Family farms are the foundation of the Australian agricultural industry. Passing the farm and business on to the next generation is a parents dream, but the reality is that it can be complicated and problematic.
Opposing values, opinions and aspirations can not only threaten the success of the succession of responsibility and assets but deteriorate relationships and dissolve generational legacies.
Historically farms have been passed onto the eldest or strongest son. However, today it is more common for every sibling, regardless of gender to be given equal opportunity to take over the family farm. This is a positive thing; but it can further complicate the transition between generations.
When to begin?
There is no doubt that the earlier succession planning starts, the better the result. It is also important to not rush the process. Starting early will mean that everyone will get a chance to contemplate their own options as well as providing more opportunities for the family moving forward.
The exiting generation needs to know that their future is secured, and the new generation needs to know where they stand.
Communication and transparency are key to ensuring that everyone’s ideas and ambitions can be considered. This way the family can effectively plan for their future.
Everyone in the family should be provided with a chance to communicate their requirements and their expectations. Without effective communication, conflict can easily arise.
It is often beneficial to seek the assistance of professional advice from financial, legal or specialised consultants when it comes to making and solidifying the succession plan. They can provide unbiased, professional guidance on how to proceed, and assist in resolving any conflicts fairly.
Every family and situation is unique and there can be a lot of variables for farmers to consider. The value of land, the amount of property, the assets, stock on hand, the number of children and their aspirations all will impact the plan.
The exiting generation may have opposing ideas about succession and how they are to be provided for once they pass over control and management and their assets to their children. But it is important that everyone be present and provided a chance to air out their existing conflicting ideas to move forward.
Starting to plan for the future can also provide the necessary skills and training early that ensure the new generation can effectively run the business. Varying opinions about the business's direction and strategy can result in conflict. Clear and specific plans should be made for the future of the business, including the business's direction and strategy.
Short, medium and long-term goals should be established so that everyone involved understands and can support the direction that the business is taking.
A set of agreed guiding principles can also be effective in managing the business. Where more than one sibling intends to take over the family business, opposing ideas or values can delay processes and business growth. A set of principles detailing how major business decisions are to be made, how family members are expected to conduct themselves, how conflicts are resolved can avoid squabbling or serious conflicts.
Plans should also be reviewed as time passes by and contingency plans made in case of an event such as a death, illness or conflict in the family. Because situations change, markets fluctuate, and internal disagreements may arise over time.
At the end of the day, the key is to start early and communicate. Continuous communication and clear expectations will assist in a smooth and fair transition between generations and avoid any bitterness or resentment when it is too late to resolve.