No doubt you would’ve heard the saying ‘if you fail to plan then you plan to fail.’ From our experience this is a true statement and applies to so many areas of our life.
This topic on succession planning is really about one generation exiting a business and the next generation taking over. Each family farming business eventually has to deal with this matter, either by choice or being forced to act after an unfortunate incident.
We’ve identified four main reasons for creating a succession plan:
- Desire to retain the family farm for the next generation
- Minimise family conflict
- Protect the business
- Maintain family harmony and relationships
In formulating a succession agreement, there are four main steps:
- Exit and retirement plan for the older generation leaving the business
- Transition plan for the next generation
- Decide / change ownership of assets
- Estate planning
It’s important that the process follows this order.
We met a person recently who provides rural skills training who said there is a scarcity of specialists who work in this field. We know he is correct. The reason, we think, is because it requires experience, empathy and common sense as much as technical ability. The process of succession involves transitioning different generations who often have different objectives and motivations. This means there usually aren’t quick fixes or resolutions.
So what makes a good succession planner?
- Someone who facilitates and communicates between family members
- Acts impartially with no vested interests
- Understands what each generation wants to achieve
- Develops a strategy plan that the parties agree to
- Follows the project through to completion
It’s advisable to use someone who is independent of the family, coordinates the process and calls on the services of the family accountant, lawyer, banker and even agronomist. If they know and understand farming then that’s even better.
So when it comes to seeking expert succession planning advice, I’m pleased to say, we are one of those scarce specialists. We’ve had over 25 years working with farming families in SA and have a particular focus on the Eyre Peninsula.