Last month I had the opportunity to visit the Wimmera region of Victoria for the very first time. Like much of NSW, Victoria has had a long, hot, dry summer and the paddocks were unsurprisingly looking very parched.
When I drive through lower rainfall areas I often remark to myself “there’s only successful farmers in this district…the rest have been weeded out by the seasons”. These are the model farm businesses, I think to myself, the businesses that do it right every season. But that’s not the whole story.
That remark may be good at describing the process of ‘natural selection’ in farming, that only the fittest survive and go on to thrive for generation after generation.
But it’s also a demonstration of survivorship bias, the tendency to only look at those that have expanded, transitioned the farm business smoothly between generations, or become highly ‘professional’ operations.
But what about the cases we don’t see? The farms that may have struggled or fractured during family succession, or simply ceased to exist despite having the right people, the right equipment, and the right settings in place? Surely there are lessons learned from these examples of what pitfalls to avoid.
We explored this idea during my recent presentation in Birchip, Victoria, where I was invited to speak on the topic of “Farm Business Characteristics for Success” at the Birchip Cropping Group (BCG) Succession Workshop. It was a great opportunity to challenge conventional thinking and dig deeper into what really makes a farm business resilient across generations, as well as the bread and butter of good financial stewardship and performance.
Survivorship bias is everywhere and has been present – and thankfully avoided – at major points in history. During World War II, the US military would study the bullet hole patterns on bombers returning from missions over Germany. Military engineers wanted to reinforce those damaged areas, until a statistician, Abraham Wald, pointed out that the planes never made it home were hit in the other spots.
The lesson? Sometimes the most critical vulnerabilities are the ones we can’t see. In farming, it’s the same: if we only study the survivors—the farms and families that have transitioned successfully – we miss the invaluable lessons from those that didn’t.
These so-called “invisible bullet holes” in our businesses are what the next generation needs to detect and understand for a stronger footing for financial success and a clearer path forward for family succession.
I was fortunate to share the stage with James Hamilton from Cultivate Advisory in Narromine and Jack Langley from Farrell Goode Solicitors in Narrandera. James brought a wealth of knowledge around having the right conversations with family and what to prioritise in commencing the process, while Jack connected with the audience over family trusts, capital gains tax strategies and family agreements. Together, we were able to offer a multi-dimensional view of what makes – or breaks – a succession plan.
What stood out most to me was the calibre of the audience. The BCG members were engaged, curious, and honest in their reflections. The questions that followed the session showed a real desire to plan ahead – not just about how to succeed, but how to navigate and avoid the “invisible bullets” of family success planning.
