Click here to read the full story on The Globe and Mail website.
Christiane Jost understood the importance of succession planning when she and her husband, Matt Kenny, took over ownership of the Nova Scotia-based Tatamagouche Brewing Company in 2018.
That’s because the previous owners were Jost’s parents, Hans Christian and Karen, and they had been through similar discussions as a family when they sold their former company, Jost Vineyards, just six years prior.
Jost Vineyards started as a hobby for Hans Christian and his parents, who grew their own grapes and made their own wine. But over time, the Malagash, N.S.-based vineyard took on a life of its own.
“By 1983, we were growing more grapes and making more wine,” Hans Christian says. “We got our licence in November 1983 and started out as a mom and pop shop.”
Over the years, Hans Christian expanded the business into a renowned, multi-award-winning winery. But after nearly 30 years of ownership, Hans Christian started experiencing health issues and it felt like the right moment to move on.
At the time, Hans Christian and his wife’s two daughters, Christiane and Matina, weren’t ready to step into ownership, so he and his wife sold the company to new owners.
“We were both in university at the time, and I didn’t feel ready to take on such a large business,” Christiane says. “It was definitely a difficult decision for my parents to sell the winery.”
Succession planning has never been more important for family businesses than it is now. In the next decade, more than 60 per cent of family businesses in Canada will be ready to transition ownership, but only 10 per cent have a formal succession plan in place.
Kelly Adams, who runs Barrington Wealth Partners – a practice based in Lower Sackville, N.S., that helps family businesses with their succession plans – understands the challenges of succession planning well.
Tatamagouche Brewing Company has grown from making two original styles of beer to currently brewing more than 100, with their core seven available for purchase across Nova Scotia.Supplied/Tatamagouche Brewing Company
“Only 30 per cent of family businesses succeed to the second generation, and only 10 per cent go to the third,” Adams says. “The reason many don’t succeed is simply a lack of communication.”
Although Hans Christian and Karen closed the chapter on Jost Vineyards, they had new ideas they wanted to birth.
They started Tatamagouche Brewing Company in 2014, and Christiane and Kenny, who both recently graduated university, were sold on the idea.
“It was a really exciting time for local producers in the alcohol industry,” Kenny says. “Consumers were becoming more educated on what was available and the different flavours that could be created.”
The locale, a short 15-minute drive from Jost Vineyards, was also a draw.
“Tatamagouche is an incredible little village,” Kenny says. “We are surrounded by beaches, world class golf courses, ski and mountain bike hills … but it has never lost the charm of a small village.”
Christiane and Kenny have run the operation since the brewery opened. The plan was always to transition the business to them at some point, but the early days were simply about learning the ropes. Navigating the alcohol industry was brand new for both Christiane and Kenny, so understanding the ins and outs of every facet of the job was crucial.
Adams says understanding your industry through mentorship and hands-on experience is a great step in preparing the next generation to take over a family business. However, he says there also needs to be a clear governance plan in place to ensure everyone understands what success looks like, how decisions are made and who makes the final decisions.
Tatamagouche Brewing Company is a bustling space, especially in the summers when an influx of tourists hits the Nova Scotia village.Supplied/Tatamagouche Brewing Company
During the succession planning process, Adams says the right professionals are needed. “Things can get complicated. There’s nepotism, people feeling entitled. Maybe counselling is needed. The picture of success needs to be co-ordinated, and the right professionals can help you do that.”
This is the approach Tatamagouche Brewing Company took when the transition of ownership happened between Christiane and Kenny and Christiane’s parents.
“This is where our financial advisers and accountants were able to guide us through the process of transferring ownership and navigating all the steps,” Kenny says.
Hans Christian adds: “We had a fair amount of discussions around financial expectations.”
Adams says this type of purposeful communication and planning is needed to build a successful transition plan. “I have two sons in my company, so I’m currently living this process,” he says.
After a decade, Kenny and Christiane are feeling content with where their business is at. They’ve grown from their two original styles to now having brewed more than 100 beers, with their core seven available across Nova Scotia.
Their brewery and taproom is a bustling space, especially in the summers when the population swells with tourists who enjoy the patio, a beer and live music on Friday nights.
With two young kids and further growth on their minds, Kenny admits they haven’t formally started any succession planning. But they have the team in place to help them put pen to paper when the time comes.
“Christiane and I both love the industry we are in as well as this special community of Tatamagouche,” Kenny says. “We see ourselves operating the brewery forever. We’ll eventually have to move on, but as of right now, in this stage of our lives, we can’t picture doing anything else.”
-
Article published: The Globe and Mail
Author: Travis Persaud