Planning for the next generation to potentially take over or deciding what comes next for your farm business can be very tricky. Not as tricky as not having a plan, however, so even if the farm business is pretty young, it still pays to ask some key questions.
Trevor MacLean, a partner with MNP’s agriculture team, says it doesn’t matter how young your family may be, or how early on in your career you are, you need to be thinking about succession.
Where you are at in life will determine how aggressive said planning should be, but at the very least, it needs to be something you think about occasionally.
Questions like, “How are you going to grow?” and, “What type of operation are you hoping to become?” are questions that have a significant impact on your family — even if they are currently still running around in diapers, says MacLean.
“How are the shareholders right now going to be taking capital out of the business, versus leaving capital in the business [which builds] that shareholder equity portion?” he asks.
As well, you need to determine when you are going to start having these conversations with the kids.
“When do you want to start bringing them in? Besides having them sit in the bumper seat of the tractor or the combine. Tell them exactly what’s going on,” he says. “Really inviting them into the conversation, you just can’t start early enough… Just talking about the farm business and what’s important family values, you can’t start early enough talking about family values, and how important that is to the family farm.”
The conversations as time goes on also needs to involve more than just mom, dad, and the siblings, says MacLean. It’s thinking about the whole management aspect of the farm, and what’s needed. Going forward, he notes, is very different than what may be needed today.
“It’s about bringing in the in-laws into the conversation too, because they do have an influence on what that farm looks like. The in-laws may also have skills and competence that they can then bring into the farm,” he explains. “So when you’re thinking about the growth plan, whether it be diversification of just straight-on growth of the existing business, [thinking about] what other competencies and skills do you need to have in order to get your business there, and keep it there, to actually grow the bottoms line.”
Check out the full conversation with MacLean and RealAgriculture’s Kara Oosterhuis, filmed at AgExcellence 2022 at Canmore, Alta., below: