While it probably comes as no surprise that over half of Australia’s farm owners are over 55 years old with the majority retiring in the next 15 years, what is surprising is the number of farmers who are failing to discuss and adequately prepare for the future.
As a result, many are discovering their options are limited when it comes to retirement and the transfer of ownership and control.
Business advisory firm Chapman Eastway, in conjunction with Charles Sturt University have released a new report Australian Farming Families: Succession and Inheritance.
The report looks at intergenerational changes in attitudes towards family business ownership and how this affects succession planning, as well as implications of an ageing agricultural workforce and the consequences of inadequate succession and retirement planning.
Farming has changed significantly over the past 20 years, with younger farmers adopting new models of business ownership and displaying greater willingness to engage in discussion and formalised business planning. Farm succession planning needs to move and adapt to those changes.
The report identifies a number of tips for farming families when it comes to succession planning:
- Be proactive and start conversations early – involve all family members in discussions and planning, and have regular family meetings
- Run your business like a business, for example house your business in a formal legal entity, with formal financial reporting and decision making
- Write it down – draw up a family charter clarifying the terms of involvement for all parties and consider a legal partnership or operating agreement
- Assemble a strong team of advisors and seek advice in areas where there is a lack of expertise
- Adopt a mentality of stewardship – ensure your family views the business as something to be protected and maintained for future generations instead of something to be divided up