Farming with family can be rewarding but also stressful — especially when it comes to the issue of succession.
“Though the traditional aspiration has been to pass a farm along within the family, some operators are finding that the transition of a farm’s ownership from one generation to the next just may not be a feasible reality,” says Ryan Riese, national director of agriculture at RBC. “In these cases, it may be necessary to explore non-conventional options for succession.”
For those considering a non-traditional succession, the following are three strategies for ensuring its success:
1. Start with a family meeting.
Before making any business decisions, begin by setting up a family meeting as an open forum for asking key questions. For example, is anyone interested in operating the farm, or owning it as a business asset? Would everyone be comfortable with selling the land, even if carries a long history in the family? It’s these types of emotional decisions that must be contended with before any business decisions can be put in place.
2. Establish expectations early.
If your family is bringing in an outsider to sell or manage the business, be sure to clearly delineate the roles and responsibilities of each party. For the other party, it will also be important to determine your policy on compensation, revenue sharing or what the path to ownership of the operating entity or land base will look like down the road.
3. Consider key successor qualities.
Developing clear criteria to guide your search for a successor will help ensure that the process is a success — but remember, it’s not only business management skills that matter. Be sure to also consider other factors like communication style, personality profile and culture fit, which can be equally as important for smooth collaboration and transition.
Find more information at rbc.com/agriculture.