Better Farming - October 2016

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at other assets and see if we can
divide them between on-farm and
off-farm children in an equitable way.
This (action) is sometimes very
difficult.”
And potentially painful, said John
Fast, an author, speaker and consul-
tant for the Centre for Family Busi-
ness in Waterloo.
“It depends on when you start,” he
said. “It doesn’t have to be painful,
but if you wait too long, it could be.
When the parents – let’s call them the
‘founders’ – are in their 70s and the
successors are in their 40s, there’s
potential for trouble. By the time you
are 40, you’re established and have
fallen into patterns in your life. But if
the founders start when they are in
their 50s, that’s the time to start
talking about capacity and commit-
ment.”
Batte said a succession plan always
starts with family dynamics. “Who
will be happy or unhappy? How will
my life change? Would I be giving up
control?” These issues are often
pushed under the surface, he said,
and many give up planning until
something – like ill health – forces
them into it. When that happens, said
Batte, assets are sold for less than they
should be, and tax implications aren’t
fully considered.
“In order to get started, you need
to have your finances and (corporate)
structure in place. Then you look at
cash flow,” Batte said. “Your plan
needs to prove to yourself that it will
work. Then you have to convince a
lender.”
Planning and financing growth
Mary Lou McCutcheon, Royal Bank of
Canada vice president of south western
Ontario agriculture, noted many
people think a business plan is devel-
oped primarily to satisfy financial
institution requirements. “But the real
value of the plan is to the owner,” she
said. “The plan looks at the industry,
the markets and where you want to go.
It’s much more important for the
farmer to have this plan than the bank.”
She spends a lot of time working
with farmers to select the best
financial products for their farm –
regardless of whether they are new or
established farmers.
“The complexity of agriculture has
increased substantially. Managing risk
is part of that. Risks like foreign
exchange, trade, investment manage-
ment and commodity prices. We help
clients identify those risks and try to
bring in experts to provide support.
Farming is a big business. A capital
Mary Lou McCutcheon
GENERATIONALTRANSITION