Strathmore (Rural Roots Canada) – Succession planning is an imperative part of building a striving farm business.
Who are the first professionals you consider when thinking of a farm succession plan? If you said a lawyer and /or an accountant, you’re probably not alone. How about throwing the banker into that mix?
Chris Herrmann has been doing business development for farms, ranches and agri-business with connectFirst Credit Union for five years and he has been in the agriculture financial services sector for 10, meaning he has seen it all when it comes to passing the operation along to the next generation.
FULL PODCAST WITH connectFirst’s Chris Herrmann and Lawyer Eric Dalke
He says you want everyone to get together at Christmas, Thanksgiving and all those kinds of things. A succession plan can help the family remain a family unit, while keeping the farm a farm business.
Herrmann says succession planning has evolved greatly over the years, as farms have grown significantly.
“Farms are turning more and more into a business than a way of life, as they get bigger and bigger and sometimes it’s hard to distinguish between the two in that how do we keep this business going, but keeping everyone in the family happy,” says Herrmann.
Herrmann says the amount of financial services needed by farms has grown with the increase in size.
“Their capital requirements are growing.”
Herrmann is straightforward and honest with his clients even if they have not had a discussion about succession in the past.
“I’m going to be blunt in asking you, what is going to happen, because I need to know if you take a trip and don’t make it to town how is the farm going to continue to operate. No one wants to think about it, but we must have those conversations because it is just not grandpa’s two quarters anymore. These are multi-million-dollar operations.”
Herrmann says every farm is different, which mean the transition and selling of the farm is always going to be different.
He says it’s in these unique characteristics that a banker can offer services that a lawyer and accountant can not.
“Some farms may need a lending component, if you need a loan for the next generation to buy you out or to give you a little retirement money.
He also points to their wealth department, which offers assistance with investing money, or providing guidance with life insurance and support with financial planning.
Herrmann says a credit union like connectFirst can bring several experts to the table and help producers on how to start the process.