Succession Planning Strives to Preserve Local Jobs and Ownership

The Iowa Alliance for Cooperative Business Development is introducing the cooperative succession model as a creative solution for Iowa’s decline in small meat processing industry. Cooperative succession involves selling or otherwise transfersing ownership and management to employees and presents a strategy to maintain the longevity and vitality of small businesses that are crucial to the prosperity of rural communities.

In Iowa, there were 550 small meat processors 40 years ago. Today there are 140 meat processing businesses that are economically vital to their local communities because they provide much needed services to niche marketers, local food producers and customers. Cooperative models are a proven strategy for keeping these businesses operational.

Reg Clause and Madeline Schultz, of the Iowa Alliance for Cooperative Business Development, presented a three part succession planning workshop and training to meat processing business owners and industry professionals during the annual meeting of the Iowa Meat Processors Association (IMPA) held on the Iowa State University campus on Febrary 20-21, 2009.

The succession workshops acknowledged that business owners have many different goals when planning for succession. Allowing plenty of time to develop and implement succession strategies in a meat processing business can alleviate stress, benefit the owners financially, and generate greater long term success for the business. The speakers used several worksheets developed by the Ohio Employee Ownership Center to guide the business owners through the process of understanding and documenting their succession planning goals.

The training included a panel of meat processing business owners who shared their experiences working through the succession and business transfer process. Bill Dayton from Dayton Meats is the second generation of the his family to manage and own the business. Mr. Dayton shared that he is already looking at ways to transfer assets and management: “You’ve got to let the younger generation know they matter or they won’t be interested.”

Clint Smith, owner of Stanhope Locker, bought his meat processing business outright from the previous owners. Mr. Smith, a former auto parts store owner, told the audience: “Parts are parts; I knew I could manage a business, but I relied heavily on trusted employees for the meat processing expertise.”

John Tiefenthaler, owner of Food Locker Service, started working for the previous owner as a kid in high school. During the 1980’s the previous owner knew he would have a hard time selling the business to an outside buyer, so he began a gradual transfer of the business to John. “He was ahead of his time,” said Mr. Tiefenthaler, “I never could have done this without his mentoring.”