It’s Your Business Column: 5 tips to smooth succession planning for the family business

A man wearing a cowboy hat embraces a woman while standing in a field of cows.
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(NC) Succession planning is an issue that is top of mind for many farm owners. Often the plan is to hand over the reins to a younger family member. But when family is involved, there can be greater sensitivity amongst the participants and greater potential for differences of opinion.

“It’s only natural that perspectives on succession are significantly different for senior and junior partners as they transition into new roles,” says Ryan Riese, national director of agriculture strategy at RBC. “Even in cases where the younger generation has been part of the operation all along, their roles and expectations naturally evolve over time.”

Junior partners have their own ambitions and needs that aren’t necessarily what the senior partner had in mind, at least not immediately.

The best way for a junior partner to approach the process is to treat it like they would any other business transaction. While this isn’t always easy, here are some steps you can take:

Be patient. Sometimes a junior partner comes to the table with plenty of new and innovative ideas. However, being a little too quick to change things can sometimes put the senior partner on the defensive.

Start the discussion early. Once the senior partner has voiced the idea of retiring or slowing down, ease into the conversation. If you look too eager or push too hard, the senior partner may start pulling back.

Put your personal feelings aside. Emotions can quickly stall progress and create negative feelings among family members. Keep the discussion within a business framework with specific processes. Include all parties, such as employees and family members. Conduct a proper business meeting off site, where you can talk professionally about expectations, roles and timelines. Most importantly, write them down
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Evaluate your plan annually. Set a time each year to talk about your progress and what you need to focus on next. Keep that conversation within the guidelines you have written down.

Don’t leave your senior partner out of the picture. Together, find a specific task or a way they can contribute after the transition. Continue to invite them to the more challenging business conversations and/or decision-making meetings. Both sides will appreciate the support.

Find more information online at rbc.com/succession.

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