For years Dad always drove the truck to town. But now his children are running the show. So what happens when Dad wants Son or Daughter to run the business but refuses to give up the driver’s seat?
Welcome to succession management. It’s a term you may already be familiar with. And if you aren’t, it’s one you’ll eventually need to learn.
Simply put, succession management is the transition of the family farm or business from one generation to the next. As the farming population gets older and closer to retirement, many questions arise. Who will take over when you leave? Have you discussed what will happen with your children? Do they know how to manage the operations on their own? Do they even want to?
“Ideally, you want everyone to enjoy sitting around the table and eating turkey at Christmas,” says Dr. John Fast. Dr. Fast is widely recognized as the Family Business Doctor, as well as author, speaker and guru of family business matters. “You don’t want bad blood between family members.”
Succession planning happens on three levels: transfer of assets and shares, the management of the farm, and passing along the family values or harmony. It’s this third level that can be most difficult. After all, how do you pass along the family harmony?
“The deepest issues are the transfer of control and power,” says Dr. Fast. “Both sides have needs. And those needs must be met so all sides enjoy mutual benefit. It really affects the entire family and therefore the process should be transparent from start to finish. Whatever financial deal is made affects the children taking over the family business, as well as the kids who aren’t active in the family operations. Everyone needs to know what the plan is; otherwise some members of the family may feel controlled. The stronger the family, stronger the chance of success.”
Keeping family peace is important, but so is timing. Families often wait too late to create a succession plan. Ideally, parents should begin discussions in their 40s and children should be included in these plans once they reach their teens. The worst case scenario, according to Dr. Fast, is when parents are in their 60s with no plan, no one to help them, and no successors.
“The sooner there is a well-discussed game plan, the better,” says Dr. Fast. “As parents get older, they become more rigid in their thinking and less able to let go of their control. This affects the next generation’s ability to plan their lives and their futures. This is why it’s important that planning starts early. Sit down with your teenagers and talk about family values, the family business, and what being a part of the family business means.”
An important thing to remember when creating a succession plan is to keep your sense of humour. It can be a fun process where everyone has input. It’s a time to share ideas and dreams. If you normalize the situation, it’s much easier for everyone to understand and embrace the planning process.
And remember, like any plan, you can always change it.
“Some farm kids grew up thinking they were always going to take over the farm,” says Dr. Fast. “But they have gone onto different careers. Conversely, there are a lot of kids who went through university, tried different careers, and decide by their late 20s that they want to be on the farm. It’s important to give everyone permission to change their minds and allow for flexibility.”
Taking charge of your future now alleviates the stress of the unknown. By attending a succession planning workshop as a family, you learn together, and stay together, as a family.
And who knows? When it comes to choosing who drives to town, taking turns might be a lot of fun.
Finding a seminar on succession planning and other aspects of farm management is as easy as doing an online search. Farm Credit Canada offers succession planning workshops throughout the year across Canada as part of their AgriSuccess program. For more information on these seminars, call 1-888-332-3301 or visit www.AgriSuccess.ca.
