There’s a lot of talk about “succession” being tossed around in agriculture. It occurred to me that some people might not be quite sure what that term means, especially since we seem to have more than one kind of succession to talk about. Currently, a lot of the talk seems to be centered on business and inheritance, but not so long ago it was all about ecological systems. Since I’m getting on in years, I believe I’ll begin with a little discussion of the “succession” I grew up with.
Ecological succession is the concept that populations – especially plant populations – change over time, not only in number, but also in relationship to each other. In other words, as time goes on, the number or density or ratio of any particular species to another will change. Environmental conditions change, ecosystems evolve, populations adjust. And these changes are somewhat predictable, if we pay attention.
I believe my first exposure to this idea came at a very young age, by reading the old Time/Life book series called the Life of the Pond, the Forest, the Prairie…etc. Later on, I was privileged to have a fine life science teacher who took a few of us out on weekend trips to conduct field studies. In the mountains we looked at the result of fire or logging (disturbance) that had reduced an area to a very “low” ecological state. We saw how pioneer plants would colonize that area, only to be eventually displaced by more complex organisms, finally returning to the “climax species” population. On the desert, we saw how a range fire could set back sage brush or juniper populations by decades, allowing grasses and forbs to flourish the very next season.
A couple decades on, I found myself observing and managing ecological succession on our own grasslands, and some of our neighbors’, too. I learned that by thoughtful grazing management, I could move severely reduced, low-state grass communities that were barely surviving to a much higher ecological state. Severely over-grazed, hayed-to-death fields could become productive, deep-rooted perennial pastures in just a few years, with no intervention (disturbance) by farming. This was the power of ecological succession combined with intensively managed grazing.
To be defined as successful, a business is required to be truly profitable. Many consultants also add that a business must have the structural capacity to either be sold or passed on to other management, particularly to blood relation. This, then, is the heart of Business Succession: the idea that a ranch (or other business) can go forward, even when the current management has stepped aside (a disturbance, I’d reckon); and that this “stepping aside” might actually be just absorbing another family at the top, and being able to financially support that family.
Successful business succession typically occurs after many years of long-range planning, figuring out ways to increase the scale of the business enough to build another home and stake the kids to a solid future. That kind of growth typically means increasing turnover or increasing the scale of the operation, or perhaps taking on what my old science teacher would have called “adventitious” enterprises: things that support the main enterprise but don’t cause huge failure if they are not successful. I have friends who have started small trucking businesses or livestock services or bull rental enterprises, each of which allowed their kids to join the family ranch. So, successful business succession requires growth in one form or another.
Success Through Non-Succession
Readers might be surprised at the brevity of the section above, the part about Business Succession. The reason that part is so short is that I have little experience in business succession and I have done no planning for succession. There will be no succession on our little ranch.
Early in our marriage it became apparent that we would not be having children. At that point, we did not sit down at the white board and map out what the ranch (or our life) would look like, but I believe the realization that we would not likely have heirs did have a large impact on our decision-making, both conscious and sub-conscious. Without succession to consider, I believe I made conscious decisions that guided the ranch away from constant growth. As an enterprise, we didn’t need constant increases in scope, scale, or turnover, as I was not building an empire to accommodate more families. And while I toyed with adventitious enterprises like meat goats or direct marketing, I wasn’t compelled to make these into true growth centers. If it looked like something interesting, I simply tried it out, learned what I could and moved on. In a strange way, I think our involvement in custom grazing was actually another way of avoiding real growth. The minimal commitment – financially, emotionally, logistically – required by custom grazing is vastly different (and lower) than trying to purposefully grow the ranch enterprise.
At the same time as I was pursuing stability rather than growth, my wife and I were able to have wide experiences away from the ranch, working and traveling, seeing how other people live, all while maintaining the ranch at a small but professional level of activity. I had some help in choosing those pathways, too.
In the 1990s I had the pleasure to sit with the Ranching Guru Bud Williams. We chatted about ranching and life, and about the idea of Non-Succession. Bud made three suggestions:
First, pay down your land debt as soon as possible.
Next, become self-financed in the cattle business as soon as possible.
He told me that those two things would make my life much less stressful.
Finally, he said, “Design the ranch to fit your life, not the other way around.”
Each of these turned out to be fine advice, and I think we managed to follow Bud’s thoughts pretty closely.
Going forward, I think the next decade or so of our ranch experience will look strikingly the same as the past thirty or so, with somewhat less physical work. I think I will continue to refine our ranching model, adjusting to environmental changes, and hopefully spending a bit more time having fun. Our ranch business will never have any salability, due to how it has accommodated our life, and that’s just fine. I believe our long-term investments in land will provide a secure retirement. Looking back, I can see that our model looks a whole lot more like ecological succession than business succession, and I find that sort of interesting. I am, at heart, more of an ecologist that a business person.
One last thought about the challenge of successful business succession: many families face a different challenge than we did. I know plenty of stories about families that do have offspring, but none of them are interested in coming back to join the ranch. There are plenty of reasons for this, too many to mention. It seems to me this would be a much more difficult situation than not having children. And worse yet, I know of cases where the children would only agree to return after the parents were truly gone. How sad.
Successful succession of a family business is a fine thing. It requires a tremendous intensity of management for a ranch to emerge as a multi-generational enterprise. And it is certainly easy to appreciate the emotional desire of people who want to pursue that destiny.
A Non-Successional ranching model is a vastly different strategy, but certainly a viable one. That said, as a long-term wealth-building strategy, non-successional ranching presents one real problem: there is no resultant business to sell, only some modest amount of inventory: cattle, equipment, whatever. Therefore, I believe it is critical for non-succession ranchers to build stable wealth in some other way (probably ranch real estate) or to constantly invest ranch profits into separate, low-management opportunities like off-farm pensions, stocks, rentals, storage units, etcetera.
Lastly, in my experience, a non-succession strategy can be a very fulfilling model, particularly for folks who have no apparent heirs or successors. Seek a path that works for you and your family.
Here’s hoping you all find success in your future.