What sets successful farm transitions apart?

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One of the reasons we're talking today is your team has put together a really great article titled 7 Traits of Successful Farm Families. Sort of focused around this idea of farm transition. Some call it succession. I love the term farm transition because I think it is more fulsome really in what we're talking about. And I want to run through some of those today. But before I get there, what sort of inspired something like this list, what sort of goes into, you know, from MMP's perspective, putting together something that really outlines what's working, what's not. Well, it's a great question, Lindsey. And honestly it comes back to, you know, doing this work for so long as mnp. And because one of our core pillars as a firm is agriculture, doing the work with families, we often come back as a team and we kind of do, you know, not sounding morbid, but post mortems on clients that we work with and say, what's going on? Where were the surprises? Where do we spend the most time, you know, as transition advisors? Where do we spend the most time with families and on what topics really are coming out very consistently for transitions. And you know, it's a little play on a, you know, the seven habits. Right is, you know, Mr. Stephen Covey, one of the, you know, kind of management gurus that's out there, that's pretty prominent in the space of management and you know, leadership. So it's a play on that that people can recognise. Bang. They want to know what those heavy hitters, what are those Key things that we really need to focus on as, you know, farm families that are transitioning. So that's where it came from now, which I love. And I really also appreciate that it's important to sort of look at, you know, what are the issues that keep coming up over and over, what have been some of the biggest stumbling blocks. And so these seven traits, and we'll go over a few of them. But there is, of course we're going to link to the entire article so anyone can go and read it for themselves as well. So that'll be on the post@realagriculture.com One of them is start early, which I think speaks for itself. But the second point is the one I actually have a few follow ups on and it is the importance of communication. And this is of course, this is my wheelhouse. But, but the importance of open and transparent communication when it comes to this. How has the reverse stymied some of these farm transitions? Wow, that is a fully loaded question, Lindsey. I'll do my best. So often what happens in business, especially in farm families, is that you have this unspoken expectations, unspoken, you know, kind of insinuations about, you know, what is expected from one party to the next party. And anything that is unspoken is really a dangerous thing inside of transitions. And so communication really is one of those fundamental pillars of any successful business. But especially important as you're going through transition, so that things don't remain held in exile and that you are truly able to have the opportunity and the safe place to be able to express. Exactly. Here's how I'm feeling. This is what I need. These are what my expectations are. And part of that we often as a team say to families, is that, you know, your communication does have to be open and honest, but it has to be respectful. Because often we think because we're family that we can say things that we would never ever say or be able to get away with in any other professional service or business. So we have to add that word in there of being respectful. And in doing so, we often encourage families to create a code of conduct to help frame out. What specifically in communication are we talking about? So how do we speak to each other? How do we talk about each other? What sort of forms are acceptable and not acceptable? Especially with the prevalence of social media and how that can come between families, it's very important for, for families to frame it out well in advance. You know, create a shared language. Right. Because what means something to Gen X, Right. Is completely unheard of. Yes. You know, to the current successor. So I think, like, I can't relate. Right. Well, and to the point of, you know, I have, I have kids that are. When it comes to text, if you use punctuation, it means you're mad. And that one was a real eye opener for me. Right. And so, and we sort of laugh about it, like, oh, isn't that ridiculous? But I guarantee you, between like boomers and Gen X and those sorts of things, there are the same, same sort of disconnects as well. They just look a little different. So definitely I hear that one. And I guess as a follow up, I really like the idea of like, you know, laying it out of like, this is what's acceptable, this is how we're going to communicate here, that sort of the guidelines of we're going to follow. But in practical application, do you speak to everyone separately and then together? Because I could definitely see where it might be really difficult, especially if as a farmer, as a family, you're not super open or haven't been until now. Is it important to have those sort of separate conversations first? Absolutely, Lindsey. That's part of the process that we follow at MNP is right up front in our discovery phase. We meet with the individuals that are identified one on one, right? And that is to be able to have that safe space, to be able to openly talk about, again, what are your fears, what are your expectations, what are your needs, right? To talk about all of those things, both within the family context, the business and the ownership. Again, that three circle model that we follow is extremely important. But at the front end, as you said, it's so important for everybody to be able to have that safe space to verbalise what's going on. Because everybody is an individual, we are social creatures. And the reason it works is because, again, you get to have that personality in isolation without the fear of other personalities jumping in on the conversation and saying, you know, certain things, to suppress what somebody is thinking. Because reality is perception in the eye of the beholder, right? So if I'm feeling like this, nobody's there to say, well, that's not right, that's not the way I intended, blah, blah, blah. You're misinterpreted. No, no, no, this is what I'm feeling. So you get to say that without judgement of somebody else. And that's why it works on the front end, because now you get the fuller context and everybody is able to have that space to talk about it without, again, a strong personality in the room. They're gonna dominate the Communication and they're gonna dominate the subject culture. Right. It also allows that cultural aspect that we are so attuned to when we're going through transitions in some cultures. And some people don't have that place to have a voice. That's right. So this is that place. Yep. Now there's, there's having a shared vision, tackling, imagining misunderstandings, which I think plays into this comms as well. One of the key ones though, there's two things that I also want to touch on, but one is focusing on financial stability before, before considering the tax implications. Unpack that for me because I think this is one of those ones where we often are really focused on the succession, the transition planning, the business planning, but we maybe aren't yet sort of where we need to be on the financial stability side. Absolutely. So a phrase that we use internally between myself and our ag team across the country is never let the tax tail wag the business dock. Right. So don't go into transition with the sole purpose is that we're doing this simply to avoid paying tax or minimise our tax quote obligations. An outcome of a well planned and structured transition plan will put that into consideration. But that shouldn't be the first priority for your transition plan. What you need to do is, is step back based on that discovery process, Lindsay, that you and I have just talked about, to understand what everybody's expectations and needs and concerns are and say, okay, can the business financially meet all of those expectations of the individuals that are either in the business, are looking to get out of the business or those that want to enter the business, is the business able to do it viably? Right. Because if your business is only generating, you know, a million dollars worth of net income and you've got $400,000 worth of payments, you're now left with $600,000 to kind of understand what to do with that means pay the shareholders a dividend, you know, look after the exiting generation and oh, by the way, those that are in the business, is there enough money left to actually do what the business needs to do to diversify, to grow, to replace existing equipment? All of those things, you've got to look at all of it in totality and say financially, is the business able to do what everybody wants it and needs it to do? Now this brings me, and it's the last point I want to touch on, and we've mentioned them all, but again, there's more to this whole conversation, but that brings us to adaptability. And adaptability to me could apply to this situation in so many different ways in this context. What do we mean by adaptability? Adaptability is really the understanding that, you know, in, in business, things happen without your ability to control them. Right. So there is risk management. So there are certain things in agriculture that you can risk manage, you know, whether you're in the crop business or whether you're in, you know, protein production, there are certain things you can manage your loans through, interest rate hedges and things like that. So those parts you can manage, there's other parts that you can't, that you must as a family be adaptable to the current situations. That is geopolitical. Right. In the last week alone, we have learned about what has happened with China, what's happening with Europe and the different opportunities. So being able as a family to identify, here's our game plan and how are we going to adapt based on the business context. But also, Lindsay, do not forget about being adaptable on the family context. So what are we going to do? If somebody has said that I don't want to be involved in the business and their life circumstance changes. Right, Right. Is the business and the ownership, the family, able to adapt? So this is about understanding and doing some discussion with regard to contingency planning. What does that look like in each one of the spaces? If an exiting owner suddenly falls ill or has any other medical situation, how adaptable are we going to be because they're so integral in developing the next generation? How are we going to adapt? That's what it's about. It's not saying that once a plan is in place, it's stuck in stone. We all know a plan is there and it's meant to be able to be adapted to whatever the situations that may arise. And we know sometimes. So the first point, so we'll come full circle, the first point was starting early. And one of those keys is that if you are starting early, it also means that things can change between the starting point and sort of getting to that actual farm transition. And you've got to be able to pivot and, and make room for any of those changes. And sometimes that process gets sped up, whether we really want it to be or not. So better to be ready. Okay? Absolutely. It is the seven traits of successful farm families. We will link to it, of course, on real agriculture.com Trevor with MMP joining me. Thank you so much. I really appreciate it. Lindsay, thank you for the opportunity. Appreciate your time. It.