I believe our family has always had strength in farming together, however my sister and I have recently had discussions on farming separately. Will we be less viable as separate businesses?
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Your question raises an interesting point.
Many people assume they will automatically be successful moving forward based on collective or individual success prior to a split, but making this assumption may leave you disappointed or even in a financially challenging situation.
The reality is, splitting the business operations and assets can change the overall risk, operational profile and financial capacity of each business.
This is particularly important if there is an ambition to expand and grow the business.
Splitting a business between family members should be no different to purchasing a new business; doing your due diligence on how it can work is essential to the transaction's success.
Each party to the split will have a range of operational skills.
Understanding these skill sets is important as the loss of a skill that is required for business operations may become a financial cost to one of the parties after a split.
If there is an intent to split up the physical assets of the farm as part of the process, it is again important to understand the viability with or without certain assets post-split, so each business and family member can survive with their allocation.
Understanding what is achievable by both parties with the resources, assets and debt (if applicable) that each are allocated will allow you to understand if either party is taking on any additional risk or potential operational concerns.
By taking the time to do this you will have the right information to assist each of you in making an informed decision on the transaction.
Splitting the business between family members based on individual circumstances can be viable and sometimes may even be necessary, depending on the parties involved.
But in the same breath it is important to understand that it is not always possible and alternate solutions may need to be considered. Don't get caught focusing on today only when considering your family circumstances.
With effective communication on the topic and a clear assessment of your individual circumstances hopefully each of you can be positioned to have a viable starting point to be successful in your own right if you choose to take this path.
