Producers often put off developing a long-term strategic plan, but they shouldn’t, says a provincial farm business management specialist.
“Farmers are always busy with their daily and seasonal tasks,” said Dean Dyck. “When asked what their plan is for the next 10 years, they often say they haven’t had a chance to work on it yet. Whether the next generation is ready to take over, or you are in the prime of your farming career, you need to ask yourself what the farm business will look like 10 years from now.”
The type of strategic plan is often closely tied to the age of the operator.
A younger producer should consider whether he or she wants to expand the operation, stay the same size, change the crop and/or livestock mix, or get into processing and marketing of farm products. An older farmer might also want to consider those questions, but a higher priority may be retirement and the continuation of the farm business, said Dyck.
Questions that need to be asked include, “How long will I farm? How long will I physically and mentally be able to continue? If my desire is for the farm to carry on, who is the successor? Do they want to take over the farm? Am I grooming them to be the next farm manager? Do I have a plan? If so, is it written and who knows about it?”
If there is no successor, ask yourself if you have an estate plan.
“Filing your income tax on a cash basis allows for the deferral of tax through the use of various strategies,” said Dyck. “But when you exit the business, this tax becomes due and payable, and the biggest beneficiary of your estate could be the Canada Revenue Agency.”
In that case, the producer needs to think about developing an exit strategy that will minimize the tax paid as the farm business is wound down and assets transferred to the producer’s estate. Consult an accountant on that, said Dyck.
If there’s a successor, it’s time to talk about the vision for the farm.
“The vision is the shared image of the family’s definition of success and what the family wants the business and legacy to be,” he said. “Having a clear vision allows the family to set goals and address the dreams of the family. This is critical to the success of the family, the individuals and to the farm business.”
Discussion about the long-term strategic plan should start with a family meeting and asking some simple yet complex questions:
- What do we desire for our family, the founders, the successors, and the non-farm members?
- What will our family story and legacy be?
- What do we want for the next generation and possibly future generations?
- How will our family values influence our vision and where we want to go?
- How will the farm business be part of our family vision?
- Who is leading the farm business now and into the future, and how are they leading?
- What are the opportunities and the strengths of our farm business?
“Although the answers to these questions may not be clearcut, they can provide a good base for discussion and the start of a plan,” said Dyck. “These answers will also create an awareness for that 10-year plan and a go-forward framework on how the business will evolve. They will also provide clarity to all involved, including those who no longer live on the farm.”