It is really important for growers and producers to not only plan operationally but also to plan strategically and to set aside the time to work on their business. As a farming business grows, so do the number of people involved in that business and there needs to be a greater level of leadership and overall communication within that family business for it to succeed and go onto the next generation. It is the farming businesses that continue to work on operational excellence as well as planning for the future that succeed.
Farming Businesses are predictable, they generally start with “Mum and Dad” but then grow and evolve and at times there can be four generations who are alive and so the ability to plan longer term around key items such as roles and responsibilities, asset strategies and other people policies is critical to the long-term success of the family and the business.
As facilitators, our priority is to understand the family dynamics and work through the relationship and communication issues with our clients rather than helping them decide on the management of the farm and how and when each generation will hand over to the next.
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Succession planning often raises topics that are difficult to talk about because they require you to discuss something uncomfortable. With the SproutAg Transition Program we take a lot of time understanding the goals of the family. It is particularly important to understand the current generations goals and aligning “Mum and Dad” so we have one view on the most important issues. This can take several one-on-one meetings to understand this. Without understanding at a deep level the goals and aspirations of each family, it is hard to proceed with any plan. By using an independent facilitator it helps those family members talk openly.
The importance of the farm and the background of this is often not associated with the dollars and cents value but what that farm brings to the family, such as a family gathering spot for important family celebrations, the identity of that family, the history of the family and the hard work that goes into that farm and also the rural culture.
SproutAg's succession planning services take an all-inclusive approach to all family members involved. By understanding the family dynamics, and working through the relationships and communication issues, we work with clients to guide them on the management of the farm and how each generation will hand over to the next.
As part of our succession planning, we also help clients with strategic planning, strategic conversations, mediation, coaching conversations and succession ready plans.
At SproutAg, we think about succession planning as a transition rather than an immediate change. Part of the transition is understating the needs of the incoming and outgoing family members, and how the farm will afford the transition. One of the core conversations that we have with our clients is around the viability of the farm and the plan. To start this process, it’s important to understand the personal and business goals of the existing and next generations. Key considerations include, the market value of farm assets, cashflow forecasts, off farm income and debt analysis and requirements.
As a family, it’s important to view succession planning as an opportunity to set up the farm business for a long-term future that will provide an income and lifestyle for each generation. As a starting point, a successful farm succession plan relies on everyone seeing it as a process that happens over years and changes as circumstances do. Everyone should have a clear understanding of what they want their role to be on the farm and what personal aspirations they might have.
Before we start the planning process, let’s challenge the way you might think about traditional succession planning. At SproutAg, we think about succession planning less as a sudden handover, but more of a process that recognises there is an overlap between one generation handing over the farm and the younger generation taking it on. This process usually happens over years, and as a result we encourage our clients to think about it as a transition. Often family’s handover parts of the farm or give young family members more and more responsibility as the older generation steps away.
The ’One-Page Plan’
When starting on the succession planning journey, it’s important to allow everyone to have their say. Our team start with the ‘one-page plan’ exercise, a tool to visualise all aspects of the fam business and plan. On this one page, we sketch out short and long-term business goals, who’s involved in running the farm and what they do, and a transition plan timeline so everyone has visibility on the transition plan.
The team at SproutAg will work with families to gather financial information, forecasts and data alongside goals, and aspirations for the farm. From here, a deep-dive analysis is undertaken to determine the viability of the plan. This analysis is an opportunity to lay down timelines on when the best time is to transition and whether the farm should grow over time.
A plan on a page helps to communicate to the whole family what the most important issues are, the progression of these, and who is responsible. The SproutAg one-page-plan helps to communicate the progression of the plan in an easy-to-read format on just one page.
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