Healthy succession talks enabled young NT farmer to pursue his own farming goals
When the *Jones family finally decided to contact Rural Business Support, their business was facing a range of challenges that had become so overwhelming they couldn’t see a clear way forward.
How would the business support three families into the future? Was the business viable long term? Their financing was in need of attention and the business was vulnerable to external political and climate influences.
Our NT business analyst met with the family at their property and looked over their historical financials, before helping them to develop a business strategy and project their financial outlook.
We helped them to identify options to build their financial resilience, including the restructuring of loans and initiating succession talks.
From here it was evident that generational and labour transition was happening already and, for it to be a smoother transition, a succession plan needed to be in place. This plan included:
- A plan for the care of elderly family members.
- Identifying business direction and developing a management plan.
- A family agreement and plan for the distribution of assets.
- Establishment of a deed of family arrangement between each generation and between the returning son/daughter and the off farm siblings.
Through getting those succession conversations started, the family’s eldest son *Steve was enthused to return to farming after being self-employed as an irrigation consultant for many years. He wanted a farming operation over a small area, so researched high value, irrigated crops, where he could control the marketing and have value adding opportunities.
The family agreed for Steve to take over the smallest of the farm land titles at the value of the debt on that land. Steve worked with us to put his business idea to paper, culminating in a succinct financial, production and marketing report that was used to successfully seek bank finance and commence operations.
All was going well – until an ill-timed natural disaster wiped out Steve’s first harvest. The disaster prompted the government to release financial aid, but this did not include any compensation for lost income.
The fallout from the natural disaster meant Steve’s new venture quickly spiralled into a cashflow crisis situation and he contacted RBS again.
Our initial crisis management priorities involved helping Steve to access Farm Household Allowance (FHA) and successfully apply for short term hardship relief terms for his bank payments.
Steve re-gained confidence that his business could be sustained through to the next harvest, when it was expected the financial strain would ease.
However when the hardship relief period with his bank expired, Steve was not yet in a position to make any more monthly payments and his loan was placed into credit management.
Under this strain he became mentally and physically withdrawn and was simply unable to follow up with the bank due to his poor health.
Fortunately our business analyst routinely followed up with Steve and, as a result, he formally authorised us as his banking advocate while he focused on getting well again.
The bank responded positively to Steve having RBS in his corner.
After the provision of updated budgets and business plans, on farm visits and joint teleconferences, the bank regained confidence in Steve’s business and offered longer term financing and an increased overdraft.
Finally, Steve can move on from his cashflow crisis. While he has a larger long term debt, he can confidently focus on rebuilding his business knowing that although the natural disaster was out of his hands, his response to how he handles its impact is back within his control.
*Names have been changed to ensure client confidentiality.