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Farm succession planning is focused on the why, what and when with little emphasis on getting the discussion started. It’s not surprising given the sensitivity around succession planning, but it doesn’t need to be a bad experience if you start in the best possible position.

From our starting point, Succession planning can take years as challenges, goals, and aspirations change over time, and the family needs to acknowledge and evolve.

A succession plan should not start as an argument between siblings who expect farm assets to be split overnight. This is a plan for failure, so before any family begins planning, it should be done in a calm and thought out way.

Everyone should have a clear understanding of what they want their role to be on the farm. Roles are essential for the older generation handing over the farm as they need to establish what they will do before and after retirement and what their lifestyle expectations are.

Getting succession planning, or transition planning as we like to call it, relies heavily on defining the older generation’s role. Another essential foundation is determining your family culture so you can line up everyone’s thinking with a shared set of values.

With everyone on the same page with family values, we ask everyone to think about their role in the farm business and what their goals are – this includes those who are not working in the business. With these written down, the next step is to look for common ground and where people disagree and why. It is also essential to look at the business’s health at the same time and flag if a goal is just not possible.

It helps to write down the family culture, roles and goals onto a one-page document. This forces the family to be very clear and concise about what these are. We suggest an independent person or expert who can facilitate the process to provide an objective ear.

In meetings, from the beginning, define an agenda that gives everyone a say to talk about their aspirations and roles. Throughout the process, keep an open mind and listen and speak up and talk about your expectations so that everyone feels ownership over the plan. Like a board meeting, the agenda should include time allocated to keep the conversation focussed and on track. Expect there will be times of conflict; that’s ok; succession planning is personal. You might consider conflict resolution training, so discussions don’t stop with arguments.

Lastly, take the view that transition planning is a live process, so don’t think that the plan is packed away once it is done. Instead, get the family together regularly to discuss and revise the plan as circumstances change.

If you want to talk about succession planning, contact your local SproutAg representative.

• Treat the farm as a business
• Plan for change and handover
• Communication is the key to success

Most family farms are complex beasts as each generation lays down decisions and operations over time, creating historical baggage along the way. From our experience, successful families manage this complexity by treating the farm as a business with planning a critical part of its operation.

Families often consider the operation but don’t think about the tension between siblings who work on the farm and those who don’t and their views around rising farm asset values. We’ve seen it often, and if it is not dealt with early on, it can blow up into a family feud.

The way around it is to plan. More often, the successful families treat the farm as a business and include transition planning as part of the operation like they would sowing. The process around planning has changed. Less often are things assumed, and more often, all generations get together to decide what will happen to the farm when the older generation step away from the day-to-day running of it.

So what does a successful transition look like when balancing rising farm asset values and siblings not working on the farm? A robustly discussed and communicated succession plan that has this tension built-in.

The plan should also be a live document that considers what the farm can and cannot do from a business perspective. This approach means you plan for change to reflect the challenges life throws up. The result is a succession plan that clearly outlines who gets and does what on the farm as each generation hands over the operation.

While there is potential for tension, you should view the transition or succession plan as an opportunity to talk and plan for a future that sees the farm stay in the family for generations to come.

If you’d like more information on succession planning, please contact your local SproutAg representative.

Even the closest and most functional family will have rows from time to time. A farming family is no different, and sometimes what can start as a minor issue can snowball into a much bigger dispute that risks the family unity and the farm. This is why working through conflict is so essential to the long-term future of the family farm. In this article, we give you an overview and tips on how to manage conflict on the family farm.

Common conflicts

Conflict happens when people cannot accept another’s differences, and this leads to a dispute. If left unresolved, a disagreement in the family will create tension and lead to divisions as different members take sides.

We work with many family farming operations, often helping develop and agree on a succession plan, which is when conflict often happens. Family members disagree on who gets what, who does what, and what those who aren’t on the farm get from the business.

Often we see a conflict between generations and whether the younger will take over the farm regardless of how good they are at farming or business. The next generation may not want to take on the farm, or the older generation may have a hard time handing it over, causing tension if there differences in opinion on how to run the farm and what is produced.

There can also be conflict in the way others handle conflict. One may manage conflict by shutting down conversation or not talking, while another wants to talk it through. This can lead to a toxic atmosphere that makes the tension worse and can erode trust – also a vital part of a successful operation.

How to handle conflict

The first step is to recognise how you handle conflict and understand that others in your family will handle conflict differently. It’s essential to communicate how you manage conflict with the family to know where everyone is coming from.

Another important consideration is to deal with conflict early because the longer it’s left to simmer, the more toxic and difficult it becomes to resolve. The solution is to sit down and talk through mediation so that everyone has their say. At the start of this meeting, everyone should agree on their role in the discussion and whose responsible for what.

We run mediation sessions with our clients, allowing family members to discuss without one being in control of the discussion. A successful session is an open environment where everyone clarifies and explores their interests, issues and underlying needs.

It’s also helpful to focus on negotiation and solutions so that everyone is involved and can agree on the resolution. We also keep these discussions confidential to allow family members to talk through their frustrations freely.

We’ve given a simple outline here; however, working through conflict is delicate and complex. SproutAg runs mediation workshops to help families continue to do what they love – run the family farm.

• Cash flow and business analysis are a key part of planning
• Be realistic about your business goals
• Compromise

You’ve had the first family meeting to talk transition planning, laid out your goals and aspirations for the farm, so what’s next? The next step is to test these goals and aspirations to see if they stack up.

When we work with a family to test the viability of a transition plan, we always undertake a deep-dive analysis of the farm’s finances and estimated cash flows over a five to seven-year period. Cash flow forecasts are critical to understanding what the farm’s yearly average cost of operation is. They are also used to run scenarios to test the different goals or aspirations each family member has.

For example, a goal to double the farm size in 3 years sounds great, but if the reality is achieving this goal relies on too much debt, you risk sending the business broke. In this case, the plan becomes 50 per cent growth.

Another consideration is whether you support mum and dad in retirement and what their lifestyle goals are. If they want a champagne retirement but the farm only has a beer budget, it’s better to know this upfront to better prepare for it, so they are looked after without burdening the farm’s operations.

This analysis is also an opportunity to lay down timelines on when the best time is to transition and whether the farm should grow over time. More often than not, they prove the family operation is more robust staying together than splitting.

A rigorous analysis of the farm’s future cash flows, business plan and scenarios is especially important for families who want to pass the farm down through generations. It shows them the impact of their goals and the viability of the business.

As we’ve said in previous articles, the key here is communication, negotiation, compromise, and acceptance that your goal may not be realistic. This approach will put the family operation in a position that it can afford to transition and compensate family members for their work and provide for them in retirement.

Transition and succession planning is an integral part of your family farm’s success. Talk to your local SproutAg representative to find out more about your succession and transition planning workshops.

• Visualise the farm’s goals and aspirations
• Identify key dates and put them in a timeline
• Regularly review and communicate your transition plan

We’ve talked about developing a transition plan and testing it to make sure it stands up, and in this article, we outline how to communicate the plan, so everyone understands it.

The first step might sound obvious, but it is essential to write it to leave no room for interpretation. When we bring clients into the office, we work through our “one-page plan” tool to visualise all aspects of the farm business and plan. In one page, we sketch out short and long-term business goals, who is involved in running the farm and what they do, and a transition plan timeline so everyone can see the goals, who does what and when the transition will happen. The one-page plan does not go into the micro-detail.

This approach aims to get everyone on the same level when they think about the farm’s goals and aspirations. It doesn’t leave anything open to interpretation as family members can come to different conclusions.

It’s an opportunity for the family to focus on that top-level detail that can often be forgotten or pushed aside in the farm’s day-to-day operation. It’s a trigger for events on what needs to be done, like the retirement of the existing generation or fair compensation for off farm siblings and the timing of those key events.

With their one-page plan in place, we encourage our clients to continually look at it and assess whether the goals and aspirations are still relevant or if they need an update. This is particularly the case if something unforeseen happens, like three years of drought creating severe pressure on cash flow.

Do not overlook communication. We recommend families get together every quarter to review their transition plan to keep everyone on the same page and allow them to speak up when things change.

With a one-page plan and a communication strategy in place, you’ll have a document that will get you through challenging times. Speak to your local SproutAg representative to learn about how to communicate and put your transition plan in place.