Farm Succession Planning: How Can You Keep the Business and Family Strong?
South Australia is home to a thriving farming community, generating over $20 billion in annual revenue with premium grains, food and wine. Many farms remain family-owned and have been passed down through generations, which raises the important question of succession planning. As an accounting and business advisory firm proudly serving SA since 1976, Hood Sweeney has valuable insights on strategic planning for the next stage of your family farm.
When Should You Start Farm Succession Planning?
The best time to begin business succession planning for a family farm is at least 5 to 10 years out from the estimated retirement or change of ownership. In the event of an unexpected illness or death, a succession plan streamlines the next steps and provides transparency for everyone involved. Even if the retirement or changeover is coming up sooner, speaking to a trusted third party is a smart move to make sure proper plans are in place.
What Are the Top Priorities for a Family Business Succession Plan?
As with any family business, a farm succession plan should include defined roles, specifically management (who is running daily operations) and ownership (who holds equity). This allows for a gradual, efficient transfer. It’s also important to provide an accurate picture of the farm’s current valuation, including profit, assets and liabilities. Putting everything in one comprehensive plan supports open conversation and helps keep the family’s personal and professional relationships intact.
What Do the Most Successful Successions Factor In?
To achieve the greatest success with business succession planning, you need to come to an agreeable solution on who is taking over, when they are doing so, and what they all need to do. To evaluate the current business and potential for future growth, you can take an asset-based approach, review cash flow, earnings and expenses, and/or compare with similar-sized family farms near you.
What About Farming vs. Non-Farming Children?
We recommend identifying the family members who are most likely to play a hands-on role in the next generation of farming. It’s important to weigh up equity as farming children need operational assets, and non-farming children may require other assets. A strategic advisor can give you ideas on a fair succession plan that supports not only a strong family farm but also strong family ties.
Do You Need a Professional to Help With a Farm Succession Plan?
To help secure the future of your family farm, business succession planning with a trusted advisor can make a big difference. You don’t need to navigate these complex conversations alone, and an independent third party will have your best interests in mind while providing reputable advice to complete a smooth transition. Especially in family businesses, clarity is crucial so each member understands their role and responsibilities, as well as their ownership interests now and in the future.
Get in Touch With Hood Sweeney to Discuss Succession Planning in SA
Feeling inspired to take the next steps to protect the future of your family farm? Hood Sweeney's team of business advisors and financial planners* can help. Contact business succession planning experts to develop a robust, forward-thinking strategy for your South Australian farm.
*Hood Sweeney Securities Pty Ltd
AFSL No. 220897 | ABN 40 081 455 165
The information in this article contains general advice and is provided by Hood Sweeney Securities Pty Ltd, AFSL No. 220897. That advice has been prepared without taking your personal objectives, financial situation or needs into account. Before acting on this general advice, you should consider the appropriateness of it having regard to your personal objectives, financial situation and needs. Please refer to our Financial Services Guide for further information.