Taking Over the Farm is One Thing. Understanding It is Another.
Before You Talk Succession, Make Sure You Know What You're Handing Over
When families start talking about succession, the conversation often heads straight to lawyers, accountants and trust structures. Who gets the home block? How should the assets be split? What's the best ownership structure? Those are important questions, but they're usually not the first ones that should be asked. Before you decide how the farm will be passed on, it's worth understanding exactly what you're passing on. Because a well-written succession plan won't fix a business that's struggling underneath.
If the business isn't profitable, is carrying too much debt, or only works because Mum or Dad are putting in 80-hour weeks for little or no wage, you've simply passed those challenges to the next generation.
Start with the numbers
One of the first questions I ask is simple.
What does each enterprise actually make?
Not gross income.
Not what was left in the bank after harvest.
What is the genuine profit once you've allowed for direct costs, overheads, depreciation and a fair wage for the people running the business?
That last point often changes the picture.
Many family farms look profitable until you put a value on the owner's time. Once you recognise the labour that's going into the business, the margins can look very different.
That doesn't mean the business is failing.
It simply gives everyone a more realistic understanding of what the business needs to support into the future.
Can the business support another generation?
Bringing another family into the business changes everything.
Whether it's parents and children working together or siblings taking over progressively, the business has to generate enough income to support more people. That means paying living expenses, servicing debt, replacing machinery when it's needed, investing back into the business and still leaving enough profit for everyone involved.
Sometimes the business can comfortably do that.
Sometimes it can't, at least not yet.
Understanding that early allows families to make informed decisions, rather than discovering the financial pressure halfway through the transition.
How dependent is the business on you?
This is probably the question that gets asked the least.
How much of the business relies on the current owner? Do all the key relationships sit with one person? Would someone else know how things operate if you stepped away tomorrow? Is the business built around systems, or around one person's experience and long hours?
These aren't reasons to delay succession.
They're things that need to be recognised and planned for. The smoother those responsibilities can be transferred over time, the stronger the succession process will be.
Build the foundations first
Succession is about much more than ownership.
It's about making sure the business is capable of supporting the people who will run it for the next 20 or 30 years.
That starts with understanding:
What the business actually earns.
What debt it carries.
How much cash it generates.
Whether it can support another family.
Where the risks and opportunities are.
Once you understand those fundamentals, the legal and ownership structures become much easier to build around them.
Where I fit in
I don't prepare wills or family trusts, and I don't replace your lawyer or accountant.
What I do is help farm businesses understand the numbers behind the business before those succession conversations begin.
Through benchmarking, cashflow analysis, business performance reporting and strategic planning, I help families get a clear picture of where the business stands today and what it needs to look like tomorrow.
In my experience, the biggest challenge in succession isn't usually the legal structure.
It's that families are making decisions without a clear understanding of the business they're trying to pass on.
If succession is on the horizon over the next few years, starting with the business itself is one of the best investments you can make.
With Purpose,
Nathaniel