I've been lucky enough to have been working with farming families for almost 20 years.
Whether that be as a Rural Banker or as a Rural services specialist at McIntyre Dick. Recently I've been working with significantly more families regarding planning for succession in their farming business.
A combination of observation and best practice study has reaffirmed for me that an early start in discussing farm succession and introducing some structure to family conversations is always the best path forward.
Why start early?
Let’s look at our options.
You could start late.
- On the down side Mum and Dad are older – their energy levels have dropped, old injuries are beginning to catch up with them. My perception of starting the job too late is when parents have reached their 60’s. I realise this is a generic statement but is based on observation and experience. My message is the earlier the better.
- Uncertainty has grown in their mind over what may happen with the farm business they have worked so hard on over the years.
- Guilt may start to kick in about not starting the process earlier or about creating a business that can benefit all of the children in the way they had envisioned. Worry kicks in about having to clarify this for the children.
- Mum and Dad have had had to focus on the business for so long they may never have had an opportunity to develop off-farm interests to look forward to when they lace up the boots for the last time.
- Risk of health issues increases and the time required to tutor potential successors may evaporate.
- The kids may have developed alternative career paths or found other farming opportunities because the conversation was never had.
- Children have begun their own family and are caught in that middle ground of internalised conflict where they feel a responsibility to their parents but also want the best for their children.
- On the upside, Mum and Dad have never had to have those tricky conversations they fear or had to disappoint any of the children because of the way their inheritance has unfolded.
Start on time
If you start early – and my perception of early is before children have hit their 30’s. Generally, future career paths are still being carved out and Mum and Dad still have a passion and the energy to drive the business. There will always be the challenge of an age gap between children to bridge, however, children in their late teens are still capable of holding an adult conversation about what the next 1-3 years of their life might look like and will be able to express how they feel about the business of farming.
The earlier you start the less complexity is created regarding including children’s spouses in the initial conversations. The conversations are more often with your own children and you can begin to share family business knowledge with your children without this added relationship dynamic.
As you uncover more about your children’s career and business aspirations this may shape how you make your business decisions. The earlier you know the easier it is to use that information for growth, consolidation or diversification strategies.
Why have a plan?
Again let’s look at the options.
If we approach the issue of succession in an unstructured way – what does the family do?
- Mum and Dad may have those adult conversations with one child before another. This is a risk around perceptions of favoritism (real or perceived). Other children may feel left out.
- The conversation might be had in the tailing pen or walking behind the cows. Not a great place to record the outcomes, conclusions, thoughts or feelings of each party, or to get into detail about structures and finances.
- I usually grimace to myself when I hear of families planning to hold the tricky conversations “When the kids are home at Christmas”. I am yet to meet the family that puts these conversations ahead of Christmas trifle or a day’s boating between Christmas and New Year.
- I have observed some families holding a meeting to talk about the issues without having a plan of how to go about it. The risk is that children find themselves in a position of needing to ensure the scales of asset allocation are not tipped too far one way or the other. There can be a risk that each child does not understand the context of how Mum and Dad see the business or their future.
What can following a structured process deliver?
- Mum and Dad can clarify in their own minds what they hope to achieve by speaking to their kids about the business. Once they have discussed this and have clarity in their own minds they can explain and frame with the kids why they need to discuss their future plans.
- Amazingly marriage does not necessarily mean every couple is on the same page. Mum’s and Dad’s in my observation are very quick to put the onus of succession conversations on the kid’s….”We can’t do anything until we know what the kids want to do”. The reality is that the first conversation starts with Mum and Dad. If they don’t have their own plan clear the process will go nowhere. How long are they farming, where will they live, etc?
- Following a structure enables the key conversations to happen when you think they are important. I firmly believe that a history lesson held early on can help kids (and spouses) understand the equal v’s fair conversation that may come down the track.
At McIntyre Dick, we have aligned with Coach Approach Rural to deliver Succession planning to Rural families. We believe that beginning with the end in mind is the logical place to start.
If you are interested in a chat about when and how to start planning for your family call us for a chat.