There can be few more emotive and challenging tasks for any rural or regional family than considering the future of the family business, especially when that business is the family farm, as is so often the case.
According to Cade Gow, Principal at Crowe Horwath, Australia’s largest SME accounting firm and largest Agri-business financial advisory practice, the whole process should revolve around planning with a capital P, and, he advises, “that planning process can rarely commence too soon.”
“One of the keys to successful outcomes is not just a simple or single planning exercise but a recognition of benefits of an ongoing review as circumstances change. In short, it’s critical to invest in an ongoing planning strategy.”
“One should never discount the potential emotions related to this subject; emotions that often make it seem easier to ignore or to put off consideration of the issue.”
“In our experience all parties benefit when the issue is not ignored but addressed in a calm, considered and caring way.”
“Planning that is orderly and timely is vastly preferable to urgent action driven by events that may be unexpected such as death, divorce or new relationships to name just a few.”
“The planning outcome also gives direction for the next generation, eliminates concern for the family future and can be critical in engaging ongoing support of each other,” he said.
A quick check list of ideal elements of the planning process include:
“A recommended first step in any such exercise is to meet as a family to discuss what is important to each individual family members – this is the key to drawing up a first draft. In this meeting the guiding principles that are most likely to lead to a positive experience are transparency or openness, respect and generosity.”
“We advise clients to ‘think for success’, or look at the bigger picture and this of course involves canvassing not only the future of the farm but of all off-farm assets. It also pays to document the contributions of all involved and this will assist in creating a first draft as the basis of ongoing discussion and planning,” he said.
Whilst working through the dynamics of each farming family the aim should be to reach a resolution that provides:
“Planning sooner rather than later also generates ideas that may be critical to the future viability, direction, funding and operations of the family group. Finally each family member needs to assess how the plan ties into their own estate planning?”
“Again this is where a professional adviser’ knowledge of taxation law and clear understanding of corporate structures and re-structuring can ensures an optimal outcome.”
“One only needs to look at high profile family disputes to reinforce the desirability of addressing this issue of asset transition in a timely, respectful and open manner,” he said.
Crowe Horwath Australasia is the largest provider of practical accounting, audit, tax, business and financial advice to individuals and small and medium enterprises from a comprehensive network of over 100 offices. With over 3,000 principals and staff in Australia and New Zealand, Crowe Horwath Australasia was formally privatised and inducted into the Findex Group on 6th January, 2015. Crowe Horwath International is ranked amongst the top 10 global accounting networks, and is known for delivering quality audit, tax and advisory services in more than 100 countries worldwide.
The Findex Group, with more than $17 billion under management is one of Australia’s largest non-aligned and privately owned financial advisory and accounting groups. It has businesses across the spectrum of the financial advice and accounting industry including middle range, high net worth, public sector and online.
The Findex brands include Crowe Horwath (Australia and New Zealand), Centric Wealth, Financial Index Wealth Accountants, Prescott Securities, MBP Advisory, Civic Financial Planning and MOVO online advice, looking after the needs of around 250,000 clients. It employees over 3000 finance professionals from 120 capital city and regional offices.
Findex has been awarded the IFA Excellence Awards for best dealer group 2014 and listed in the BRW 2014 Most Innovative Companies list. It is the only financial services company of any size to have the highest internationally recognised quality standard for service and process, ISO 9001.
More about the Findex Group: www.findexgroup.com.au
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