"Don't be afraid to ask dumb questions," John Baker advised participants at the New Century Farmers conference at the Pioneer Hi-Bred headquarters near Des Moines on Wednesday. "They're more easily handled than dumb mistakes."

Baker, the administrator of the Iowa State University Beginning Farmers Center, addressed young participants on the issues of succession and transition planning. The participants were selected for the New Century Farmer program by FFA, and most intend to return to a home farm after graduation from college. The week-long program is sponsored by Pioneer Hi-Bred and Rabobank.

According to Baker, research shows that the sooner a small business begins succession planning, the greater the likelihood of a successful transfer to the next generation. But he acknowledged that such discussions often are difficult.

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"It shouldn't be surprising that the older generation is hesitant to start the process," he said. "But families need to move ahead with the conversation, even if it takes place by bits and increments."

He suggested beginning with these six critical questions:

1. Is there a desire to continue family ownership of the family business?

2. Can the family withstand the stress generated by succession planning?

3. Is there a successor capable of managing the family business?

4. Does the successor want to manage the farm family business?

5. Will the owners recognize the authority of the successor?

6. Will the owners transfer managerial authority to the successor?

Succession planning goes hand in hand with estate planning, Baker said.

"You need to ask specific questions," he said. "Most of you will be hesitant to ask some questions that need to be answered early on." This list may include:

1. Will the owners actively manage the development of a business succession plan?

2. Have all interested parties been identified, informed and involved?

3. Has a decision-making process been agreed upon by all parties?

4. Have the parties developed a compatible vision of the future of the farm business?

5. Have key positions been identified and have training plans been developed for these?

6. Has an estate plan been developed that provides for an equitable distribution of business property?

7. Have all important parties been made aware of the details of the farm business succession plan?

8. Have contingency plans been developed?

Baker works with many young farmers who plan to return to a family operation. He offers them a plan called "The Critical Path Method" for moving the discussions forward.

"The urgent is the enemy of the important," he said. "Routine farm activities get in the way because they are more urgent. But they're not more important. That's why you have to develop a systematic approach to planning."

The first step is to identify the necessary resources in this process. This ranges from assembling family members to a compiling inventory of business assets. "Succession planning is like any other complex project," he said. "You need to calculate a minimum time for completion of each step and prioritize the activities that need to be completed. Most people tend to underestimate the amount of time required."

Family reunions, Christmas dinners and other emotional events are not the time to initiate succession planning, Baker said. "You need to get away from the farm or ranch," he says.

"People will say that they are not in the mood to plan during those occasions."

Before the younger generation makes a commitment to returning to the farm, Baker recommended working for a wage on the farm. "It's a lot easier to leave during a testing or trial stage of the process," he pointed out.

If the farm successor is married, don't leave out the spouse. "One common mistake is that families exclude the daughter-in-law from meetings," he said. "They say, 'We just want the family.' The reality is when you get married, your loyalty is to your spouse and your children."

He emphasized the importance of written agreements at every step of the way. "The only thing you know for sure is that the unexpected will happen," he said. "My dad always said, 'If it can, it will, and it will at the most inconvenient time.'"

He told the young students, "Your dad's word may be good, but over the years we tend to remember what is important to us, not what is important to someone else," he said. "The written word also requires you to define things more clearly."

In some cases, families may need to hire a facilitator to help them. "If no one wanted to do the books for the farm, you would hire someone, wouldn't you?" he asked. "Succession planning requires the same degree of importance."