Brexit and broadband among concerns for Irish agribusiness

By John Daly

Despite the looming commercial spectres of Brexit and poor rural broadband, the risks from poor succession management are an increasing concern for Irish food and agribusiness SMEs.

Recent research shows 83% of enterprises in the industry do not have a clear succession plan in place, indicating either that owners have not thought about it, or a lack of interest from the next generation.

While optimism levels are high for the coming year, the report highlights a number of concerning issues, including the fact that almost half of businesses are not planning for the implications of Brexit. For the time being, these worries are tempered by a buoyant domestic economy, from where most of their sales are derived.

While four in 10 medium-sized companies are planning to hire next year, 63% of employers indicated the difficulties finding the right people to run the business.

“From a longer-term planning perspective, clear succession plans are rare, with 83% of the food and agribusiness SMEs not having a defined succession plan,” says David Leydon, head of food and agribusiness at accounting advisory firm Ifac.

However, 40% of businesses are open to selling in the next five years, which is higher than might be expected in the sector.

Many companies are trying to get a grip on developing digital changes, and broadband remains a contentious issue in rural Ireland.

“Online trading is slow to get going, with only 7% of companies doing a significant level of online trading, while social media is an important marketing communication channel for 62% of businesses. Here, Facebook outperforms all other social platforms in terms of usage and effectiveness,” he says.

Proper succession planning is often a complex concern for family businesses, not just because of the blood relationships but also because of the difficulty in confronting topics such as aging, death, and personal financial affairs.

These sensitivities are frequently quoted as reasons that many firms do not survive the transition from founder to second generation.

“Succession planning doesn’t start with people. It starts with the requirements of the position,” says David Ulrich, author of Organisational Capability: Competing from the Inside Out, and professor of business at the University of Michigan.

“If you look to countries such as China, India, Brazil, US, Italy, France, and Spain, more than 85% of the firms in these countries are family businesses,” says Eric Clinton, lecturer in entrepreneurship at DCU Business School and the director of the DCU Centre for Family Business.

The situation is similar on the island of Ireland, where family firms form the economic and social bedrock of our society,” he says.

A family business poses many challenges emerging from the co-existence of two often competing circles: The family, which often revolves around family values and family cohesion; and the business, which is often purely performance-driven.

“Given our position under British rule for many centuries, our Irish family businesses are among the youngest in Europe, falling well below the fourth- generation average,” Mr Clinton explains.

“As a result, our family businesses are really only now beginning to appreciate the challenges in creating a multi-generational family firm.

Such challenges include succession planning, next generation involvement, letting go of the business, in-law involvement, and change,” he says.

Retirement should not be the only force pushing proprietors out of ownership, advises Bob House, president of BizBuySell.com.

Unexpected life events come up very fast on any business.

“The majority of owners without a plan say they enjoy managing their businesses too much to even think about a transition of ownership, but life can come at you fast, and the future can become the present in an instant,” he says.