Make succession planning a success on your farm

But the truth is, there's no good reason not to tackle it in much the same way as every other predicted change. In fact, there are plenty of good reasons to get started sooner rather than later.

This guide outlines several key steps to starting a plan for your own farming business and signsposts to useful resources that can help.

Communication is everything when it comes to succession

Open and honest communication is crucial to success with succession planning.

Whether you’re yet to create a succession plan or even if you’ve already got one, it's crucial to be able to talk honestly with the other stakeholders.

Sometimes, this can be difficult as you may feel uncertain about how other family members might react to your goals – and other family members may have similar worries. 

Independent facilitators can really help ensure everyone in the business has the freedom to voice any concerns and be honest about their career goals, so it’s often best to bring in a third party to ensure everyone’s thoughts are considered in this process.

It’s also important to recognise that different personalities will react to changes in different ways. 

And while some people might accept changes faster than others, it’s worth understanding that, broadly speaking, people typically go through eight phases in reacting to change: Shock, Denial, Realisation, Resistance/anger, Letting go, Searching, Understanding and finally, Acceptance.

Having an idea of the different personalities involved in your business and the journey they will go through with those eight phases can help you assist them in processing the changes you’re working towards. 

You can find out more about these phases, the different personality types and how they might deal with changes in our Essential Skills: Succession planning Learning Path.

 

Succession is not the end of the road for existing owners and managers

Some farmers struggle with the idea of stepping back from the business, fearing it means they’ll lose their identity. But it's crucial for all parties to understand that developing a succession plan needn’t mean the end of the current owners or managers’ career.

In fact, many previous owners and managers continue to work in the business for some time, lending their expertise and knowledge to help the new owners and managers take on their added responsibilities in a smooth way.

Some farms work to a plan whereby the younger generation builds an increasing amount of equity in the existing business over time, ensuring both parties are actively involved together for many years to enable this transition. And there’s no reason why the older generation can’t maintain their role in the business even after the younger generation has taken on ownership of the business—either as an adviser or consultant or even as a manager of a part of the wider business.

Of course, decisions on how to shape this relationship need to be made with both parties’ goals at heart, so start the conversation early and return to it often to ensure plans match your objectives.

What’s next for current owners and managers?

The prospect of retirement can be daunting as many people wonder what they’ll do with their time. Some people look forward to the dream of travelling more or spending more time with their relatives. Other people may take joy in new hobbies and pastimes. Often, it can help to start these hobbies before you retire – giving yourself some time to start developing a new skill so you’re keen to pour more of your time into it when the opportunity to do so finally arrives.

Whatever you choose to do, there’s absolutely no reason to worry that retirement means losing your identity or your legacy. Take pride in your achievements, offer your help to the next generation, and stay involved in conversations about the business and the industry. 

By staying part of the community, you may find new opportunities for small farming projects, either as part of the succession plan or potentially with other businesses.

Complexities with family farms

It’s a sad truth that many farms are managed and run by family members in their 60s and 70s – and, in some cases, by those who are even older. Sometimes, these owners and managers have only taken the business on for themselves in the last decade or so, with their parents having been reluctant to hand over the reins, too.

But it’s also true that the businesses that succeed the best with succession are those that outline a plan early and follow through on it, allowing the younger generation to take on the business while they’re in their 30s or 40s—if they’ve decided they want to pursue a career on the family farm.

Regardless of the ages of those involved, it is vital that all parties feel comfortable talking about the future of the business.

Early, informal conversations around the dinner table can help everyone better understand each other’s ambitions and the timescales in which they’d like to realise them.

Having an early idea of everyone’s goals can really help the whole family consider the options. If it appears there are likely to be some conflicting opinions, then it's important to remember that specialist facilitators can help with these kinds of issues.

 

Starting the conversation

While a succession plan is a formal document outlining key objectives and deadlines for their delivery, it’s important to recognise that the best first steps towards this are almost always taken in informal conversations.

Younger farmers can start this process by asking about the farm's longer-term objectives. Conversations about the future development of the business and what changes may need to happen to strengthen it over time can help identify areas where they could take more responsibility.

Similarly, the farm owners and managers can start this process by asking the younger generation about their career goals and any ideas they may have about developing the business.

It doesn’t matter too much whether these conversations happen around the table, in the pub or in the field—it’s more important that they happen, as these first steps are critical to understanding how the other party feels about developing this business relationship. 

Find out more about this in our case study: David Homer: ‘Succession is not a subject for tomorrow – it’s for today'.

Ultimately, these conversations will need to move to a more formal setting at some point, and they will need to take place with all the key stakeholders/family members involved in the business. But those formal discussions will not happen if these initial conversations don’t occur.

 

What happens when there’s no direct successor in the family?

It’s important to remember that there are still succession planning options for farms without a direct family successor. In many cases, it can be helpful to ask your existing staff about their ambitions, as they are ideally placed to take on the reins if they’re interested in doing so.

Tenant farmer Catherine Pickford was in exactly this situation herself. By speaking to Nathan Crocker, her herd manager, she’s managed to assess his career ambitions and start the process of selling her business’ assets over time. This allows Nathan to gradually buy her business, giving him more control over the business one step at a time.

Read more about Catherine Pickford and Nathan Crocker’s approach to succession planning.

Fundamentally, there’s very little difference in approach when a farm is being handed down to the next generation of a farming family or if it’s going to an existing employee. Start the conversations early and in an informal setting to gauge the other party's interest, and then think about setting a date for a formal meeting, where lists of assets, etc., can be made and timetables for transition of ownership can be outlined.

 

What should a good succession plan contain?

Each succession plan should be unique and built around the career aims and business goals of the company's key stakeholders.

So, while the younger generation on a family farm may aspire to become farm owners themselves, they may also want to ensure they have an opportunity to travel the world a bit first. It’s only by being open about these objectives that stakeholders can agree on a plan of action to meet them.

Read more about the importance of highlighting everyone’s goals in our case study: Will Holmes: Succession allowing family to meet their goals.

That said, all good succession plans should contain the following: 

• Clear timelines of what will happen and when
• A plan of who'll be taking responsibility for what and when. This may be in agreed stages
• A list of the assets that will be handed over, to whom, when and how
• Documented explanations detailing why decisions were taken
• Details of where to find important information
• An agreed date (month and year) of when the plan's next review will occur 

The timelines outlined needn’t be hard deadlines—and they should move if factors affect the delivery of the goals. But it is vital that the plan contains these dates as targets for each action, as this will allow everyone to track progress towards the overall objectives.

It can be difficult to list all the assets to be handed over. Some farming families include the farmhouse in this list, while others might keep them privately owned by the older generation – but it’s important to be up front about the assets the business has, and to consider how they fit in the transition too.

All parties involved in drawing up the plan should understand that a fair plan for the transition of assets to the younger generation doesn’t necessarily mean an even plan in terms of financial value. This is a particularly important point to make in situations where some siblings may want to work on the farm while others might not, as it’s vital for everyone to recognise that there will be high-value items that are crucial to that business’s ongoing success.

These situations may feel difficult to manage, but independent experts can help stress that point too, and there are ways of allowing non-farming children to retain some ownership or stake in the business. 

Explanations of the key decisions made can really help if the plan is reviewed later or when circumstances change. For example, if one of the non-farming children later decides they want to be actively involved in the business, then the explanation of the initial division of assets can help set a precedent for how that second sibling may begin to build up their own equity in the company later.

Lastly, it is essential that the succession plan contain details of where the younger generation can find the information critical to running the business.

This should contain:

• Where passwords are saved
• The business bank accounts and information on how to find all relevant codes/access information 
• Where a list of signatories, deeds, Wills, and copies of Powers of Attorney are stored
• Details of the named persons with access to all the above
• Information on the security codes for equipment on-farm

With all this detailed in the plan, the last thing to agree on is a date to review the plan in full.

Next steps

With a plan outlined and agreed upon, it can be tempting to think that the rest will be smooth sailing! Of course, things don’t always run according to plan, which is why it’s also important to outline a timeline for reviewing progress against the plan. 

It’s typically recommended that these reviews be held every five years—or sooner if important aspects change, such as divorce, death, changes in legislation, etc.

Take this time to assess the success of each step of the plan, consider the obstacles to the goals and review the timelines involved. 
It can be surprising how fast five years can pass, but these review meetings can help keep things on track and ensure everyone involved in the business knows where things are up to.

You can find loads more advice, tools and tricks to help you make succession planning a success in your farming and growing business by starting our Essential Skills: Succession planning Learning Path.