements or other arrangements.

Note: Personal goals are a big part of defining an understanding of senior generation transition timelines. Be sure to complete and share personal goals before developing transition timelines. 

Instructions: Use the space provided below (senior generation only) to answer the following questions about your transition plan. Be prepared to share your responses with family members, partners or other business successors as appropriate.

1. How old are you today?
2. How old do you want to be when you transition from the business (i.e. transition significant management and leadership to the next generation or other successors)?
3. How do you define your transition? What do you want to do once you transition from the business?
4. How much money will you need once you transition from the business? What are your sources for funding your transition?

Group Discussion Guide

Including all people vested in the business in this discussion is important to ensure transparency, understand all perspectives and maintain relationships.

Prepare Participants

• Schedule a dedicated time (1-2 hours depending on the group size) for a focused discussion.
• Provide this Transition Timeline guide to all participants.
• Recommend listening to the Transition Timeline episode of the Northwest FCS Strategic Planning audio series. 

Define Roles

• Identify a facilitator to keep the group focused and moving through the discussion. 
• Designate one person to take ‘official’ notes, documenting the discussion.
• Review the meeting ground rules and verify agreement or possible changes.

Instructions

• Current owners share their transition plan in the following categories:
  • Desired Transition Date
  • Definition of Transition
  • Funding Sources
• The designated note taker should inventory the transition plan in a shared document.
• Discuss the questions below and take notes on family and business member perspectives. Give everyone an opportunity to share their perspective and be heard.

Recommended Next Steps: 

• Schedule a dedicated time (1-2) hours depending on the group size) for a focused discussion on Roles and Responsibilities. 
• Listen to the Roles and Responsibilities episode of the Northwest FCS Strategic Planning audio series.  
• Read the Roles and Responsibilities Strategic Planning Guide.

Additional Family Business Planning Resources

• Family Business Planning Toolkit
  • Family Business Basics
  • Family Business Communications
  • Family Business History and Timeline
  • Family Business Values
  • SWOT Analysis
  • Personal Goals
  • Business Vision
  • Transition Timeline
  • Roles and Responsibilities
  • Estate Plan Philosophy
  • Strategic Decisions and Action Planning

• Talk to a Consultant