Back in 2020 when Covid first reared its ugly head, bringing machinery production to a... Read more
The Importance of Succession Planning
The Importance of Succession Planning by Davina Fillingham, Partner
Top five priorities for effective succession planning;
- Planning for the Future,
- Expert Assistance,
Succession Planning is never an easy topic to approach with family members due to the differing of opinions and emotions involved, but early communication is essential. Constructive communication at all levels, between husband and wife, parents and children and new family members underpins successful succession planning.
Even with an intention to address succession issues there needs to be regular structured meetings that encourage open discussions between family members. It is important to consider the business objectives as well as the objective s of the individuals involved. Regular meetings with an agenda, minutes and clear actions arising from these meetings will help to develop a succession plan and will act to discourage discontent.
- Planning for the future
In planning for the future it is important to address the existing business and whether it is capable of supporting the next generation and their expected expenses and whether the exiting generation can afford to retire or whether the business needs to develop to a multi generation business. It is also important to consider those non-farming family members and how everyone can be catered for in a fair and reasonable way.
Developing a succession plan will provide a clear path to transfer responsibilities, management control and ownership of a farm business from one generation to the next, a good plan will provide a clear path to retirement for senior members of the business and a clear path for the next generation to develop the business if required. Expert assistance will provide the necessary advice to arrive at the best succession plan based on individual circumstances.
- Expert Assistance
It is important to obtain the best advice and consult legal and accountancy advisors on all plans, ideally, they should be present at all meetings where succession plans are discussed, the professional team at Stephenson & Son are experienced facilitators who act to ensure everyone has their say in meetings, all the difficult questions are answered, maintain focus on a succession plan and manage potential conflict. Acting without an advisor could be very costly. With the expert assistance restructuring options can be carefully considered.
- Restructuring Options
Business succession can be addressed in a number of ways whether that is by dividing land ownership and occupation, perhaps considering contract farming, share farming, Farm Business Tenancies or changes to the business structure, partnership or company arrangements.
Every succession plan is different, there is no one solution. The next five years will see a period of considerable change for agriculture and as part of ensuring the resilience of your business through this time succession planning should be bought to the farmhouse kitchen table for discussion.