With all the changes occurring across the industry at present I thought it timely to look at what is often a high stress topic – progression planning.
As much as we wish we could, none of us can work in our businesses forever, so a carefully planned progression is essential.
For fishing, as in many primary industries, progression planning is about retaining family relationships in the progression/succession process by looking at the people issues before dealing with the financial and business aspects.
It is often the unspoken expectations of family members that can lead to the difficulties experienced. If farming families looked at the relationship aspects and the people issues, of their business as part of the progression plan there would be less stress and misunderstanding.
Why progression? Mixed messages are received and given using the word succession. For most it means the king is dead who is the next king? However, progression is not just a business transaction; it is primarily about relationships.
One of the greatest risks to a fishing or farming family’s viability, in the long term, is relationship breakdown that we often don’t see coming. Progression shifts the focus to how we move the family-owned business into the next era or generation, and how the older generation can successfully make the transition to the next phase of their lives. Progression encapsulates these options.
Effective communication allows for awareness, understanding and a basis to reach agreement on issues. Communication must be maintained to both reduce distress and for our positive wellbeing. In fact, many people don’t talk about progression until it’s too late and/or put it off because it is too difficult or too uncomfortable.
The following key topics in progression planning need to be canvassed in detail:
- Family communication, it all starts here. Open an honest communications.
- What is the fishing or farming business? This allows understanding of the business the family are involved in.
- Stakeholders, who’s involved? It is important to empower all parties to have a role in the progression planning process, and to recognise their roles and influence.
- What do stakeholders want? Questions to ask our spouse/partner and children about progression and/or retirement and business development.
- Transition period. You must establish an agreement that is suitable to your requirements and those of the family. It’s not going to happen overnight and all parties should be aligned as closely s possible throughout the process.
We need to make Progression Planning discussions part of normal conversation in our business – and as early as appropriate.
Only the minority, amongst family-owned businesses, have any documentation around farm and/or business succession. Families must lead the way and own the process. No one can do it for us.
Some simple rules that influence good progression planning are:
- Sort the relationships first.
- Debate the issues openly and with those that matter.
- Listen to each other.
- Start planning early, when your kids leave school, the plan should be in place and understood.
- When children come to work in the business, be clear on where it is going. For example, you may agree to sell the business but not the land or buildings.
- Seek outside help for more than financial and legal matters (involve more than just the financial consultant, accountant and/or lawyer).
- Have a hand-over strategy and stick to it.
Remember not all businesses will be able to have a successful progression/succession outcome, for a variety of reasons. Maintain the relationships first, to give it the best shot.
A quote from Warren Buffett that fits in well with progression/succession matters… Don’t do what others say, just listen to them, and do what you feel good with.
You can find many more tips on managing mental health and wellness at Regional Men’s Health Initiative.