Posted by: Kylie Wilson
I had the privilege of being included in the
succession and continuity roadshow in central Queensland, organised by RCS, for
the purpose of providing information to primary producers on the best options available
to ensure smooth succession and ongoing continuity and viability of their
intergenerational businesses.
An interesting part of each section of this
roadshow was an exercise that was run and facilitated by Claudia Power of RCS,
where each generation was split into two groups: those that consider themselves
part of the "older" generation and those that consider themselves
part of the "younger" generation.
Effectively, regardless of age, the older generation being those that
currently control the business, and the younger generation being those that are
working in the business with an aim to ultimately succeed to control of that
business.
What was interesting out of that exercise was that
in each of the three sessions that were conducted in Emerald, Biloela and Rockhampton,
two main themes came through from both generations as their main priority:
- family harmony; and
- financial security.
So both generations' top two priorities from each of
the sessions by and large exactly mirrored each other. Why then are there so many difficulties with
rural succession being completed in a way that ensures that families both stay
together and stay on the land?
There are many answers to this, depending on each
respective business and the dynamics of each respective family. Having said that, one overwhelming issue that
came up again and again from both generations was communication. The older generation not always expressing to
the younger generation the status of the business, the liabilities, the exact
nature of the income and expenses and how the business is conducted as a
whole. The younger generation not
communicating their expectations, their thoughts and ideas on growing the
business or their desire to know more about the ins and outs of the entire business. In failing to communicate these things, each
generation is disadvantaging the business by removing from the business two
important elements:
- the passing on of wisdom, in a way that occurs over time and in an educated fashion, and allows a younger person to grow and develop in, and with, the business; and
- a loss of the injection of youthful enthusiasm and ideas into the business.
While these problems are not always universal, it is
also not uncommon for parents to focus very much on growing the business in a
way that they think will benefit the next generation, with little long term
planning given to how their retirement will be funded when they exit the
business. In addition, children often
want to try to meet what they see as their parents' expectations, without ever
actually asking their parents what their expectations in fact are, or
expressing what the children actually want.
Therefore, what was clear from the succession
roadshow is that the very first step of any succession planning needs to be for
all parties involved to identify first and foremost as individuals what it is
that they want, both in the business and in life. Without an understanding of what it is that
they want, it is impossible to appropriately plan for it, and ascertain whether
what is wanted can be achieved during the succession process. You cannot set goals to achieve anything in
life without knowing what it is you actually want to achieve.
In summary then, the best approach to starting a
succession plan for rural families is for each family member to identify what
it is they want and communicate that, openly, honestly and without judgment, with all the stakeholders in the
business. Then a flexible plan can be
put in place to achieve the aims that work for everybody if those
"wants" are achievable. The
more planning, time and communication that is put into the succession process,
the more likely that the two main aims of family harmony and financial security
will be achieved. Ultimately, each
generation wants the same thing, and with proper communication and planning,
achieving that does not need to be difficult.
