Succession – How to start the conversation
The topic of succession is one that evokes many feelings.
For some, there may be excitement at the opportunity to step up, have more ownership and take on more responsibility. For others, there may be mixed feelings, about having to step back, and pass on control of something you have helped build. And for those who may be looking to initiate things, there may be a degree of trepidation about having to start those difficult conversations.
Succession is something that all agricultural businesses must consider. Even if you aren’t planning on handing your business over to family, as is often the image we conjure up when talking about succession, there should always be an exit strategy you are working towards for when the time comes. Perhaps it’s a plan around simply selling up, or getting investors in, rather than handing on. The definition of succession, after all, is about the transfer of ownership or control, however that might play out.
Either way, starting the conversation early and at least thinking about the plan is important, which is why we’ve put together a few suggestions to help kick-start your succession conversation:
1. Start early
To maximise the possibility of success with minimal disruption to your business, start the conversation around succession planning early. The more you talk about it and make it part of the larger business plan, the less daunting it becomes. Hold formal family meetings, with a set agenda item being “succession or exit strategy”, rather than just talking around the dinner table. Adopting what we like to call a “proactive transition process” gives you sufficient time, motivation, will-power and resources to plan for, and support, a successful business transition.
2. Focus on opportunities for growth
Throughout the succession planning process, you have the opportunity to identify areas of growth – for both the people in your business, and the business itself. Perhaps someone who will be taking on additional responsibility needs to upskill in business management or people management before they are ready to take on the role? Or a person coming into the business might have very complementary skills (such as finance, marketing or communication)? Or perhaps in order to provide for all members of the family, you need to expand and purchase more properties? No matter what the case, succession planning provides the opportunity for growth – something that is always a positive!
3. Succession objectives should guide your business plans
Our program and advisory clients often express their amazement at the power of simply writing things down. Once ideas and decisions are committed to paper, this seems to make them ‘real’ – as other people can more tangibly visualise them, and therefore, there is a much greater chance of them actually happening.
While a dedicated Succession Plan is often needed (or a “Business Growth and Transition Plan” as we like to call it), with input and guidance from key advisors, your succession objectives should already make up a fundamental part of your ongoing Business Plan.
Given all key members of the business should have had input into the business plan, and participate in its regular reviews, a conversation about succession shouldn’t come as a surprise to anyone. If you don’t have a business plan, check out our webinar recording on effective business plans.
If you have already got succession in your larger business plan, then you are ready to start discussing and creating a ‘succession plan’. Before initiating a larger conversation, you might want to be ready with ideas and suggestions around how to approach this plan – planned meetings with key people, external advisory support options, and so on.
4. Allow yourself time
The key thing to understand when starting the conversation around succession is that it really is about the process – successful succession takes time and commitment by everyone. In very simple terms, succession is fundamentally about having a structured and orderly conversation over time. Set the expectations early that this process will take a while, and that it is important for all participants to be open to starting and continuing the conversation for as long as it takes.
Always allow for inevitable delays due to workload and day-to-day demands, breathing room for when participants need space, and for open communication (including time to reflect and to ensure everyone is engaged).
Short-term gain can often lead to long-term pain, as rushing through the process may lead to irretrievable family break-downs or business partner break-downs. When starting the succession conversation, let everyone know that this isn’t a fast process, and that it is important to take the time to “get it right” for everyone involved.
5. It is all about the people
Everyone involved must understand that succession planning can be a very imperfect process at the best of times – and might need to stop-and-start or head off on a tangent for a while. Often you have to fully explore the ‘wants and needs’ of those involved before you can start addressing the legals and financials.
And while people like to see succession as fact based – which is important – the emotional side is equally crucial. Make sure that you undertake the succession journey together and remember that it is just that – a journey for both those involved and the business itself.
This emotional and “people” side of things is the area where most people come unstuck, because relationships and emotions get in the way of making rational decisions, and this derails the process. This is the value of having an external advisor (not necessarily an accountant or solicitor, but rather a “mediator”) who can navigate the challenges of these family dynamics and emotions. We all know that succession is certainly not a straightforward black-and-white process, and a successful process generally means the ‘grey’ area has been given the attention and respect it requires.
Wanting support around your succession journey?
We understand that succession is often a private and very emotive matter, which is why having the support and outlook from an external advisor and facilitator can be beneficial. If you would like support around your succession planning, feel free to contact the team at ABDI to discuss our advisory services or how one of our 12 week or 12 month programs might be able to assist with starting the conversation.