Succession planning

And that tends to be around exit.

It could be succession planning.

It could be a lifestyle business as well.

Mm.

And we're, we're going down a rabbit trail here, but the often is you talk to somebody who said, "Gosh, if I only would've known the things I needed to do before I signed a letter of intent, I would've saved X million in taxes." And so all of those things come into play, but I think what you're, you're real, the genesis of your question though is, okay, is it too early to start, and what should I be doing? And for me, it's today.

It's today.

What, where are you going? What are you trying to achieve? Why are you in business in the first place? Is, again, is it lifestyle? Is it for succession planning? Is it for a true exit, a financial exit? Then let's set those metrics now, and let's start driving to it.

And I can, I can give you a good example-

Now to the weather and math part of our day.

Every time we talk about succession planning and farming, dollars and cents play a pretty big role in that.

When I was reading a discussion that was in the Farm Futures magazine, there was a really good point about when you are transitioning the farm, who has to literally buy it back.

So we talk about phantom yield loss on a combine when all of a sudden you've got grain going up over the header and you're losing it and you're thinking, how much yield did I lose or did it fall on the ground or maybe cobs fell on the ground and it's a yield loss that I don't know what it was.

I can't count it.

But when we're talking about succession planning, there's a phantom growth drag.

And here's why.

Let's say you have three of five generations of a farm that have had to borrow money to buy out other family members.

It's September 20th time for another edition of Lead Better.

And the field note today is about, well, it's about the succession planning that Warren Buffett sort of just completed in the last stage of this.

But there probably are larger lessons for all of us because if you look at what happened at Berkshire Hathaway, the field note title is A Masterclass in Succession Planning.

Now, Should all of us be thinking about what it means in terms of generations, ages, stages, succession? Or do you think this is just reserved for a very few people? How widely do you see these lessons applying?

Ask anyone who's at the back end of succession planning that doesn't do well, and they will immediately tell you, yes, we should all be thinking about it.

Right, yeah.

Now, I've known a couple of billionaires in my life, been to a couple of homes, and you see glimpses into how operations of that size might work.

So I think the field note today actually kind of goes into all of that nicely.

So I'll hit on that.

So succession planning doesn't have to be complicated, especially for like small to mid-sized businesses.

I'd really start by identifying the most critical roles to the organization and then ask a simple question.

If this person were to leave tomorrow, who would step in? It's that simple.

We shouldn't just focus on high performers, potential successors.

We need to have conversations with everybody to really understand where do they wanna go within the organization? What comes next? that is where you get engagement.

And so this is where succession planning ties into kind of employee engagement.

It's really a win-win for the organization.

Jodie Duncan's family basically farms next door to the Mewdies in that area just west of Ravensthorpe and she's about to embark on an interesting Nuffield scholarship project.

It's going to focus on farm succession planning where a family member is living with a physical or intellectual disability.

So I have a nephew who has some special needs and disabilities and he will likely never be a fully independent adult.

So that story combined with, I guess, the story that's common to every family farm business, the intergenerational family farm business transfer, more commonly called succession planning.

I'd like to look at cases from around the world and learn from other people who are doing that.

Because you're running the farm now with your brother and his wife and, as you said, their children, one of which does have additional needs.

From a personal point of view, I'm just looking for a bit of a challenge and to undertake some extra learning, I think.

But I can also see the value of doing something like this to our business as well as the wider industry, I guess.

Welcome to the KBB Review podcast, the show all about the ups and downs and ins and outs of being an independent kitchen and bathroom retailer.

I'm Andy Davis, the editor of KBB Review, and this week we're talking about something that every business owner needs to think about, but probably not enough of them actually do, and that's succession planning.

And that doesn't just mean deciding what happens when you eventually retire or sell the business.

What happens if you're suddenly not there tomorrow? Could the business keep going without you? Who knows what you know? Who makes the decisions and who keeps everything moving? And what happens if it's not you that leaves, but a key member of your team? Trevor, Liz, Nick and Steph are all here.

And when it comes to succession planning, they're all at slightly different stages from relatively new business owners to those actively trying to make their companies less dependent on them all the way through to semi-retirement, of course.

So how do you build a business that can survive and thrive without you? But before we get into that, a heads up that entries are now open for the KBB Review Retail and Design Awards 2027.

It's the biggest, longest running and most prestigious awards in the industry.

Morning, morning.

And, you know, the dentist could be in their late 50s or 60s and, you know, they never had an accountant that actually... you know coach them through that process and advise them and you know in extreme circumstance i had a dentist who was operating as a sole trader and he had assets in in you know in in in there in the group that the assets they had were over 20 million dollars so so there's a lot a lot of risk exposure and and you know everything was in sort of his and wife's name and and he was operating as a sole trader which you know in most circumstances is is big no no so understanding the structure is very very important and and then educating the client about different structures is is equally important so that's kind of a starting point then understanding of um their assets and liabilities.

Now, that's crucial from many, many angles, you know, wealth creation and succession planning and everything else and the retirement.

But also it's crucial in terms of understanding where the values potentially can be brought in.

So, for example, if they've got... non-deductible debt meaning the debt against their private home or a holiday house or something some private assets um and and how is a opportunity or possibility to convert that debt into deductible debt now deductible debt is something that can be offset in their tax bill So someone earning $200,000 taxable income has $50,000 interest on non-deductible debt can potentially can't offset that non-deductible debt against 200,000.

When you're having fun, when you're busy, time does fly.

And so making sure that we're always aiming towards the goal that we want is a good idea, which kind of lends us into that.

You mentioned it before, succession planning, and that currently at the moment one of our clients, they're selling their dental practice.

They've been a dentist for decades and decades.