Succession Planning For Growers
Succession planning is a sensitive subject, but one that you need to address when it comes to deciding on your operation’s legacy. We caught up with two growers who shared their process and provided tips for a smooth transition.
Respect And Patience Were Key Virtues For Successful Transition At Battlefield Farms
Starting the conversation on succession planning is easy, if you do it respectfully and are willing to listen, says Anthony van Hoven, president of Battlefield Farms in Rapidan, Va. Anthony and his brother Bobby, COO, took control of their family operation January 1, 2012, after working with their parents to transition the business.
Battlefield Farms was founded more than 20 years ago by Gerrit and Lona van Hoven. Gerrit emigrated from the Netherlands and married Lona, the daughter of Aart and Cora Van Wingerden. He says at the time, he didn’t know anything about the industry, but learned much from his father-in-law, and aimed to structure his own business— and raise his family — in much the same way.
The parents of eight children, Gerritt and Lona built Battlefield Farms to provide for their family. All of the children grew up in the business and learned the ins and outs of each department. There was never a time, Anthony says, that he or his siblings felt like they were in the dark about anything. Their parents were always open and honest about every decision, and willing to talk about the business with their children.
“I always felt comfortable approaching my parents and asking them how they did something or why,” Anthony says. “They were always willing to talk and never tried to keep anything from us. They were always willing to explain the reasoning behind decisions they made. That has meant a lot to me over the years, and has provided a great example for me, as a businessman and a father.”
Gerrit says he hoped that one of his children would take over the family business, now a 40-acre operation, but there was never any pressure for any of them to do so. Gerrit’s goal, he decided, was to retire once his youngest son completed college, to allow each of the children equal opportunity to take over Battlefield if they desired. And while some of them took their own roads, all eight now live within a 20-mile radius of their parents, and are all involved in the floriculture industry. That’s a testament, Anthony says, to his parents’ love and commitment to their family and to the industry.
Eldest son, Ed, decided to go into business for himself, and started American Color, Inc. in 1988. The business now operates more than 20 acres of production.
Daughter Jennifer Boyer went to school and got married. When she returned recently, she opened Deep Roots Home & Garden Center.
Sons Bill and Kenny both became pastors, but Bill recently began building a four-acre greenhouse nearby. Kenny recently started a church in Culpeper, and works in sales at Battlefield Farms.
Middle son Anthony also aspired to start his own business, but Gerrit asked him to commit to three years working at Battlefield Farms after returning from college at Liberty University in 2002. Bobby began working at Battlefield in 1999, after graduating high school. Bobby had a hand in rebuilding the operation from the ground up, after a fire broke out in 1999, so he says he was especially attached to the business and wanted to stay on there.
The two brothers worked well together, with Anthony focused on the production side of the business and Bobby running maintenance and logistics.
Next in line, Ryan worked for 10 years in sports ministry camps all over the world. This past January he began working at American Color as a salesman. The youngest, Ben, worked at Battlefield Farms out of college, and now runs Commonwealth Growers, a six-acre facility with 11 acres of outdoor growing, for his father.
Talking About Transition
Through numerous talks, starting in 2009, Anthony and Bobby talked with Gerrit about succession. One option was for the brothers to buy 10 percent each year, but after consulting with lawyers and accountants, the better option was to buy the business with one payment due to changing tax laws. It all came to fruition on January 1, 2012, and Anthony and Bobby now each own 49 percent of Battlefield Farms, while Gerrit retains 2 percent.
Although they paid off their father this year, with restructuring of finances and loans, the brothers wanted to keep their dad involved in the business, and also asked him to serve as a tie-breaker, in case there were any disagreements between them.
One of the most important things they learned from their father about business, Bobby says, was the importance of investing in employees, and that you’re only as successful as your employees make you.
“What you get out of an employee is what you put into an employee,” he says. “Anyone who wants to take over the business needs to care as much about the employees — the people who have helped build the business — as the founders.”
Gerrit still works at the farm every day, and is in charge of all of the overseas buying, which often requires travel to Europe once a month, Anthony says. Anthony and Bobby continue to split their duties based on interest, with Anthony overseeing production and logistics and Bobby heading up construction and maintenance. They both work on finances, and Gerrit helps them manage accounts and bookkeeping.
“A lot of people wouldn’t think that I would like giving over control of the business, but I love it,” Gerrit says. “All of the day-to-day business is up to Anthony and Bobby — I don’t have to worry about it. I am fortunate that they still want my advice — that they come to me and ask what I would do. But since I sold the business to them three years ago, it’s been the best three years of my life!”
The van Hovens’ Secret To Succession
1. Be open and honest about everything.
2. Learn the ins and outs of every aspect of the business.
3. Approach the subject of succession respectfully, and be willing to listen to each other.
4. Respect your parents’ knowledge of the business and commitment to employees.
5. Realize that it’s your parents’ business, and they don’t have to sell it to you. In the end, their name, reputation and finances are on the line.
6. Prove yourself to be an owner if you want to be an owner. You must have the respect of your parents and your team.
7. Don’t rush the process — it won’t happen overnight. You may think you know and can handle everything immediately, but you don’t and you can’t.
8. Make the transition as seamless as possible, especially for employees and customers.
9. Stay current on tax laws and get advice from accountants and lawyers.
10. Parents — trust your children. When they’re ready, let them go their way. Don’t interfere, but be willing to counsel them if they ask.
Botany Lane Greenhouses: Preparation For The Future Begins At The Bottom Of The Ladder But Leads To The Top
Aaron McDonald has worked in greenhouses since he was eleven years old. And one could say he was preparing all along for bigger and better things, although he may not have known it at the time.
Botany Lane Greenhouse, owned by Aaron’s father Mitch McDonald, has been in business since 2004 and grows premium annuals, perennials, hanging baskets and herbs for the independent market. The company also grows young plants for other greenhouses. It has two locations in Denver and Lafayette, Colo., and recently expanded into Texas where it focuses on growing tropicals. Aaron has been directly involved with the company for the last eight years and recently took over as general manager last spring. Eventually he will manage the entire company.
Aaron says his father has done a good job of preparing him by giving him opportunities to work with knowledgeable people throughout the company, as well as providing him with chances to gain exposure in the industry. His recent position wasn’t just handed to him. He earned it by starting at the bottom and learning the ins and outs of the operation.
“Succession needs to be a mutual thing,” says Aaron. “If the parent doesn’t feel like you have the experience and understanding of the business, they aren’t going to be ready to turn it over. The same for you, you need to make sure that you are ready for the change yourself, and you are at the experience level you need to be at to feel comfortable.”
Mitch says succession planning is different for every family. Since he says he is not a formal planner, the experience for him has been not so much of a step-by-step process as it has been about providing his son with learning and growth experiences.
In addition to exposing Aaron to different concepts and areas of the business, Mitch tried to carve out niche opportunities for Aaron in new areas of the business, where he wouldn’t be in direct competition with other employees. For example, he started a young plants division and put Aaron in charge of it. These types of things can help make the transition easier for other employees when the next generation takes over.
“A critical aspect for parents is to have a desire for their children to succeed,” says Mitch. “The next generation also has to demonstrate that desire and ability before responsibilities are delegated to them. They don’t just take the authority, but when that day finally comes, they have to take ownership of it.”
The biggest issue in the transition from father to son, as Mitch sees it, was that Aaron was ready to take over, but Mitch didn’t quite know how to get out of the way.
“Aaron had to basically come to me and say ‘Are you going to give it to me or not?’” he says. “For me, it is like a little bird falling out of a nest. You have to let them get out there and do the job. They will make mistakes. They need to learn from their mistakes. They also need someone to be their counselor and sounding board along the way.”
Aaron agrees, advising others to not discount their parents experience after they take over the family business.
“You can’t be afraid to ask questions and utilize your parent’s vast knowledge and experience,” he says. “Any problem you encounter, they have most likely been through it before.”
Mitch says any business is not about the owner, it is about being part of a team. An owner’s job is to provide direction and vision.
“Aaron has prepared himself for a position of responsibility as much as I have prepared him. Now it is my job to put the right people around him so he can be a successful business owner and guide his team well.”
Aaron’s Tips For Succession
1. Don’t be afraid to ask questions and utilize the knowledge of your parents.
2. Prepare yourself. Make sure you have the experience necessary to take over when the time comes.
3. Keep the communication lines open with your parent.
4. Take the time to work through the process and learn the ropes.
5. Don’t assume you know everything.