Viable succession: start early, progress slowly

View From the Paddock: "Succession at all costs" not the way to go


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Alison Larard, Evelyn Limousins, Westpac 2018 Nuffield Scholar

Alison Larard, Evelyn Limousins, Westpac 2018 Nuffield Scholar

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Alison's final column as she winds up her Nuffield scholarship travels, posting from Brazil, advises on making a succession plan that's truly financially viable.

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This is my final column as I wind up my Nuffield scholarship travels, posting this from Brazil.

It has taken me overseas for four months this year, providing an international perspective on my topic of “better business management and succession planning in north Queensland beef businesses”. 

I have been fortunate to visit successful cattle businesses the world over.

Many have strikingly similar business models: small positive returns (~4%) being used to meet financier commitments while an asset base is being grown and/or developed.

Operationally, these businesses were all pushing a high quality or value-add angle to improve returns.

Costs were closely managed with a chief financial officer in place: decisions were based on proven science and sustainability outcomes; the family’s wages and benefits were treated as an operating cost, not a luxury; having a high functioning team was paramount; wherever possible contractors were used to negate over-capitalising on equipment or fixtures; they weren’t over leveraged (~75% equity), and they mitigated risk.

Clear, time-framed sale/succession plans exist in these businesses.

Assessing these, it strikes me that the issue of succession for family farming businesses comes down to “viability” on two levels – financial and personal. 

To me, the financial viability issue is clear cut. If you are struggling to assess your situation, engage your accountant, consultant or rural financial counsellor to assist.

Be aware that many succession planners may help in this regard but if you are paying them to sort out your succession, they will do just that.

Ensure you develop a truly financially viable business plan not just a succession plan or “succession at all costs”. 

The viability of the personal situation is the tricky issue.

Most of us considering succession are, admit it or not, heavily emotionally invested in the family business.

My advice…start early, but progress slowly and methodically through the issues.

Look for a succession model that suits your family dynamic – can you really partner for the long term or are you better off with degrees of independence and responsibility?

Unless there is real mutual respect and a spirit of goodwill between the generations forget the traditional succession/partnering model.

Next week I take up a beef extension role with DAF, based in Mareeba. I have enjoyed my time as a QCL columnist.

 – Alison Larard, Evelyn Limousins, Westpac 2018 Nuffield Scholar

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