As featured in The Country Web Number 59 Spring 2013 edition.
Succession planning: It’s never too early to start
Succession planning for farmers can be difficult and at times stressful, but it’s important and must be addressed. Sometimes it can seem like a huge task, with too many difficult decisions to address and the risk of conflict or disagreement can often discourage families from starting the process.
It’s best to get it all planned early so that everyone knows what to expect should you retire or be forced off the farm due to injury or other circumstances. The sooner decisions are discussed, the more choices are likely to be available to the family—it’s never too late to start.Seeking professional advice long before you reach retirement age will ensure a smooth transition.
There are different reasons a transition of ownership occurs in farm families. Unlike many other businesses, the farm is usually passed onto another member of the family. This can lead to problems if you have more than one child and don’t have an appropriate succession plan in place. Farm succession can create tension among siblings. The child who inherits the farm may be the only one who has any economic advantage from the family inheritance. There are creative ways to share the farm among your children however, which may not involve carving up the property into non-viable plots of land.
Sometimes rapidly changing circumstances can mean loss of the farm and this can be traumatic as the farm may have sentimental as well as economic value. Having a well-thought-out and detailed succession plan is the best way to avoid the difficult and stressful time of succession when it comes.
A Director of proAGtive and the 2013 NSW-ACT RIRDC Rural Women’s Award winner, Isobel Knight says, ‘a good approach to establish a farm succession plan is to seek the assistance of a succession planning professional who can walk you through the complexities involved in the planning process. This will ensure the needs of all family members are met and also ensures a viable and sustainable farm into the future.’
Whether you’re a family member or non-family member working in a family owned business— succession and preparing for the transition of management to the next generation is an integral part of good business planning.
Succession involves far more than just the transfer of assets when the business owners either retire or pass away. It is an evolving process ensuring the continuation of a business down through either generations or layers of management. It involves choosing and grooming the successor(s), planning for the future, coping with the transition, communicating around and managing the change to the family and the business and letting go gracefully.
The timeliness of succession is the most critical task any business owner, who wants their business to endure for future generations, will face. Effective succession planning depends on open communication, good will, respect and a desire to keep relationships strong between all family members whether they are on or off farm.
Isobel says there are many benefits for developing a farm succession plan including:
■ The opportunity to discuss key areas of concern and future aspirations before the situation becomes out of hand.
■ To understand how to implement strategies now to prevent issues in the future.
■ Increased family harmony, less pressure on Mum and Dad to have to ‘sort it all out’ themselves.
■ Opportunity for the business owners and family members to communicate their aspirations for the future in a non-threatening environment.
■ Framework and plan to manage the complexities associated with being in business with the people who are also our family.
■ Clarity and direction for each family member for the future.
■ Future direction for the business.
■ Security for each family member for the future.
■ Opportunity to have meaningful relationships with family separate to the business.
■ Empowerment to ask other professionals the right questions to ensure accurate information and the right structures and agreements are put in place.
■ Less stress for family members.
■ Motivation, drive and enthusiasm injected back into the business.
■ Risk management strategies discussed and analysis on current and future business structure based on the needs and interests of each family member.
■ Strategic planning to build greater profitability into your business.
■ Accurate and appropriate structuring to save you money.
MORE INFORMATION – proAGtive works with people in family businesses to provide succession planning and other services. Visit their website at: www.proagtive.com.au , email: info@proagtive.com.au or call 0419 464 857.
Rural Financial Counsellors provide free, independent and confidential assistance to farmers and small rural businesses. To find your local Rural Financial Counsellor in NSW go to: www.daff.gov.au or call 02 6272 3933.
A guide to succession: Sustaining families and farms produced by GRDC is a free publication. Call Ground Cover Direct on 1800 110 044. (Postage and handling fee $10).
nswruralwomensnetwork 