As business owners of the baby boomer generation look to retire over the next five years, for many of them, family members are a key component of this wave of change as the next generation prepares to carry on their legacy.
I’ve seen this scenario many times over my career as the wave continues to pick up speed. A transfer from one generation to another in a family business has no one-size-fits-all approach, but the earlier that businesses start having these conversations about succession, the better.
Attorney Dennis Hollman of O’Neil, Cannon, Hollman, Dejong & Laing, S.C., echoes this sentiment. For the past 35 years, Hollman has specialized in business tax law and succession planning. During this time, he has worked on hundreds of different succession planning strategies with clients, and he said the biggest mistake families can make when going this route is procrastination.
Hollman views succession planning as a process, not an event. It’s an evolving dialogue meant to make the transition as fluid as possible. The problems come when the strategies aren’t well thought-out and discussed, which can lead to the professional and personal aspects of the client’s lives crossing over.
Amanda Martin knows this well. Her father, Chuck Schwiesow, purchased the industrial coating and painting contractor Porta-Blast Inc. before she was even born. Now, she is the president and majority owner of what is now called Porta-Painting. Based on her conversations and inquiries into the business and its direction with Schwiesow and his former business partner Bruce Ash over the course of the prior year, Amanda was prepared when interest was expressed in her one day taking over the business.
Amanda Martin and Chuck Schwiesow, Porta-Painting
“I kind of saw it coming, because we’re pretty open with each other,” Martin said of her reaction when her father expressed interest in her one day taking over the business, “but I was also surprised when I was finally asked.”
With experience in retail, bank branch and corporate banking support management and a degree in business finance from UW-Madison, Martin seized this opportunity, but she didn’t begin right at the top. She joined Porta-Painting as a project manager and estimator, and she worked for the company for about two and a half years before taking over as majority owner. That time was important to see if it still made sense for her, her father and Ash.
She said that what has made her succession so successful is that it was well planned and the communication between herself, her father and the company was transparent from the beginning. It also helped that Schweisow has stayed on as vice president and minority owner, because where some employees might be wary of the boss’s daughter coming in to take over, he was able to show through his actions that the company is in good hands.
Martin added, “From the beginning he said, ‘I trust you and whatever you do I know it’ll be the right thing.’”
Like Porta-Painting, long-time generational family business and Park Bank customer, Hein Electric Supply Company is also looking to the future. Two years ago, Alexa Kohlenberg joined the family business that her grandfather, Sid Kohlenberg, took over in 1947 and is now owned and operated by her father, Ron Kohlenberg. After graduating with a bachelor’s degree in business from UW-Stevens Point, Alexa decided to work for a large corporation, saying she wanted to “climb the corporate ladder.” She eventually felt the need to move to a smaller company, however. After much discussion, she joined her father at Hein Electric to learn every aspect of the family business.
“I grew up with it at the kitchen table,” Alexa said, “now I get to live it day-to-day.”
A program was developed by Chris Stoming, vice president at Hein Electric, to give Alexa first-hand experience – guiding her to learn, work and engage in all aspects of business operations. So far, Alexa has worked in nine different departments and visited all eight Hein Electric branches in the last two years. She has six more departments to cover, including the office of the president.
Alexa explains, “After each experience, I sit down with Chris and share my insights and how we may consider doing things differently. Our associates have accepted me and know that my only interest is to do what is in the best interest of the company.” Ron adds, “Whatever path Alexa takes, whether it be management and/or ownership, the company is structured and is prepared to continue as a successful, independent business.”
Alexa and Ron Kohlenberg, Hein Electric Supply Company
““Whatever path Alexa takes, whether it be management and/or ownership, the company is structured and is prepared to continue as a successful, independent business.””
This is how a successful succession can be achieved – through communication, preparation and a solid strategy. The new generation brings fresh ideas and different perspectives, and if positioned correctly, this can lead to a lasting legacy for a family-owned business for the generation that comes after.