There are many different ways to define succession planning. One approach is to think of it as a process occurring over time during which a family plans for the transfer of knowledge, skills, labour, management, control and ownership of the farm business between the founder (retiring) generation and the successor (next) generation. It involves the creation, preservation and ultimately the transfer of the farm business assets in order to achieve personal, family and business goals.
Each family farm business is unique and no single approach works for everyone. It is important to understand that the family farm business (and therefore a succession plan) involves the interaction of people in the strong bonds of family, who make decisions affecting the farm business.
You may be eligible to access cost-shared funding to develop a succession plan. By participating in a Growing Your Farm Profits workshop and developing an action plan for your farm, you can access the advisory services and learning opportunities. The Growing Your Farm Profits workshop helps participants develop strategies and action plans that lead to better management decisions including succession. You may also be eligible for cost-share funding for a succession plan under Growing Forward 2.
What are the Steps in Succession Planning?
Succession planning has a series of steps. Some of these steps have smaller parts. They are not always easily placed in a sequence. However, it does help to organize the process into major steps. This Factsheet summarizes the process into steps.
- Preliminary Step: Open the Lines of Communication, Define Objectives and Goals, Identify Successor and Assess Compatibility of Objectives and Goals
- Step 1: Collect and Analyze Information
- Step 2: Generate Options
- Step 3: Make Preliminary Decisions
- Step 4: Design, Develop, Write and Review
- Step 5: Implement and Monitor
As mentioned, it is important to understand that these steps are not necessarily in a sequence (one after the other) or in a set order. Some parts must be done sequentially (one after another), but others can be done concurrently (at the same time) and still others can be completed in a random order.
Open the Lines of Communication
The first and most important step, actually a pre-step before even considering succession, is to open the lines of communication between the generations. Once the generations are talking, everyone will start to think about his or her involvement in the future of the farm business.
Define Personal, Family and Business Objectives and Goals
Once communication is occurring, the founders and next generation must define their separate objectives, goals and expectations for themselves, their family and the business.
When defining their objectives and goals, a major consideration for the next generation is whether they wish to be involved in the business. If the answer is yes, they become a potential successor. The process then moves forward within the framework of transitioning to the next generation. If the answer is no, discussions and decisions eventually focus on preserving family wealth and the transition out of farming.
Assessment of Compatibility of Objectives and Goals
With the successor identified, family members need to honestly assess the compatibility of each other's business and personal objectives, goals and expectations. A strategy to address serious discrepancies and incompatibilities needs developing.
The goal is to reach consensus (among the founders and the successors) on major "objectives and goals." For example, the successor(s) may want to take over the farm tomorrow but the founders (parents) want to be involved indefinitely into the future. Somehow, this discrepancy must be addressed.
At this point, the founders need to assess how much money they need for retirement. The successor(s) need to consider what they can afford to pay. The viability and profitability of the farm business is an important consideration.
Consider obtaining the services of a trained outside facilitator to assist in these discussions - particularly when dealing with family members' objectives, goals and expectations. A number of factors affect objectives and goals. These include past family history, family values, personality conflicts, family relationship dynamics, favouritism, life stages issues and associated challenges.
Step 1: Collect and Analyze Information
In the first step, information is gathered and analyzed in order to:
- improve the farm family's general knowledge of succession planning
- collect relevant technical information (particularly financial)
- analyze financial viability and profitability of the farm business and
- review additional specific technical information.
Enhance General Knowledge of Succession Planning
Family members need to acquire a basic understanding of the succession planning process - read articles about succession planning and/or attend a succession planning workshop or seminar.
Collect Relevant Technical Information
Next, pull together relevant technical information about the farm. Compile and review the legal will, the power of attorney, tax returns, financial statements, current financing arrangements, retirement savings position, any business and legal agreements, etc. Identify any missing pieces. This is a prerequisite to completing an analysis of the farm business's financial situation to determine viability and profitability.
Analyze Financial Viability and Profitability of the Farm Business
Once the financial information is collected, use the financial statements to analyze the farm business's past and current financial situation.
Real Spark Women Girls Fashion Plated Gold & Silver Tree Of Life Elegant Circle Drop Dangle Statement Earrings
Jewelry (Real Spark)
Darkey Wang Fashion Personality Charming Evil Eye Necklace BringsYou Shining World
Jewelry (Darkey Wang)
1st Place Winner Gold Award Medal, Antique Gold
Sports (Prestige Palace Awards)
Sulfate Free Argan Oil Shampoo and Conditioner: Sodium-Chloride-Free, Alcohol-Free, Paraben-Free, Natural Sun Protection and Highest Salon Quality Pure Ingredients with 12 Plant Extracts
Beauty (Vizeri Beauty)
Dynasty Toys NERTS 12 Decks of Playing Cards Set
Toy (Simply Addictive Games)