Recently, I conducted an agricultural producers’ conference focused on larger, complex operations and progressive producers willing to consider non-traditional practices. In a “rapid-fire” type of panel discussion, one question asked was, “What guidance can you provide for me as I prepare to partner with a younger, non-family member with minimal equity?” As this circumstance becomes more frequent, the resulting panel discussion is worth sharing.

This question is particularly pertinent in today’s agricultural environment as nearly 20 percent of American farms and ranches will not pass the business on to the next generation. Commonly, the younger generation chooses a career path not related to production agriculture. This is due partly to economics in agriculture, and partly to changing trends and dynamics in the younger generation, among other factors. In fact, partnering with an individual who is not a family member may prove easier in several ways. Family businesses can be riddled with emotion, which affects productivity and sustainability as well as numerous other issues. Additionally, business discussions and decisions are often approached with a more objective, professional perspective when family dynamics are not involved.

First, when entering such a partnership, each party or stakeholder must start with written goals; both short (one year) and longer term (three to five years). Remember to include spouses, significant others or any party involved in the partnership in the goal process. As the younger generation is just beginning, and the more senior generation may be closer to retirement, it is critical for each to know the thoughts of the other. Be careful not to enter a discussion regarding goals without written details. While communication is vitally important, solely verbal conversations tend towards unfocused discussion and very little progress.

Second, discuss in detail the roles and responsibilities of all parties along with metrics for accountability. Again, these specifics need to be developed in writing. Sometimes in these situations, the younger partner enters the business first as an employee, and then advances to management. Moves to the next level should be discussed as well as planned. In some cases, an internship or outside work experience can be valuable in accelerating the process.

Another strategy is to carve out a specific piece of the business, or, perhaps, a secondary enterprise for which the younger person can be responsible. Duties could include daily production operations, budgeting and even working with the lender to secure operating money. This helps to develop the necessary skill set for a successful business partnership. In addition, it promotes responsibility, accountability, valuable experience and of course, overall confidence in management.

Finally, an exit plan is essential. This allows a structured way out should the business relationship need to be discontinued. An exit plan can also lay the groundwork for the potential departure of the older generation, if appropriate for the partnership. Often, it is more difficult to get out of a business then it is to enter one.

Joining forces with an outside partner aligns with the future economic environment and changing trends in agriculture. The younger generation can bring a new energy and talent base to agricultural operations and businesses. However, when coupled with the experience of the older generation, these new skills can become exponentially valuable. Interestingly, this same process could apply with a younger family member, but because of emotions, pride and other family dynamics, often it is not.