Succession planning in the spotlight

New-born Archie joins his three siblings – James, Lexie and Izzy – as the fifth generation of Scotts at Fearn.

John’s father James, 60, took over the running of the family farming business at just 26 from his own father, and he is a strong believer in handing over the reins to the next generation at an early stage.

His son, John, has been at the helm of the business for several years now. A turning point for him was his 2004 Nuffield Scholarship. The time away from the business gave him a chance to stand back and take a “bigger picture” view of his plans for the farm and he returned home with fresh confidence and a clear set of priorities.

But succession planning has not just been occupying John’s mind lately. It was also the main topic at a recent Monitor Farm meeting, led by agricultural consultant Peter Cook.

Monitor Farm

Fearn Farm is one of Scotland’s eight Monitor Farms that share information with each other and the industry. Special sub-groups examine in more detail specific areas like beef and sheep enterprises.

James admits the prospect of allowing the group to discuss openly what is often a very sensitive, private subject meant he had some reservations prior to the meeting.

But any concerns proved unfounded and the meeting, attended by 42 members of the Monitor Farm community group, proved very constructive.

“A lot of those attending had not put any serious thought into succession planning and there was a wide range of views. One thing that came through clearly is that there is no single formula which suits everyone – every situation is different, but getting an accountant’s advice on the tax implications is very important,” says John.

SWOT analysis

One of the exercises at the meeting was a SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis and a comparison of the objectives of different generations involved.

“This proved very interesting – my goals were to grow and develop the business and make a profit with the belief that lifestyle benefits would flow from that. But Dad had the lifestyle and enjoying farming further up in his objectives,” says John.

With very limited opportunity to buy or rent land locally, the Scott family is focusing on development and diversification opportunities to grow the farm business.

The farm has a block of development land earmarked for housing that the Scotts plan to sell in the coming months, with an eye on the changes to capital gains tax legislation, which come into effect in April.

Diversification

A possible diversification project for 2009 is the Old Mill House, an attractive, aged property close to the main farmhouse that could be suitable for conversion into a retail outlet or farm shop.

“We are planning now for the future of our children. Fiona and I have bought a flat nearby as an investment for them and we also own our house outright.

“At the moment James (6), our oldest, seems keen to farm but we have no way of knowing yet if the others will be too,” says John.

John and Fiona, with his parents James and Janet, make a point of sitting down for a structured monthly meeting to discussthe farm business.

“John and I get on extremely well but inevitably there are areas of possible conflict and differences of opinion and these can get aired and talked through at family meetings,” says James.

Physiotherapist

His wife, Janet, who works part-time as a physiotherapist, plays a crucial role in the smooth running of the business.

“Mum is definitely the matriarch of the family – she is the linchpin and really at the hub of how we operate and communicate as a family business,” says John.

“In general our family meetings are very constructive. It’s important they are not too informal – it’s not about having a chat over a meal.

“Inevitably there will be an element of ‘old bull vs young bull’ in the discussions but, with a structured meeting, it seems possible for everyone to voice their opinion without anyone taking offence,” he adds.

James and Janet are building a new home at Fearn and John and Fiona and their family will move into the farmhouse this spring.

After six decades in Fearn Farmhouse, the prospect of the move is one which James inevitably has mixed feelings about, but he believes the changeover is a healthy next step in the handover process.

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