Newlyweds Holly White and Kent Sereda were already quite good at tackling what you might call their legal due diligence, updating their wills and preparing marital agreements.
Then they realized they should go even further.
This was the right time, they decided, to review the whole succession plan for the fourth-generation family farm that they would one day be taking on.
Yet it wasn’t something that Kent or his parents Judy and Ron relished the thought of doing, because Sereda Farms had been in almost continuous transition since 2005, and they were getting tired of the process.
“We had been in transition basically since my uncle decided to sell out in 2005, and then in 2010 we started the succession process to officially bring me into the company,” says 33-year-old Kent. “We had been in a constant period of change and adaptation and metamorphosis of the company. Mom, Dad and I were all just sick of that kind of stuff and wanted to get back to the business of farming.
“Then, when Holly and I married, of course she had some questions about how things were set up and where everybody stands. So it was an opportunity for us to go back and revisit all the details. It prompted us to really clarify what we were doing, and what the succession process was.”
Holly, 32, had grown up on a mixed farm in Saskatchewan, and as she prepared to quit her job as manager of agricultural services for the County of Newell, her business and administration background, as well as her outsider’s eye view, helped her identify some areas of the farm operations, management and succession plan that needed some work.
“When you marry into a farm, you’re marrying into a family business, so there’s a lot to determine… where your place is and what your role is going to be within the organization,” says Holly. “Kent already had a succession plan in place but it needed updating, and it wasn’t totally complete.”
Can you survive the hit by the bus?
In her former job, Holly had been responsible for delivering programs, hiring employees, updating job descriptions, and developing safety protocols, operational processes and procedures.
She immediately had questions, particularly about what she calls the “hit by a bus” scenario.
“I started asking Kent questions like, well, you take care of this, and your dad takes care of this but what happens if one of you suddenly disappeared, if some tragedy struck? Do you have the processes in place to be able to carry on?”
“One of our goals,” says Holly, “is to be able to survive the being hit by a bus test by having all our processes and procedures in place and documented.”
Across the table, the Seredas could see that Holly was raising important questions.
“I knew we needed to do a better job at things, but I didn’t feel prepared enough. I didn’t know how to go about doing things better,” says Kent. “Holly brings a professional workplace background to the table, so it was natural for all three of us to rely on her as a facilitator. My parents have always been open with the business side of things with me, and they’re happy to do that with Holly as well.
“We feel like we’re doing these things proactively instead of reactively. Holly facilitated those soft issues that I would have difficulty talking with Mom and Dad about. She does a better job of handling those things.”
A history of change
In 1940, Kent’s grandfather had brought a truckload of fresh fruits and vegetables to convince his family to resettle from southwest Saskatchewan to Alberta. Originally, the family were set to relocate to the Peace country, but when Grandpa came out to Rolling Hills, about 45 minutes west of Medicine Hat, he knew that even if they had a crop failure, the family could irrigate a garden and feed themselves.
When he passed away in 1969, his two sons had to drop everything and become full-time farmers at the ages of 16 and 17. Ron eventually bought out his brother’s share of the farm, and at 64 is still active in the operation, as is his wife, Judy, who acts as chief financial officer.
The farm has changed a lot over the years. After Kent completed his ag diploma program at Olds College and came back to the farm in 2004, only a fifth of the land was in cash crops and the rest was in pasture or forages for beef production.
Since then, the family has gone completely out of beef production and added irrigated row, seed and specialty crops, such as corn, wheat, black beans, pinto beans, alfalfa seed and certified canola seed.
“It takes a lot of drive to change,” says Kent. “It was tough in our operation. But you have to keep your eyes open because I have seen a lot of biases, like looking over the fence and saying to yourself, we’ll never do that. You have to keep your eyes open and jump on opportunities when they come.”
Now, one of the couple’s priorities is to formalize their business methods, and they’re exceptionally clear at articulating how this formalization plays into their larger goals.
“It seems like we’re just laying down a foundation for success,” says Kent. “We’re not a large operation but we desire to grow the business. Competition and availability of land is getting tight, and we have to rethink what we’re doing.
“We want to formalize our business practices so that we’re making well-informed decisions. We want to know financials upside and down, and to use that to help our decision-making. We want personal and financial freedom from the business, opportunity for personal pursuits, and a good quality of life.
“Although we very much want to grow the business, we need to maximize what we’re doing here currently.”
One area of focus is capital efficiency, because relative to the size of their operation — around 1,200 acres — capital purchases are their biggest investment decision.
“Only one or two of those decisions made wrongly can damage a business, so we want to be confident going forward that we understand the details of those decisions,” says Kent. “For example, if an opportunity arises to purchase land, we want to know exactly what we’re going to have to compromise, and what the financial picture looks like if we do that, so we are making a sound business decision rather than an emotional one.”
Working on management skills
The couple are part of a growing trend among young producers who want to get advanced business management training. They are actively working on their business management skills — Holly is involved in the Bridging the Gap: Step up to Succession program offered through Farm Management Canada, and both she and Kent are taking the Agri-Food Management Excellence’s CTEAM (Canadian Total Excellence in Agricultural Management) program.
Both Bridging the Gap and CTEAM are not only helping them learn how to approach some of the issues they need to address on their own farm, but the programs also inspire them to carry on with the process.
“I had always wanted to do the CTEAM program but I just didn’t have the motivation,” says Kent. “It’s helped tremendously to keep us encouraged and keep our momentum. We really want to keep at it and make sure the business transforms, so a big part of CTEAM is giving us confidence that we are doing things right and maintaining our enthusiasm to keep going with it.”
Part of that enthusiasm comes from the other participants in the programs and from the valuable networking opportunities they have had through attending various conferences, such as the Agricultural Excellence Conference in Calgary, Canadian Young Farmers Forum in Ottawa, and the International Farm Management Association, which is coming up in Scotland this July.
“Sometimes it seems counterproductive to take time off to attend a conference or a workshop, but in the long run, it’s so valuable for so many reasons. It’s not just that you’re going to learn a new skill or identify things that you have to work on, it gives you an opportunity to network and meet other people in your industry,” says Holly. “Sometimes the conversations you have afterwards are more valuable than what you learn in the conference or in the course. It’s important too because sometimes you need to take a step back and recharge and take time off. There’s almost always something at a conference or course that inspires you, and you learn a new idea, or you meet somebody who’s done something fascinating on their farm.”
Defining roles and responsibilities for everyone is something the family has struggled with. It may be easy for an individual to define what his or her current role is, but it’s not nearly as easy to figure out they want that role to be in 10 or 20 years time.
One of their first CTEAM exercises helped them out with this process, when Holly and Kent had to write a magazine article about their farm after they had accepted a fictitious award 15 or 20 years from now.
“After we did that, we came back and got Mom and Dad to write down where they see things in 10 years,” said Kent. “It was interesting. It was what I had hoped. Mom said she wants to be retired, she wants to hand off the bookkeeping to Holly, and Dad said he wants to help out when he’s needed. He wants his own corner of the shop where he can tinker with stuff… he really came out with what he wanted to do. So that exercise helped us to figure out where we are on the line of transformation into the future, where Dad wants to slow down and I’ll start taking over things.”
“We’ve been really lucky to have done both programs together; they’ve been really a great complement,” says Holly. “It’s allowed us to look at our operation and figure out what we are doing well and what we are not, and to make a list of goals and how we’re going to achieve them. We’re starting to get a plan in place for what we want to tackle next.”
Lots still to learn
What’s next is to learn to fully understand the financial statements and to know how to translate that knowledge into making sound business decisions, rather than emotional decisions. “Kent’s mom has been doing the books and financial stuff and that’s something I’m transitioning to taking over,” says Holly. “One of our main goals with CTEAM is to figure out how to generate an accrual report to make decisions on. How do we calculate all the different ratios and what does that mean when we’re making purchasing decisions. That is something we really want to get better at.”
The couple is also developing a strategic vision for the future. “Farmers wear so many hats that it’s hard to find the time to focus on the business aspect of the farm, because even though it’s vitally important to the organization, it’s hard to carve the time out to do that or gain the skills they need,” says Holly. “We wanted to actually take the time and prioritize, and focus on things like standard operating procedures and defining job roles and responsibilities based on everyone’s skill sets and aptitudes.”
The family is also starting to hold monthly business meetings to discuss where the farm is at, their goals and vision. Holly and Kent feel fortunate that their parents are so open and willing to discuss all the parameters that come with succession and management planning.
“We are very lucky,” says Holly. “After talking with so many young farmers, not just the people in my group but the people that we’ve met at conferences, we’re way ahead on that aspect. A lot of people are just so afraid to have those conversations because they are so awkward and can be very emotional at times, but they’re so important to the business and to good family relationships, so you can still all sit down for dinner together.”
The family is all onside when it comes to improving communications. “When both sides are communicating you’re more than likely on the same page in the first place,” says Kent. “When you’re not communicating, you’re making assumptions about how the other party feels or what they’re thinking, and that’s where it goes wrong.”
The continuous learning plan
Kent and Holly admit that learning about management isn’t a chore for either of them, and a formal, continuous learning plan is something that they are totally committed to because they have already seen the huge value that the programs they are involved in has brought to them and the farm.
“We haven’t formalized it yet but we plan to put down on paper that we are required to do a certain amount of off-the-farm learning every year,” says Holly. “I came back to the farm after college and I thought, is this it? Do we just stop learning from here? So I started going to conferences and when you get back out there and start listening to speakers, you realize how much of a benefit it is. It doesn’t mean that you learn a lesson, you come home and just apply it and it works. It affects your overall view of your operation. You make a thousand decisions every quarter, and if you’re influenced to do something in a better way, it helps.”
“It’s absolutely something that we are talking about because not only do you have to plan for what skills you want to develop, you have to budget for it,” says Holly. “These programs that we’ve been doing have brought up so many things that we need to learn to do and, obviously, we can’t do them all at once. So, if a conference comes up you can assess if it fits with your overall goals. If you have that written formalized plan about the areas that you want to learn, it helps you make better decisions to make sure you’re getting the most out of your time and money.”
Holly has a degree in agricultural biology and is a certified crop adviser. She had already become a member of the Canadian Association of Farm Advisers, and has been so inspired by their own succession experience, she hopes one day to be able to help other farm families with the process as a professional farm adviser. “It’s just a dream at the moment,” she says. “I have enjoyed this process so much that I would like to see how this process goes for us to the point where I’m confident that we are making headway, and then I’d like to work to help other people achieve a successful farm transition.”