“It’s never too soon,” says Hugh Arnold, Adjunct Professor of Management, Rotman School of Management, University of Toronto, says of succession plans (SP). “It drives a mindset and a set of activities involved in the leadership and development of people and their strengths for the future.” 

Despite being necessary and inevitable, SPs are a fraught and difficult aspect of business for many if not most greenhouse growers and ag-executives. 

“The reasons that growers tend not to have a SP are varied. SP can feel like planning for [their] own demise or exit and that can be difficult. It is also common to see situations where there is no apparent successor or the fear that a successor is not ready (or able) to take over,” states Glen Kroeker, FEA, Business Advisor, Farm Credit Canada (FCC). It can “feel like the end of an era for the Senior Generation. SP is about planning for the successful continuity of the business. It is a plan to have the business span multiple generations.”

Having a succession plan: the benefits

According to Statistics Canada (2021) the average farm operator was 56.0 years in 2021. In Canada, according to an RBC report (BCG, 2023), by 2033 40 per cent of Canada’s farm operators will retire. Additionally, 60 per cent of farm operators will be over the age of 65 in the next 10 years. Most, 66 per cent of growers and ag-owners, do not have a SP in place (BCG, 2023).

A search for a successor and a SP sends a message. It tells those who are financially (and emotionally) invested in the company such as employees, clients, suppliers, shareholders, competitors, and management that the company is stable and the business will continue. The BDC states that a SP “gives you time to prepare” a successor while it helps to “protect business value and shareholder interests.” The SP and the executive search signals “the company’s ongoing ability to deliver the same service and continued positive returns,” and that “institutional knowledge” will be protected. 

“A poor plan or no plan will close doors on future options,” Kroeker says. “A good SP will keep doors open and expand opportunities for the future.” 

Large organizations

According to Sigma Assessment Systems, large companies should avoid a one-size-fits-all approach, relying on HR to choose a successor or placing the position on a pedestal. They should also try to sidestep pitfalls like focussing on one candidate or not understanding the effects of change, and keeping the company’s SP a secret (Sigma Assessment, 2024). 

“A larger company,” Professor Arnold says, “has a larger pool of candidates.” 

A smaller company is more likely to choose an external candidate. The advantage, Arnold points out, “is that an internal candidate is a known quantity and they know the organization.” Choosing to promote someone from outside of the company “sends a message to those who are below the level of CEO.” 

Both large and small organizations use search firms notes Arnold, whose company Hugh Arnold Associates Ltd., “focuses on assisting senior executives with their key strategic, organizational and leadership issues.” The Board of Directors (BoD) of a company may perform also the executive search. “It may be the most important job a BoD ever have,” Arnold observes. 

Research by Fernández-Aráoz et al., (2021) found externally sourced CEOs in large firms tended to underperform. They also found that with an external candidate there was a loss of “intellectual capital,” and they were “ill-prepared” by their new firms. If a company was doing poorly, an external candidate would add value, but in a reasonably performing company an external candidate “destroyed value.” They concluded that external candidates should only be hired in “exceptional cases.” Internal candidates did not “significantly change their company’s performance” if they were “similar” in their ways of working to the person they replaced. 

Poorly prepared internal candidates also failed. Small firms can benefit from hiring external candidates, however. The authors recommend “plan your SP well before you think you need to” and “grooming” managers who have “four critical traits — curiosity, insight, engagement, and determination.” These traits will serve a company well in a world that is “volatile, uncertain, chaotic, and ambiguous.”

An external candidate, Arnold notes, may be “highly intelligent, they may be charismatic, and they may be verbally skilled, but they may not be great at the job.”

Having no succession plan: the consequences

Conflict and damage to a business’s reputation, both family-owned and otherwise, are inevitable consequences of not having a SP. Boyer (2006) notes conflict, compensation, governance and wealth transfer issues are associated with not having a SP. The long-term survival of a business might also be affected. The Family Firm Institute (FFI), a global network of professionals specializing in family business advising, has found that only 30 per cent of family-owned businesses survive into the second generation with 12 per cent lasting into the third generation, and three per cent remaining in the fourth generation (Boyer, 2006). A SP protects the present, the near future, and the far future of the farming family and the family business.

The SP “should be reviewed on an annual basis or more frequently as required, but early is always better than later,” advises Kroeker. 

To preserve family harmony: talk, then plan

“I think it is much better to consider a SP as a continuity plan for the business,” says Kroeker. “It can remove a lot of negative connotations from the discussions and it is a better base for communications.”

Commentators in business and academia note that a lack of communication in farm families will slow or derail a successful SP and will negatively affect next generations. It is estimated that two-thirds of family businesses fail in the second generation due to a lack of open communication (Boyer, 2006). 

The development of a SP allows a farm family to voice what they want their relationship to the family business to be. Musselman (2015), in his study of management and transfer of ownership of American agribusinesses, wrote: “Perfect harmony in any business is not possible. Moreover, there are benefits to constructive criticism and differing opinions.” As well, he noted, “excessive turmoil and conflict give resistance to moving along in SP.” Taylor and Norris (2015) found that when Canadian farm families were not close, when they disagreed on what was fair, and when they disagreed on “rules of fairness,” “conflict” would ensue over the transfer of farm assets.

Kerry Smith, CPA, CA, TEP, a Partner in MNP’s Professional Services team and National Leader of Family Office Services notes: “It is rare that kids want to carry on the family business” even though the parents may assume that they want to. 

Mixing money, family, and emotions can be explosive. Best practices for a SP for a family business is to be as methodical and rational as possible while drawing on the objective expertise of business experts. 

“The consequences for a business with no SP is that the options for family members and the business will decrease over time. Without a good plan, there is little to no chance the business and family will have the opportunity for an orderly succession. The succession will end up being dictated by circumstances that might be out of their control,” Kroeker cautions.

Part of the success of a family transition in leadership is connected to the “motivation” of the individual chosen as the new leader as well as their “real-world job training” both in the family business and elsewhere (Boyer, 2006). Conditions should be set, it is advised, for the family members learning/work experience in the business and how they earn consideration for later leadership (Boyer, 2006).

Seek professionals’ advice

SP professionals such as bankers, investment counsellors, and accountants can help a family make reasoned, rational decisions regarding how assets can be allocated among the second generation and third generation and beyond. They can help with decisions regarding the benefits and drawbacks of, for example, debt, taxes, insurance, real estate, or share buy-sell options. 

A successful transition of assets, according to Smith, depends on decisions such as on whether to sell or gift the business to the next generation or to sell to employees or executives (who may not be a part of the family), or a “strategic third party.” 

Weighing contributions of family members, whether it is sweat equity, business degree knowledge, or innovative ideas that strengthened the business, is important, Smith said. As important is who has the respect and the confidence of the managers and employees in the family business. The family’s “philosophy around wealth” and how it should be treated, is a guide to how assets could be divided and what family members fit into the SP Smith said. He cautions, however, that “equal isn’t always fair and fair is not always equal.” 

Do it now

“Although it is hard to think about your mortality, it is a very necessary process to ensure the longevity of your life’s work,” says Anna Barnitz, CFO, Bob’s Market & Greenhouses, Mason, West Virginia (Drotleff, 2008).

“For family-owned businesses, it is very important to start a succession plan as soon as family members become involved in the business in any way,” notes Kroeker.

RBC (2025) advises having a plan ready before you retire. The plan, RBC suggests, should be developed over several years during which the needs of the individuals involved can be considered. 

Establish relationships with the experts you want involved in your planning so that you have a solid working relationship with them. They should also know you and your values, and your hopes for your future and your family said Smith.

Why a formal plan and not a verbal ‘This is what I want you kids to do’?

RBC (2025) notes that a formal SP brings transparency and understanding of the business issues involved as well as a de-escalation of tensions among family members. 

The process increases the “general knowledge” of the family and allows time to consider the choices made as well as “providing financial security.” It also ensures income and structures debt for the upcoming generation; wealth and tax management in the present day. 

Overall, it presents decisions plainly, in a written format, for family members while allowing them to see the plan as it develops over time. 

Getting organized is also important. RBC (2025) suggests that among the documents you should have ready access to includes: wills and directives, partnership agreements, financial statements, income tax returns, business appraisals and plans, insurance policies, lease agreements, employee contracts, mortgage and loan information, an “asset list (equipment, buildings, land” etc.), and lists of key suppliers and consultants. Include, as well, locations of files, bank accounts, passwords, keys, codes, and concerns about the business.

SPs must be revisited to ensure that the assumptions and estimations that went into making the plan still hold true over time. This can include business evaluations, changes in the family, and property valuations. These changes have repercussions for taxes, debts, future income, and future generations. 

“None of us is immortal,” Arnold says. “Although, a few want to be in their job forever.”

Read more from Greenhouse Canada on succession planning here.