Our latest Irish Farm Report found that 94% of farmers believe there are significant challenges for Succession Planning.
Farmers identified business viability (24%) and the lifestyle not appealing to the next generation (20%) as two key barriers to succession.
Each year, these same issues arise when we conduct our survey or when sitting down face-to-face with our farming clients to discuss this topic.
Firstly, succession shouldn’t be rushed and doesn’t have to lead to a breakdown in communication in the family.
Nobody wants this scenario, and with careful planning, you can empower everyone in the family.
Where to start
When looking at succession, the priority is usually securing the future of the farm.
But it is critical not to forget about the need for a sustainable income for both the retiring generation and the incoming one.
Often farms can have three generations living and working in and around the farm.
In ifac, we have always advised to find out the wishes of family members and stakeholders and take their thoughts into account.
Communication is key to a better, successful succession plan.
The aim is not to divide assets equally but to divide them fairly amongst your chosen successors.
10 Steps to a Successful Succession Plan
1. Clarify your goals
2. Collect and Analysis Information
3. Assess your Farms Viability
4. Explore your family options
5. Work with your team of professional advisors
6. Make Decisions
7. Develop and implement your plan
8. Review your plan at least once a year
9. Review and update your will
10. Ensure everyone is happy with the plan
Starting the succession process early is important in both communicating with your family but also in seeking professional advice.
The earlier you start succession planning, the better the outcome for yourself, your family and your farm.
• Communication is a vital part of a successful succession plan
• Start the process early by seeking advice and formulating a plan
• Give yourself time to implement the succession plan
• Update your Will
Let’s talk about Viability
With viability being a concern for farmers yearon- year, it is the number one challenge in succession planning.
When you’re looking at succession plans, it’s important to find ways to generate enough income for both the retiring and next generation (we keep coming back to this point, but for good reason).
Succession planning is the perfect opportunity to pause and assess where you’re at, to consider what’s working and what’s not.
You might need to change your business model, diversify, invest, or even enter into a partnership to improve your viability.
These are difficult decisions, and sometimes the interests of some family members can conflict with the interests of the business.
If this happens, know that you’re not the first and won’t be the last to go through it.
A good approach to teasing this out is to discuss these key questions together:
• Can the farm pay a fair wage as the successor’s level of responsibility increases?
• Can the farm sustain another household?
• Are there structural or operational changes that can be made to improve profitability?
How Can I Improve Viability?
• Invest/grow – using the option of off-farm income
• Change/diversify
• Examine cost structure
• Increase productivity
If you’re looking to start your succession journey, contact our team in Bandon on 023 884 1785 for advice.
