Key importance of succession and business planning

Succession planning, especially for a farm or estate owner, can seem to be a delicate, complex and drawn-out affair to put off until tomorrow, but it is an essential task that should be given due time and consideration.

Future-proofing your farm, especially in light of current Government manoeuvres and market conditions, is vital.

To ensure family members are treated fairly and tax pitfalls are avoided, perhaps one of the first steps is to establish who will take over which role in the business, and how that should be structured.

A date needs to be put in the diary for an initial meeting with family members to open up a conversation which will help establish the basis of an effective plan.

While succession is often a difficult subject to broach, once a conversation is started it can help smooth the generational transition and encourage greater interest and understanding in the business at an earlier stage.

Taking specialist advice at this point can be hugely beneficial in navigating your way through complicated tax and legal issues as well as helping with business strategy and asset management.

It is also an opportune time for farmers to review who is occupying their land (and on what basis) and also evaluate their operating model.

Might they partner with a neighbour or contract farmer, or should they acquire additional land to optimise economies of scale, or perhaps downsize to manage costs?

In a wider context, consideration should be made of the farming industry as a whole.

Is there sufficient new talent coming into the industry to draw on, or are there new skills sets we have to attract from outside the sector?

With the price of land seemingly ever on the up, should you stay or sell?

Management skills and technological expertise are as critical to business planning as farm walking and technical crop assessment in today’s farming sector.

Now is the time to address those needs and put measures in place that will see your business thrive.

During these changing times, successful Scottish farms will be the ones with the strategies in place, or in the pipeline, to maximise the value and performance of their assets.

Some farmers, for example, are reviewing alternative options for their land and property assets – ranging from renewable energy, novel and non-food crops and diversified businesses, to environmental management.

Estimates suggest that almost 50% of farm businesses are now diversified, and there has been significant growth in renewable energy production (small and large scale) across Scotland’s land-based business in recent years.

The Scottish Government recognises the economic importance of farm diversification, and local authorities have a key role to play in supporting diversification which helps rural businesses and communities flourish.

By having an understanding of the growth potential of their property – and a bit of savvy business planning – farmers can provide good income streams for generations to come.

The combination of land reform and market and commodity price volatility means farmers and landowners should review their farm business strategies, now more than ever.

In addition, the potential uncertainty of the UK’s membership of the EU, the constant threats of CAP reform and the debacle over the Basic Payment Scheme all underpin the clear need for farmers and landowners to take stock.