THE ABILITY TO communicate well and effectively is the ‘secret sauce’ to family farm transition planning, according to Dr. John Fast, the Family Business Doctor.
“It’s about the family’s ability to have the emotional intelligence to stay at the table — to dig deep and openly express their fears, desires, and needs,” he says.
But it isn’t easy — fearfulness itself gets in the way for the senior generation, which sometimes has a hard time with confronting the perceived loss of control that ‘retirement’ brings.
Fast, who operates out of Waterloo, finds that there is a gender difference in how family members approach the topic. Most of the time, although not always, it is the women who want to get on with the planning, and get something in place.
The incoming generation can feel intimidated, especially if they are used to working in a controlled environment where the parents call the shots.
“A lot of times, the family just doesn’t have a culture of communicating at all,” he says, with the exception of assigning daily chores.
People with family businesses — like many of us — can talk easily about the operational side of things, but when it comes to feelings and desires, it is much harder.
Another hurdle is the assumption that others are not on the same page.
“If family members think there is going to be conflict, that just seizes things up from the get-go,” he says.
Sometimes it takes a third party — like Dr. Fast — to delicately tease out the nuances, get all the issues on the table, find out what everyone really wants to do in life and how they want to accomplish it.
WILLS ARE NOT TRANSITION PLANS
One of the main catalysts for transition is the point at which the parents decide they need a will. But Fast says that a will is aimed at carving up the farm’s wealth, it is not how the business is transitioned.
“One of the big issues that farmers have is that they confuse the two,” he says, adding that a lot of farm families are busy and just want to get the whole thing done and settled as quickly as possible.
Transition is a longer process in which the family has to explore who has the commitment, capacity, confidence, and compatibility to take on the responsibilities of the business.
The toughest landmines in terms of getting a transition plan together are compromised mental health or undiagnosed learning differences.
“Many families experience some kind of mental health problem like depression or anxiety, and it can trap the members into patterns of avoidance,” Fast says, adding that he figures about one-third of his clients have something like this going on.
While Dr. Fast deals with many different kinds of businesses, there are a couple of areas in which farming is unique.
“It takes two million dollars in equity to sustain one farm salary,” he says, a figure that is significantly higher than other businesses.
What this means is that if the farm is going to continue, the parents pretty much have to become the ‘bank’, and it makes it tough for the next generation to farm.
When the parents take on that role, issues of control — and letting go of it — can be tricky.
Another factor that is different is that, generally, everyone in the family lives together, or down the road from one another. This makes it hard to get enough separation to see things clearly.
HOW TO MOVE FORWARD
Self-awareness and empathy are the two big ‘soft’ tools that are required if farm families want to be successful in developing and implementing a good transition plan, according to Fast.
Self-awareness is the ability to understand your own strengths, what you are capable of giving to the enterprise, and your personality style. Empathy is the capacity to really listen to the other members of the family.
“You’ve got to love people — and believe that they want to grow and do the right thing,” he says. “A lot of what I do is educational — helping people understand themselves and each other so they can move forward.”
Unlike a medical doctor, who can sometimes prescribe a pill and make it all better, Fast tells his clients that transition takes time and patience. On average, getting a plan in place takes about two years — depending on the size of the business, the health and maturity of the players, and how prepared they are to engage.
Implementation is the next stage, one that can take one to 10 years and involves checking in once in a while to make sure things are on track, or determine if there needs to be adjustments.
Once a solid plan is achieved that everyone signs off on, it is always a huge relief for all involved.
“It’s a roadmap for helping make decisions — with reasoning about why certain decisions are arrived at,” he says. •