Succession Planning for Your Food and Beverage Business

Statistics indicate that the food and beverage industry in America is home to nearly 27,000 organizations. These businesses have collectively generated a total of US$5.47 trillion in sales since 2021.

Many of these organizations are owned by baby boomers who may be contemplating their succession plans. These owners are thinking, "I have around 10, 15, or maybe just 5 years left until I want to retire and move on. What should I do with my business? Who will buy it? Can it continue to prosper as it has until now?"

When discussing succession planning in the food and beverage industry, it's important to consider the attitudes of business owners. The first prevalent attitude is they don’t think they will ever retire. This perception needs to be discarded. With careful planning, owners can establish a sustainable business model that goes beyond their personal reputation and can operate without them.

Another common attitude is the belief that no one can replicate what they do. This mindset is especially noticeable with small business owners. Instead, owners should acknowledge that they are not the most vital aspect of the business. Many other factors, such as the right people, effective planning, and streamlined processes, contribute to the overall value of the business.

Many owners aspire to pass their businesses on to their family members. However, it is crucial to acknowledge that not all family members may be interested in taking over the business. It's one of the downsides of encouraging everyone to pursue their passion and purpose in life.

Owners often assume that their children want to inherit the business because they themselves desire it. However, while children may initially express interest, it is important to determine if they possess the skills and aptitude to run the organization successfully. Having open conversations with potential successors about their vision for the organization is essential. It is equally important to ascertain if they genuinely want to be a part of the business.

It is never too late to start planning for succession and the eventual transition. Begin by conducting an analysis of the organization's current state in six key areas: overall planning, having the right people in appropriate positions, clear and defined roles within the organization, well-documented processes, and up-to-date technology.

This process, known as a current state analysis, can be facilitated by a third party, or your attorney, business consultant, or financial advisor. They can provide an evaluation of the business's value. From there, you identify areas requiring improvement and set achievable milestones for the future.