What does everyone want? I see the Family Plan as the foundation stone for everything else. (Continued from last month)
The vagaries of daily life can be mitigated by the knowledge that the activities of each season go to meeting the known needs and expectations of family members.
In other words, the business has clear and agreed objectives because family members know what they want from the future.
The Family Plan does not have to be a wordy document; indeed, a list of dot-points will suffice.
Whatever form it takes, it must be based on the conclusions that have arisen from discussions amongst family members, with each responsible member having the opportunity to freely articulate what their future might look like.
Family objectives must be known in order to develop the business objectives that will deliver the future.
A dot-point list that is reviewed and discussed within the family each year will suffice. It might look something like this:
Tom and Jill (mum and dad)
- Step back from the business and allow succession to take place
- Tom will work in the business on things he is interested in, but is happy to let management responsibility move on
- Buy a caravan. Start taking short trips away, then longer trips
- Ensure that a comfortable, but not extravagant, lifestyle can be maintained into retirement
- If the orchard passes to John, would like Tim and Sarah to receive a fair sum for work they put in in the past.
John (son)
- Came back to the orchard some years ago, and is keen to take on more management responsibility
- Needs to learn more about the marketing end of the business
- Is getting married next year and would like to build a new house on the northern side of the property
- Hoping to do well on the orchard and raise a family there. Will require increased family drawings as this happens.
Tim (son)
- Studying law at university. Has no plans to return to the orchard
- Will be working hard to qualify and then work overseas to gain high-level experience
- No plans other than this at the moment.
Sarah (daughter)
- Newly married and living interstate
- Started her own small business and will work hard to make this a success during the next three to five years
- After that, hope to start a family
- No other plans at the moment.
Implications for the business
- Work with accountant to understand the options to fund Tom and Jill’s move towards retirement
- Will require, say $60,000 to buy a caravan, although a good second-hand one could be cheaper
- Consider the size of settlement sums for Tim and Sarah. Something for Sarah soon could help her business plans
- Provide John with opportunities to take up management roles. For example, in marketing meetings with customers
- John will need to fund, say, $250,000 to build a home.
How do things look now?
(continued next issue)
See this article in Tree Fruit Nov 2015
