Star Business article on Great Lakes and succession planning

[sstackho]

I can't find this article on their web site, so I'll just post the whole thing.

No succession plan? Look out! 'The earlier, the better,' advises brewer, based on his tough experience
Gloria Er-Chua Toronto Star
1019 words
5 May 2011
The Toronto Star
TOR
ONT
R2
English
Copyright (c) 2011 The Toronto Star

The last thing Peter Bulut Jr. wanted to do was bring lawyers into his father's hospital room, but he had no choice.

His father had written a will for his personal assets, but there was still the question of transferring ownership of their family-run business.

"We had to bring them (the lawyers) in to sign documents," said Bulut Jr., who assumed control of Great Lakes Brewery in September 2009.

Less than a month after the transfer, his father died of heart complications.

PwC's recent Global Family Business Survey found that 62 per cent of family businesses are unprepared for the death or sickness of a key manager and 47 per cent do not have a succession plan that details how they're going to transfer ownership.

Many family businesses don't make it to the second generation, the study adds.

The Buluts' succession plan for their Etobicoke-based craft brewery was a lesson in the way not to do it for other businesses, Bulut Jr. noted with a laugh.

"Dad thought he was immortal. We were pushing him to come up with a formal plan and he would always say, 'Don't tell me what to do.' "

The elder Peter Bulut was used to taking fate into his own hands.

As an 18-year-old, he fled what was then Yugoslavia by rowing across the Adriatic Sea to Italy in 1957. After a short stint in jail for not having immigration papers, Bulut Sr. made his way to Canada, arriving in Halifax.

He ended up in Toronto and found work in construction. When he had saved up enough, he started his own construction company, Bulut Jr. said.

But the entrepreneur wanted to own a business that his entire family could take part in, and he didn't think construction was appropriate for his three daughters.

"His dad had said, 'Son, if you get to North America, you have to get into the booze business,' and that was always in the back of his mind," Bulut Jr. said.

In 1990, the Buluts got their chance: Great Lakes Brewery, three years old at the time, was struggling and its owner was looking to sell. The Buluts closed the deal in June.

Their first beer, Golden Horseshoe Premium Lager, did so well in Toronto-area restaurants that the brewery outgrew its plant by the fall of 1990. They moved the brewery to 30 Queen Elizabeth Blvd., where it still is today.

Their Devil's Pale Ale, introduced in 2006 as a change from their usual easy-drinking lagers, signalled a shift for the company. Following its surprise success, the brewery produced a line of award-winning seasonal ales for drinkers looking for a unique flavour. The beers sold out at the LCBO in weeks, Bulut Jr. said.

Succession plans were never discussed as the family focused on expanding the brand.

However, in mid-2008, the elder Bulut was diagnosed with pulmonary fibrosis and admitted to hospital. Bulut Jr. knew it was time to bring up the subject.

"It was awkward," he said. "I think if you're older, you don't want to be talking about passing the business on because you feel like you're jinxing yourself."

Early communication is a key factor in creating a strong succession plan, said Lorraine Bauer of the Canadian Association of Family Enterprise (CAFE).

"There are so many cases where a founder thinks that he has it all worked out in his head and he has a plan, but he hasn't actually communicated that to anyone in the family," she said.

A common misstep is not allowing yourself enough time to properly plan out a transition, Bauer said.

"It takes years, not months."

After his father died, Bulut Jr. had to deal with making funeral arrangements and taking care of his grieving mother. The emotional load made it difficult for him to concentrate on running the business.

When Bulut was alive, he always had final say in decisions. Because they didn't have a chance to ease Bulut Jr. into a decision-making role, the rookie president found it difficult to call the shots at first.

When a piece of equipment broke down, for instance, Bulut Jr. and his sisters were faced with the choice of either fixing it or investing in new machinery.

"Those decisions took probably three times as long to make as when Dad was around," he said.

Bulut Jr.'s learned to bring in business advisers to facilitate discussions on strategic planning. Not only do external advisers offer a fresh perspective on the company, they also remove a lot of the emotion from the discussion, he said.

The company has had success since the initial shaky months that followed Bulut's death. The brewery, which employs about 30 people, has expanded into canned beer and will be introducing its Crazy Canuck pale ale later this month.

Bulut Jr. joined CAFE, which gives members the opportunity to be part of a personal advisory group. Made up of non-competing family businesses, each group meets up monthly to discuss challenges that they face.

"They may talk about issues like HR or strategic marketing, or they may talk about divorce, like, 'What did the pre-nup say?,' or that type of conversation that is very unique to a family business," Bauer said.

Unlike his father, Bulut Jr. has already started drafting a succession plan to hand Great Lakes Brewery over to his two children when he's ready to retire.

Does he plan on bringing them in to work at the brewery soon?

"Well, they're 9 and 8," he said. "But if there's one thing I've learned about succession planning, it's this: The earlier, the better."

[Ale's What Cures Ya]

Read that today while taking lunch. I was disappointed it wasn't about beer.

[S. St. Jeb]

Thanks for this post. I appreciate any links or references to beer-related stories as I don't subscribe to any newspapers. No, the article isn't about beer, but it does give insight to another challenge that the small breweries face (as do all small family businesses).