HAVE YOU STARTED SUCCESSION PLANNING?

Yes, I have seen a few successors of rural properties who have not had a passion for the land, and succeeded out of a sense of duty (due to expectations, emotional ties to the family heritage, etc).

Fortunately, later in life I have seen some of these have a realisation (often due to a personal crisis) which has led them to quit the farm, and follow their passion.

WHEN IS THE TIME RIGHT?

Let us now look at some biological aspects of succession planning.

I am a biodynamic practitioner, and follow some of the teachings of Rudolph Steiner.

One of his theories is that as human beings, our life progresses in “blocks” of seven years.

Now nine cycles of seven brings us to sixty-three.

If you study numerology, there’s significance in the nines.

Nine is completion. So, nine lots of seven brings us to sixty-three. Add six and three and you have nine. Time, my friends, for completion.

Now between sixty-three and seventy, we are supposed to hand over all that we “do” to someone younger.

The price we pay for not acting on this, is that we can get so set in our ways that no one wants to work with us.

This then drives off younger family members, employees and friends who see no way to advance in the business.

Maybe you haven’t yet come across this age-based / numerology-based idea in your succession planning workshops or readings.

I feel it is a very important “missing link”.

Now before you throw a hiss fit, and start on about how you are still fit, and active, and want to be involved in the business for many years to come, I will throw you a lifeline.

NOT NECESSARILY ALL OR NOTHING

You can begin to hand over the running of the business, the financial, and physical management, while transitioning into a role of mentor, advisor, supporter, and your services, and wisdom will be much appreciated.

I have done this, and can vouch for the effectiveness of the strategy.

So successful has it been for me that I am about to launch into phase two, and transition my new farm (bought at sixty-three) into a new form of ownership, where I become a minor shareholder, and the farming is done by young people who have a passion to farm, however lack the capital to buy land.

AND YOU?

Here are a few questions that might help you to get thinking about your own succession plan.

  • What about sharing your plan?
  • How have you arrived/will you arrive at your succession plan?
  • Will you meet with all stakeholders?
  • Will your successors be having input into the shape/structure of your plan?
  • Who will be your successor/s?
  • Will it be family, a friend, an employee, or other?
  • Are all involved filled with joy about the plan?
  • Do you have any specific questions that you’d like to see answered in this blog?

THE REGENERATION GENERATION

One thing that came to me when on the phone with John Leggett was the concept of next generation and regenerative agriculture. Yes next gen, and regen!

What effect will transition to the next generation of land managers have on the landscape?

I look back on my experience, and the transitions from my grandparents to my parents, to myself, and now onto the new owners of the land.

The transition from my grandparents, in who’s era transport was largely horse drawn vehicles, stock work was on horses, stock transport was droving, timber treatment was with an axe, and labour was cheap.

In my parents’ era there were many changes. Mechanical clearing of timber, chemical usage in agriculture, in the form of insecticides, herbicides, and fertilizers, cars became the mode of transport, & stock movement to market was on trucks.

These, along with many other changes, had their effect on land management. Unfortunately, much of this change was degenerative!

A NEW ERA OF LANDSCAPE MANAGEMENT

Now along comes my era in managing the land. Seeing the degeneration in the landscape, the increased cost of labour, machinery, fuel, electricity, etc., I set out to reduce the need for labour, reduce external inputs to the land, and begin to work with the land (not against it).

Now the landscape is in new ownership, having been sold to a Coal Seam Gas consortium for environmental offsets. The cattle enterprise is with new managers, and part of the agenda of the CSG consortium, is to progressively remove the grazing enterprise.

The property is owned by the CSG Consortium, while it is leased back to myself. The young couple are managing the cattle enterprise for me. The next phase of “succession” here is for me to bow out of the lease in November 2018, & the young couple will then take up the new lease from the CSG Consortium.

This agenda is largely driven by their need to satisfy state and federal regulators, who monitor the environmental offset, and its management.

What has all this to do with succession planning?

AGILE MANAGEMENT AND SUCCESSION PLANNING

In my opinion landscape management and succession planning are very closely connected.

Often people observed my land management techniques and suggested that I place some sort of management covenant on the farm.

I considered these suggestions, and was so grateful that my grandparents had not placed a covenant on the land. I was grateful that my parents had not placed a covenant on the land.

Imagine having a covenant on the land, from generations back, which dictated how to manage the land.

Consider then very carefully what “covenants” are within your succession plan. Is your succession plan sufficiently organic and sufficiently flexible to fully embrace the changes over succeeding generations?

ANTI-FRAGILITY

Now to throw in another concept that is close to my heart: “anti-fragility”.

I came across a book some years back, titled ANTI FRAGILE, Things that gain from disorder by Nicholas Nassim Taleb.

The idea behind his theme of setting up systems, businesses, etc., to be anti-FRAGILE, is to build in a capacity into whatever we do, so that we can benefit from disorder!

The book struck a cord with me, and I believe that we can apply anti-fragility to almost anything.

Let’s get specific to our regenerative landscape. What “disorders” come from time to time, that we cannot predict?

Drought, flood, fire, market crashes, high interest rates, and more. How can we structure our landscape, our business, in order that we can extract benefit from these events?

On this same thought pattern, how can we make our succession plan more anti-FRAGILE.

In the event of sickness, death, relationship breakdown, what measures are in the succession plan that will see these wild cards, become beneficial events?

I have seen examples of “succession” where the older generation has been “guarantor” to the bank for loans taken out by the succeeding generation.

I have seen a number of not so nice “un-windings of these arrangements. Financial hardship, which has led to banks foreclosing, relationship breakdown in the succeeding generation, which has led for the need of property settlement. Now seeing a daughter/son in law walk way with ½ of the farm can be quite a bitter pill to swallow.

This section is largely written to provoke thought. Obviously, it is quite easy to set up a succession plan with obvious pitfalls, now maybe it is an opportunity to brain storm the hows of succession planning that is “bullet proof”.

Managing landscape for anti-fragility is quite easy, managing succession planning for anti-fragility will be your challenge.

I have had solicitors, accountants suggest testamentary trusts. These I am not in favour of. These to me are like placing a covenant on land, & what I call “management from the grave”.

Think about what could possibly go wrong with your succession plan, now think what changes may be needed to make it more anti-fragile.

My main personal anti-fragility measures are to invest in myself, through on going education, developing new skills, interests, and passions, taking ownership of my health, and fitness, and getting involved more in off-farm activities.


SUCCESSION: FIRST THOUGHTS, IDEAS AND EXPERIENCES

When in conversation with John Leggett in relation to the re-birth of my Soils for Life blog, the topic of SUCCESSION PLANNING came to the fore.

Now, as with many things that I “have a go at”, I am no expert on succession planning, however I suspect that you, as a reader, also are not!

I do however have some multi-generational experiences in this field.

Firstly though, I would like to explore the definition, according to Dr. Google, the wizard, who resides within my smart phone, on which I am writing this story.

ASK GOOGLE

1. A number of people or things of a similar kind following one after the other 

Now I have the experience of alarm bells going off in my head!

“Things of similar kind”. Ah, what ever happened to “diversity”?

“Following one after the other”. This for me has connotations of “mindless” following, with little scope for thought, or innovation. 

2. The action or process of inheriting a title, office, property, etc.

My mind here immediately races to many poor examples of inheritance, which have actually contributed to the “decline of a dynasty”, due largely to lack of a selection criteria!

Let Dr Google continue: The gradual replacement of one type of ecological community by another in the same area, involving a series of orderly changes, especially in the dominant vegetation. Succession is usually initiated by a significant disturbance of an existing community.

Now I am with this definition of succession, and in particular the first sentence. “gradual replacement”, “a series of orderly changes”, “in the dominant vegetation (personalities)”.

Now this is obviously specific to matters organic & vegetative, however, I feel that as families, businesses, farms, there is a real need to treat the process of succession as an organic process.

Sentence two: “usually initiated by significant disturbance”.

This is where I feel we need to alter the organic process, and initiate the succession planning, and actions, before significant disturbance occurs.

Yes, all too often I see succession, or change being initiated by disease, death, hardship, etc.

MY FIRST EXPERIENCE WITH SUCCESSION

Now to get to some of my experiences with succession planning.

I grew up on a family beef cattle operation in Queensland.

My grandfather had migrated from Ireland. My father & uncle were in partnership, through what I call “the golden age” in the Queensland beef cattle industry. Land clearing (the Brigalow Development Scheme), improved pastures, and a change in cattle genetics (British to Bos Indicus).

My uncle had no children, while in our family, we were four boys.

There was no thought of doing other than following in our father’s footsteps.

While still in primary school (I am the youngest son), the succession plan was laid out.

One contributing factor to the dissolution of the partnership between my father and uncle was succession.

My father was “into” handing over the farm, while my uncle was not this way inclined.

Dad “re-passioned” (the new terminology for retirement) at sixty years of age, when he & Mum moved to a small farm at Maleny.

At this time three of my brothers were already on their portions of the family landholding, while I was working & travelling.

I leased my portion of the farm back to my father, mother, & one of my brothers, who as part of the succession plan, had remained in partnership with our parents.

My parents were very clear about their succession plan, and it was very clear to us four boys.

This took place decades before succession planning had become a “mainstream” agenda item.

I am not familiar with how my grandparents structured their succession plan, or even if they had one. The one thing that I was aware of though, is that the two sons inherited the farm, while the four daughters did not.

BACK TO THE ECOLOGICAL ANALOGY

Another extract from my Google searching on succession planning, again is specific to ecological communities, and I quote, “Unidirectional change in the composition of an ecosystem as the available competing organisms, and especially the plants respond to, and modify the environment.”

Yes, with a few word substitutions, this could well be used in relation to farm succession planning!

Some of the words that appeal to me are “UNIDIRECTIONAL” and “COMPOSITION OF AN ECOSYSTEM (BUSINESS)”. “AVAILABLE COMPETING ORGANISMS” and “RESPOND TO AND MODIFY”.

Ah the makings of a truly organic succession plan!

MY NEXT SUCCESSION EXPERIENCE

Now to my own succession planning experience with our beef cattle property in Central Queensland, “Dukes Plain”.

I had three children, a leasehold property, land values that were well above production return capability, insufficient enterprise size for three families, and the children had interests other than beef cattle and land management.

Stage one: Accept that I am not immortal.

Stage two: Accept that whomever succeeds me will “do it differently”.

Stage three: Engage a facilitator, and have a family meeting to discuss options.

Stage four: Begin to action the outcomes of the family meeting. This involves selling the farm, and re-structuring assets so that division/distribution is relatively easy.

Stage five: Launch sales initiative for the farm, while I go through the process of sorting out my healthy, and unhealthy, attachments to this tract of land that has been in the family for ninety years.

Stage six: Continue to operate the farm as if I am going to be here for ever!!! At this moment, I am by many, considered to be totally crazy! Why continue as if I am going to be here for ever?

I began by acting as if the property would be sold immediately. Stopped any new development initiatives, had no future plan for stock or land, no goals to work toward, etc.

I soon realised that the property/business was “falling to bits before my eyes!”.

I quickly understood the need for a future plan, and acting on this plan. (Acting as if I was going to be here forever!).

Ten years on, a sale of the property was effected!!!

AH, EMOTIONAL TIES

By now I had fully, well I thought I had, digested the emotional connections with the landscape, and the business.

I was well aware that operating the farm was getting in the road of what I really wanted to be doing.

An opportunity to lease back came with the sale, and a five-year lease was negotiated.

The property is now managed by a young couple, and we have entered into a partnership agreement. Yes, they have some “skin in the game!”

My realisation from leasing back, is that it was an action which indicated I still had not fully released the farm. Ah emotional ties!!!

IF I WERE TO DO IT AGAIN, WHAT??

I would do nothing differently. A great opportunity has come from “my remaining emotional tie”, and that has been the creation of an opportunity for a young couple to step forward into an agricultural enterprise, which fits with their future goals, and visions.

For me it has provided the opportunity to deal with my final emotional ties to this land, and I am in a position to happily exit the enterprise, while my partners can continue. Ah what a sweet transition! End of “channelling”!