When we think about analysis we generally think about figures - numbers and dollars. But when we are thinking about analysis in terms of succession planning, it is imperative that we also think about the people in our families and businesses.
At Proagtive, we take an holistic view of succession planning, which necessarily translates into a multi-faceted approach to the process. Because succession planning is only one aspect of successfully managing a farming business, it can’t be considered in isolation. To maintain the equilibrium of the system, it must be considered as part of the management process.
So where do we begin? We begin by clarifying our personal and business goals and aspirations, and to do this we need to allow ourselves time out from our busy lives to give us the space to reflect on the direction our lives and businesses are taking or indeed where we would like them to be heading.
We then need to determine the purpose of our business. By doing this, we can identify what it is our business needs to deliver to meet the collective needs of the family. By quantifying the needs, we can then begin to see where there may be gaps between family expectations and what the business is delivering. If that is the case, are we prepared to lower our expectations or does the business need to deliver more?
As well, we need to be analysing the viability of our business. It is vital to know how much we need not only to run our business, but also to grow the business, repay debt, retire and most importantly, live well. The question then is if the business isn’t delivering these outcomes, what are our options?
Analysis of family dynamics and intergenerational differences helps us to see things from the perspective of other family members. An understanding of the differences helps maintain harmonious family relationships, the result of which flows into productive businesses.
The way in which we communicate within our family and business needs to be analysed because good communication is a learned skill. It is not innate. If our communication is ineffective, it can lead to poor decision making and unhealthy conflict, which has a ripple effect in terms of effective business management. There needs to be a communication strategy that allows for difficult conversations, and gives families the platform to separate their business and personal issues in a respectful way.
Analysis of retirement needs of the older generation is vital. Retirement needs differ from person to person. Retirement means different things to different people and financial needs in retirement also vary.
The area of business policies needs analysis because the lack of clearly documented policies can lead to family disharmony, or worse still “blow up” good businesses and great families.
Further analysis is required to understand our business structure i.e. how the assets are owned and how the business itself is structured; it also involves understanding the legal and tax implications of any proposed business/succession plan.
Succession planning is complex and challenging, but handsome rewards are assured for those prepared to invest the necessary time and effort to undertake the analysis required, not only for themselves, but also for their families and their businesses.