There are 3 Things that Every Succession Plan Needs – The First is Time
This month, I had the opportunity to attend the Leading Edge Farm Management Conference in Red Deer, Alberta. Because of my interest in becoming more involved with my family farm, my mentor, Allison Ammeter, told me about the conference and highly recommended that I go. She told me that she had attended the event in the past and found it very worthwhile. She also emphasized that it can take a long time to put a succession plan in place, so it is never too early to start. This is a sentiment that has been echoed frequently as I delve into the expansive territory of succession planning.
Although I am not yet in a position to move to the farm full-time, let alone take over, the importance of the process has really been impressed upon me. As I have begun to gather information and learn about different strategies, I am becoming more and more aware of what I do not yet know, and I am relieved that I decided to investigate the subject early.
Over the two-day conference, Merle Good, Dean Gallimore, Rod Strilchuk and Ryan Stevenson brought a wealth of information and experience from a financial perspective. Covering various farm business structures and their respective financial implications. Each expert offered a slightly different stance on the subject matter, which resulted in lively debates and indicated that succession planning may be partly an art and not strictly a science. While some of their opinions differed, the experts were equally passionate about the subject and eager to share information with us.
Reg Shandro brought another element to the conference by discussing the importance of the relationship aspect of succession planning. A farm advisor and mediator, Shandro offered insights on dealing with the people involved in the succession planning process, which typically involves family and can be highly emotionally charged. During an expert panel moderated by Shandro, he succinctly summarized the take-home messages of the conference by breaking down the three elements required for a successful succession plan: time, a decision maker and the technical mechanisms necessary to put the plan into place.
Again, the concept that a succession plan takes time to develop was driven home. Choosing a decision maker is usually simple, because it will often be the same person that is currently making decisions on the farm. What can be more difficult is making decisions with all parties’ emotions in mind. Shandro spoke about emotional awareness and how it can sometimes be helpful to wear two different hats: a farm or business hat, and a family hat. The third aspect, the technical mechanisms to implement the succession plan, was discussed at length by the financial experts. There are many different business structures and tax strategies available to farms, each with their own pros and cons. Constructing a succession plan should be tailored to each individual farm with the advice of a reliable and trusted advisor to ensure that all possible benefits are being obtained and the chose
n structure is a good fit for the farm, whether it be a corporation or a private enterprise.
I am very grateful that I have had the opportunity to learn about the succession planning process through my involvement in the Advancing Ag program, and that I still have a lot of time ahead of me to get my family’s succession plan in place. What I have learned so far is that while each succession plan may vary, it is vitally important to have a plan of some form and these plans can take a long time to develop. A succession plan is a crucial component of multi-generational sustainability, providing direction and stability as the farm transitions from one generation to another.