How to plan for succession in fine food retail

The smash hit US TV show Succession gave a dramatised window into the world of family hierarchy and generational business planning. While it’s quite some distance away from reality for the majority of companies, some parts ring true. Chiefly that you need a plan (and a good one) to ensure the smooth running of operations, and continued quality of your products and services once you’ve decided to hand over the reins.

Have you considered your succession plan yet?

Ed Savory, managing partner at Birketts, shares his professional advice on the subject of family business planning.

Why is succession planning important?

Without a clear plan, businesses risk falling into disarray and potentially failing altogether. In fact, studies have shown that 58% of business owners haven’t even identified a possible successor. It’s also been found that only about 30% of family-owned businesses survive to the second generation and just 12% to the third generation. 

That’s why a succession plan is crucial. By mapping out a clear strategy, businesses can continue to thrive long after their current leadership has moved on. This is particularly important in the food sector, which face challenges like thin profit margins, increasing competition, and evolving consumer tastes. 

When should you start planning?

The answer is now. It’s never too early to begin. Planning takes time - often years, not months. The earlier you start, the smoother the transition will be.

How to create a succession plan

This can seem overwhelming, since there is no one-size-fits-all approach. However, a few essential steps can get you started.

1. Identify your options: Consider what you want to happen to your business when you’re no longer in charge. If your food business is family owned, will it be passed onto family members? Will you sell it to management through a management buyout, or to employees through an employee ownership trust? Alternatively, your business could be sold to a third party or private equity buyer. 

2. Choose the best fit: Once you’ve identified your options, select the best one for you and your business. This decision will depend on various factors, such as how long you want to remain involved, the extent you want to maximise value, and whether you have suitable successors in place. These factors should be carefully considered.

3. Ownership structure: Identify areas in the current ownership structure that may need changing or clarification to facilitate a smooth transition. Is there a balance in the ownership and control of the business? Are there any trustee shareholders? It may be that varying classes of shares need to be put in place or a group company might consider a reorganisation.

4. Succession training: Train workers and senior managers who have the potential to be future leaders. 

5. Tax planning: Consider tax planning strategies to minimise the tax impact of your succession plan. The key is to ensure you achieve the best tax treatment on a sale which is likely to be capital treatment and business asset disposal relief, or ensuring that business property relief applies on death.

Knowing where to start and how to implement a succession plan can be complicated and there are many factors to consider. That is why addressing these issues with a team of legal advisors to help can make all the difference.

‘My parents let me follow my own path – and it led me to the family business’

Parental pride can be triggered by the smallest, most uneventful thing. The first tying of a shoelace, perhaps. A scrawling, unidentifiable piece of artwork, destined to hang on the fridge.

For Rebecca Miles, part of family-run Lane Farm and Suffolk Salami in East Anglia, the joy is boundless as she watches her young daughter command her toddler son on a trip around the production rooms.

Much like Rebecca, she has grown up ‘at her mother’s feet’, regularly helping to feed the pigs, or parading around the production area with her own wellies and tiny hair net. And she revels in it, which makes Rebecca swell with pride.

“It’s lovely to see how she’s taken everything in, and absorbed what I’ve been telling her,” she says.

“My husband is an arable farmer. I think we’ll be fighting over who goes where,” she laughs. “At the moment she just wants to work with mummy, but that might change in the teen years, who knows? I’d love it if she wanted to work here. My sister has a little girl and it would be amazing if the two cousins could take the business forward. They’re already building that bond, and relationship. They understand each other – and that’s a solid foundation for the future.”

Lane Farm is a wonderful example of a multi-generational outfit that’s being sensitively managed to maximise on the skillset of each family member.

The business, comprising of Lane Farm (hams, sausages, bacon), and later Suffolk Salami, was founded by Sue and Ian Whitehead in 1987.

Rebecca remembers going out on the ‘Snickers run’ with her parents, driving around locally delivering to stores as a child. It her gave her a front seat as a witness of their continual innovation and expansion, with production ramped up in 1999, and a smokehouse built in 2005.

She says their commitment to always striving forward, despite challenges, seeking new ways of working, has been crucial to building her own resilience in business. Rebecca adds she’s often in awe of Sue and Ian, who made Lane Farm one of the first small companies to sell its own pork products into shops before branching out into the world of charcuterie.

“Dad always had a passion for charcuterie. It was on a family holiday to Italy that he disappeared with mum and left me and my sister Sarah somewhere by the pool. We were around 16 and 13 and fed up being dragged around. Dad found a butcher who didn’t speak a word of English, but his son’s friend was walking past and he spoke a bit, so they pulled him off the street, and dad ended up spending the afternoon making salami with them.”

Rebecca always knew she wanted to be involved in food…even as a surly teen who’d rather paddle in the pool than go along with her parents’ latest passion project.

After being introduced to Harper Adams (a university specialising in agriculture and rural affairs) she thought she might go into farming within the food industry. Crucially, both her parents were supportive, whichever path she chose. “They always said if we came back [to the family business] it had to be something we wanted to do. They didn’t want to force it on us.”

Off she went to university, with sister Sarah heading for London, gaining commercial experience in the food and drink world.

“Mum and dad were always there for us. And very early on, by the time I was 23, I decided I wasn’t leaving.” 

Rebecca worked at a local dairy for a spell, building the confidence she needed to dive fully into the family business, in which she heads up most of the technical aspects, while Sarah (who joined Lane Farm and Suffolk Salami more recently) focusses on streamlining, and processes.

There are challenges, she says, but it’s also fun, with the family sharing lot of respect, and a strong bond, crucial to making the work-life balance successful. “It helps a lot if you get on as a family. Even with tough times you have each other to fall back upon. You can ask one another’s opinion and know you’ll get an honest answer. You can learn from one another.”

Of course, working in a generational business means you never quite switch off. “It’s our livelihood,” says Rebecca. “It’s not just a job, it’s our passion. And it has to be. It’s not the nine-to-five. But, at the same time, there are so many benefits. How many people can bring their sick child to work because grandma is there and can take them off to look after them?”

Rebecca loves working alongside her parents, sister and cousin, and feels lucky they share such a close relationship. “Some people don’t see their families for weeks on end, but I can see mum and dad every day. We can have a coffee. At the end of the day the grandchildren come and see them.”

The set up has brought the family unit closer, she explains, and their dynamic, being mutually invested in the success of their businesses, means they’re always striving to improve, expand and develop new products.

Her advice? “Make sure working with your family is definitely what you want to do. You have to understand your family before doing it. You have to know it won’t be easy, but if you’re willing to go the extra mile there are so many ways you can benefit.”

Farming and food production are two of the many industries facing increasing financial pressure, due to unstable energy, fuel and feed costs. But Rebecca (part of a collective in Suffolk known as the Young Producers), says this shouldn’t put off the next generation of makers.

“They have to know it’s not going to be easy, but life isn’t easy, you really have to work at it and persevere to get through the bad times, knowing there will be good times at the end. If we didn’t have young producers coming through with new ideas, it would result in more food being imported. We have to invest in and support farmers and makers.”

The whole chain can be supported, she adds, by retailers backing and buying local where they can. “We employ local people. Everyone here comes from within a 15 to 20-mile radius. Buying our products supports a team who are buying local, keeping the money in this country. The value of that cannot be underestimated.”

Is working with family worth it?

Indeed has some thoughts to consider before you take the leap to join the family business

The pros of working in the family business

It’s easier to make decisions with people who share your vision.

Access to a job is almost a given.

You’ll have prior knowledge of your colleagues – after all, you grew up with them.

There’s could be a more relaxed working culture.

You have the opportunity to work in a variety of roles and to gain experience in different responsibilities which will help build a rounded CV.

There’s usually a strong ‘team’ mindset.

It’s easier to trust family.

The cons of working in a family business

There can be conflict which spills over from family life into the office.

You need to be super disciplined.

You need to take care not to exclude employees who aren’t part of the family.

It can be difficult to manage the hierarchy.

Promoting from within the family could put a bad taste in the mouths of non-related employees.

You might get fatigued spending all day with your family – in and out of work.