By Bill Anderson
As recently reported in Beer Marketers Insights, industry veteran Mike Mazzoni said that the beer industry is undergoing a fundamental change from “family businesses to factory businesses.”
“There is no leadership in the US industry that has ownership or legacy,” said Mazzoni. “Basically what we have now in the US is a money machine for the industry’s owners and they’re all offshore.”
But ironically Mazzoni also went on to point out a glimmer of hope for the family firms in the US beer industry. It’s family firms like Yuengling and Boston Beer that are showing real growth in this down economy, he said, and that’s because those firms have “some steerage” and “passion.”
Mazzoni’s take explains the critical crossroad facing many family firms in today’s world of mega-mergers and consolidations. And it’s true in all segments of the beverage industry.
Family firms are finding that they must step up their game and become more professional and efficient, or get out. In fact, many of the precepts that govern publicly held companies need to be applied to smaller, family firms. Family dysfunction can’t be tolerated. The need for outside, non-family professional managers who can provide financial, logistics and warehouse management skills is becoming more acute. There’s also been no better time for comprehensive succession management plans as the need for skilled next-generation leaders increases and likely large tax hikes in 2011 or sooner will make estate planning more challenging.
The first steps for a family firm to move into the next level of execution are in fact quite easy. Inviting outsiders to join your family firm’s board is one of the most cost-effective ways to raise the level of a family firm. Bringing on one or more outside board members will often change the level of professionalism in how your meetings will run; timely and comprehensive reports will need to be sent out and key execs will need to report to the full board in a different manner. Effective independent board members will provide you with an unfettered level of advice, not all of it easy to take, but much of it necessary. An outside board member can also be used to help review the performance of your senior level executives, including family members. Hiring a skilled financial advisor to review your financing strategies and your long-term growth opportunities is another cost-effective method to jump-start your strategic planning process.
By taking deliberate steps to raise the bar, family firms can have the best of both worlds: the passion and steerage so commonly associated with family businesses in our industry, and the new professionalism now required to operate successfully in this ever-more consolidated supplier world.