For beer wholesalers, the transition from one generation of family ownership to the next can be tricky.
With transition comes change, and with change comes uncertainty for employees about the new direction of the company.
When employees are uncertain, they tend to be less productive and sometimes they look for a new job. Both are bad for the business and the bottom line.
When I first started in the beer business our company was in the middle of a transition from the 2nd generation to the 3rd generation of family ownership.
Dad was stepping down and the sons were stepping in.
The old guard of managers and leaders were retiring and the next generation was taking over. While it was an orderly process, it was also a challenging time for everyone.
During that experience, I learned several lessons of what to do (and what not to do) during the transition from one generation of family ownership to the next.
In this post, I’ll summarize what I believe are the critical factors to get right so that you have a smooth, and profitable, transition in your beer business.
- Ownership Transition Basics
- Share the Vision: If you Don’t Tell Them, They’ll Make it Up…
- Seek First to Understand
- Have the Courage and Discipline to Lead
Ownership Transition Basics
The changeover from one generation to the next involves money. One generation needs to be paid for the value of the business they are handing over, and the next generation needs to do the paying.
When money is involved it’s critical to have a good team of professionals to make sure the deal is setup correctly. Legal, accounting, and valuation experts (and sometimes grief counselors!) make up the team.
These professionals will make sure the terms and agreements are all nice and legal, and that the numbers add up correctly.
When money is involved, it’s critical to make sure all the parties understand the terms of the deal. Who will get paid, how they will get paid, and who will do the paying.
The combination of Family + Business can be like fire and gasoline if there is confusion about the deal. A good lawyer or CPA must explain in common-sense language how the transition will work and how it will affect everyone.
Often, these transitions are smooth. But misunderstandings about money can make things bad, fast.
Get a good team. Insist they take the time to explain the deal thoroughly and answer all questions so that everyone understands what to expect in the transition.
Share the Vision
After the paperwork is done and both generations are happy with the deal, it’s time to communicate to the troops. Your employees need to hear from you and what your vision of the future looks like.
Who will be in charge now? What changes are going to be made? How will this affect me?
Many beer wholesaler employees have been with the company for decades. Often, it was their first and only job. The responsibility of the next generation is to respect and honor this loyalty by sharing the new vision and direction of the company.
A little goes a long way. This communication can be as simple as an announcement at a company meeting, or individual conversations with employees if you can pull it off.
How you deliver the message isn’t as important as delivering the message.
If you don’t communicate and share information with your team they will make stuff up. And it’s usually not good stuff.
Rumors start to fly and uncertainty creeps into the company. I’ve seen it time and again, and it’s not pretty.
It’s the responsibility (and privilege) of the next generation to share the new vision with the team. You owe it to the employees and to the stability of your bottom line.
Seek First to Understand
“It’s not time to make a change, just relax, take it easy. You’re still young, that’s your fault, there’s so much you have to know.” -Cat Stevens
These first lines of the song Father and Son hold good advice for next generation beer wholesaler owners.
New managers often make big changes right away and without fully understanding the situation. They want to make improvements or make a statement that they are in charge.
Either way, relax and take it easy. Seek first to understand.
On the surface, it may appear that some task or business process is being done incorrectly or inefficiently. So the new manager acts, only to find out later, there was a good reason why it was being done that way.
Talk to the people who have been doing the job for a long time and get their opinion on the situation. Ask questions and learn from them.
With this approach you’ll accomplish two things: 1) you’ll let them know you value their opinion, and in turn, they will value yours, and 2) you’ll better understand the situation and how to fix it (if it needs fixing at all).
You’re still young, next gen beer wholesaler owner. That’s your fault, there’s so much you have to know.
Seek first to understand.
Have the Courage and Discipline to Lead
There’s lots of reasons why employees join a company and why they decide to stay.
In my opinion, the most important factor is leadership.
Simply put, good leadership, and having the courage and discipline to lead, is essential for a successful transition from one generation to the next.
The old leader is out (usually mom or dad) and the new leader is in (usually son or daughter).
The new leader must step up and step into the new role to maintain continuity in the business and the confidence of employees. No one likes a rudderless ship.
There are many definitions of what good leadership is and what it isn’t. I believe it boils down to a few simple things:
Listen to your people. Most employees are very happy to tell you what is wrong in the company and how to fix it. They talk, you listen. There is no doubt that you will hear some hare-brained ideas. But you’ll also get solid gold nuggets. The best ideas come from other people, and they often come from your own employees. If you listen.
Speak to your people. Hold regular company meetings, parties or weekly lunches. As mentioned earlier, if you don’t tell people what’s going on in the business, they will make stuff up. The conversations in the parking lot, in the warehouse or around the copier in the office can become fantastical without real information to stop the madness. What may seem common knowledge to you, as the leader, is completely unknown to your troops. Speak to your people.
Be Present and Accountable. Woody Allen said 80% of life is showing up. Show up and be accountable to your employees. Work with them, work for them, and they’ll work for you.
Leadership takes courage. The leader has to clearly state the vision for the company and inspire employees to make the vision come true. It’s not easy, but it’s essential.
Wrap Up + Action Items
Ownership transitions from one generation to the next are common for beer wholesalers. When your company is ready to make the move, use the ideas in this post to help make the transition smoother.
Gather your team of professionals – the lawyers and accountants – and get the deal details on paper. Explain the details clearly and make sure everyone affected has an opportunity to ask questions and get answers.
Communicate your vision to the employees. They need to hear from you, especially now.
Work with your employees and seek first to understand. Figure out what works well, and what needs fixing. Get their input.
Last, and most important, be the leader your employees need.
Leadership is direction, decision-making, inspiration and motivation. Leadership is listening, communicating and showing up.
Now, get out there next gen leader, and lead.