An exit strategy is a planned approach to terminating an effort in a way that will maximize benefit and minimize damage. Webster’s defines an exit strategy as “a plan for ending involvement.”

Words like “ending involvement” and “terminating” are scary words for farmers who have spent their whole lives building a business that now defines their identity.

The truth of the matter is that a majority of farmers don’t want a plan to “terminate” or “end their involvement” with their farm. It goes against human nature to plan to leave something truly loved until there is no other option.

A popular country song by Luke Combs called “Even Though I’m Leaving” deals with the subject of leaving something that — or in this case someone who — you love in a way that only a country song can.

The first verse of the song tells of a young boy afraid at night not wanting his dad to leave his room to go to bed:

“Daddy, I’m afraid. Won’t you stay a little while?

Keep me safe ‘cause there’s monsters right outside.

Daddy, please don’t go. I don’t wanna be alone

‘Cause the second that you’re gone they’re gonna know.”

The father does as any father would do to calm his son with his response in the chorus of the song:

“Just ‘cause I’m leavin’

It don’t mean that I won’t be right by your side.

When you need me

And you can’t see me, in the middle of the night.

Just close your eyes and say a prayer

It’s OK, I know you’re scared when I’m not here.

But I’ll always be right there.

Even though I’m leavin’, I ain’t goin’ nowhere.”

Exit strategies

Traditional business owners try to build their business with the idea to sell it in retirement. It's not sufficient for a non-farm business owner to simply build with no end game to their business. They generally will create a plan for a way to get the money back out in one of four exit strategies.

  • Lifestyle exit: Some owners will purposely suck the life out of their business over time to support their lifestyle through large salaries, bonuses, defined retirement or other benefit plans and issuing a special class of stock that pays high dividends.
  • Liquidation: Close the doors and call it quits by turning everything to cash. Pay off debt and taxes and pocket whatever is left.
  • Sell to friendly buyer: Interested parties might include customers, key employees or family members. Due to a desire to leave a legacy, this strategy sometimes yields less money with less favorable terms for the seller of the business.
  • Acquisition: Selling the business to another company in the same industry usually yields the highest return for the sale of the business.

Entrance strategies

The farmer builds a business, however, with the idea to hand it to the next generation even though they frequently may be unwilling to execute the transition in a timeframe desirable to the next generation.

To combat this “hold on too long” approach the next generation may need to be more entrance driven rather than the current owner being exit driven. There are four strategies to consider.

  • Farming child outlasts parent: At some point, Father Time wins out and the farm must transfer. This isn’t the best or most proactive strategy but unfortunately the most prevalent. If Dad is forced out by death, a subsequent estate battle may ensue with the other heirs.
  • Grow into the operation: Put yourself in a position of respect and trust with the farm owner. Present your plan for growth and ask the older generation for help (financial and/or non-financial). The only thing more satisfying than building your own farm is helping someone else build theirs as they earn the right to grow into yours.
  • Approach a mature land owner with no farming heir: Willy Wonka handed off his fictional chocolate kingdom to an unrelated boy chosen through a process to eliminate dedicated Wonka followers. This option requires a certain amount of “matchmaking” and is becoming more popular as the number of next-generation farmers continues to dwindle.
  • Network with key people: If others in positions of significance know who you are and what you stand for, opportunity may come to you. This may be a banker, a lawyer, a local agribusiness person or connected leaders in the community. Build a relationship and communicate your business plan to someone who can connect you with opportunity.

The best strategy

The concept of an exit strategy is often applied too flippantly in farm transition planning. Frankly it can be upsetting to someone who feels they have earned the right to go out on their own terms.

It takes two to transition. The best strategy is the one that matches two parties (whether related or not) in a mutually beneficial business relationship.

Sometimes it can be a matter of psychology. Consider a proactive plan that calls for shared growth rather than one that puts the old horse to pasture (or worse, puts the old horse down). In the same way you can lead that horse to water, you can talk to a farmer about an exit strategy, but you can’t make him sign the papers.

The reality is most farmers’ strategy to exit is to go from the cab to the box. Unfortunately, the statistics on age and farm ownership tell us in the near future there might be more empty cabs than we may be prepared for.

In the last verse of Luke Combs’ hit song, the son is now grown up but still afraid of his now failing father leaving:

“Daddy, I’m afraid, won’t you stay a little while?

I never thought I’d see the day I had to say goodbye

Daddy, please don’t go, I can’t do this on my own

There’s no way that I can walk this road alone.

Daddy grabbed my hand and said:

“Just ‘cause I’m leavin’

It don’t mean that I won’t be right by your side

When you need me

And you can’t see me in the middle of the night

Just close your eyes and say a prayer

It’s OK, boy, I ain’t scared

I won’t be here, but I’ll always be right there

Even though I’m leavin’, I ain’t goin’ nowhere.”

None of us want to walk our road alone. My hope is that you have had the opportunity to build, sustain and relish long-lasting relationships with others who will always be by your side.

Maybe even more so, my hope is that you will look for an opportunity to pass the same opportunity forward to someone who will pass it forward again.

For 27 years, Steve Bohr has been a partner in the farm continuation firm of Farm Financial Strategies, Inc. For additional information on farm continuation issues or if you have a question please contact Steve via email at or by phone at 1-800-375-4180.