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Features

The fine art of family business

Formulas for Success

We talked to family-run operations about how they managed through ownership changes and leadership transitions.

September 19, 2014

There’s nothing simple about succession in a family business. It’s personal. It’s managing a legacy, and transitioning ownership of a previous generation’s dream so the next guard of leaders can preserve it, change it and mold it into a continued success.

This month, Lawn & Landscape spoke with companies that have completed ownership transitions, or are in the process of redefining family members’ roles in the company as they perpetuate the business. Here’s how they managed tough discussions, created a strategy for transition and executed their plans.
 

Know your role

When the Bakhuyzen boys, Dirk III and Kyle, began seriously discussing succession with their father, founder of PROCARE Landscape Management, the three of them knew they needed a a system with checkpoints.

Otherwise, how could Dirk Bakhuyzen II, president, be sure his sons would take the business to the next level and succeed?

“I don’t think my dad would have wanted to unleash the reins without a process in place, and I don’t think he would even think about moving into retirement down the road,” says Bakhuyzen III, who moved into the general manager position about five years ago with his brother taking over operations.

The Bakhuyzen boys had played various roles in the company over the years, showing their commitment to the family business.

But to take their involvement to the next level, and prepare for Dirk II’s eventual retirement, there needed to be more clearly defined roles tied to the organization’s strategy.

So, PROCARE decided to become a licensee of LandOpt, a network of landscape contractors that employ a business operating system based on building four pillars of success in the areas of sales and marketing, human resources, operations and business financials. By working through those four pillars, the Bakhuyzens strengthened key business functions and identified roles and responsibilities for leaders.

“Prior to having a system in place, there was a bit of overlapping – my dad doing this and maybe me overlapping his duties,” Bakhuyzen III says. “This (system) helped us identify roles and responsibilities, and put the right people in those roles. It allowed us to more accurately identify our strengths and weaknesses, and figure out where each of us would be successful.”

At the same time, the Bakhuyzens engaged in personality assessments to tease out their natural tendencies in the business environment, and how they would behave in certain situations.

“That really helped us look at where we fit in at the company as we considered the future and where we wanted the company to be,” Bakhuyzen III says.

Then, the Bakhuyzens began transitioning into their new roles. Dirk II played an active account manager role for years, and he began transitioning into a president/owner role focused on the big picture.

“That has really helped the synergy of our company,” Bakhuyzen III says, who moved into the GM position.

“My brother is strong operationally, whereas my natural ability is more on the sales and business side of things,” Bakhuyzen III says. “That was very evident from the beginning. Kyle is good at dealing with the equipment and customers, and account management.”

Bakhuyzen III says he wasn’t completely prepared to step into the GM role at first. “I had to learn,” he says. “I adapted and was challenged along the way.” Attending training and seminars through LandPro has fortified his skill base.

Meanwhile, the business holds bi-weekly meetings when Bakhuyzen III sits down with PROCARE’s account managers. “I do a lot of listening – listening to their successes and challenges so I can provide feedback and we can lay out action items that need to happen.”

Also, the family holds bi-monthly meetings where they review financials and goals, set targets and discuss issues they’re facing.

“You have to stop to really talk about things, whether financial performance or other part of the business, to keep the transition moving along,” Bakhuyzen III says.

Ultimately, having a process to strengthen the various aspects of the business has helped keep the family on track during transition.

“I don’t think we could be successful in the transition without it,” Bakhuyzen III says.

 

Make it big

When Carlos Medina approached his father 16 years ago and offered to buy the family business, his dad and mom – sitting at the kitchen table/office – were surprised. Then, Medina laid out his plans: The first thing he would do is move the company out of the kitchen, invest in new, larger equipment and go after big jobs. His father, Medina Sr., was skeptical.

“My mom said, OK, and my dad gruffled about it a bit,” Medina admits of his initial presentation. “I told him, ‘I don’t want to just cut grass. I want to do install, I want to diversify.’

“I wanted to continue the family business and make the business something different,” Medina says.

Medina promised his father a weekly paycheck for as long as the company existed. This was an appealing offer following the break-up of the Medina Brothers, the company Medina Sr. had run with his two brothers since 1967 before they went their own ways. Since that time, the company hadn’t been the same. Each brother, Medina’s father included, went out on his own.

Medina had worked in his father’s business beginning at age 12, but had pursued his own ventures during adulthood: buying and selling a restaurant, running several successful carwashes, and working full-time in the motion picture industry designing, installing and duplicating landscaping sets for movies like “Home Alone,” “Transformers” and “The Fugitive.”

“I had been working on movies for so many years on a large scale that I wanted to bring those ideas to our small, family business,” Medina says.

The time was right for Medina Sr. to agree to his son’s offer to take over as president and CEO, and they decided on a reasonable financial package that involved Medina Jr. paying his father a sum, then promising a paycheck for life.

Then, Medina moved the family business out of the kitchen – and since that time, has grown the firm from an average $150,000- $200,000 annual revenue to $2.7 million.

Medina immediately applied a “think big” mentality to the business. “I put employees in uniforms and began advertising,” he says. The trucks became moving billboards. Never before had the firm put itself out there like this, Medina says. “We flooded the market with as much information as possible for a few years, then we stopped and the word-of-mouth referrals started coming in,” he says.

His parents never planned on marketing the company, and they saw the results of Medina’s efforts. But initiating so much change so quickly was difficult for Medina Sr. to watch at times. He had to step back after running the business for 20-plus years. “I remember telling dad, ‘You’re getting your paycheck, just relax and enjoy the ride. Let’s see what we can do,’” Medina says.

He also had to tell his father: “There cannot be two bosses at this place,” and, “Relax, you’ve done this all these years, let me do it now. I don’t want you to work anymore. I don’t want you to worry about payroll or fuel costs or employees.”

Easy to say for Medina Jr., difficult to do for Medina Sr., who still shows up at 5:30 a.m. and is the first to unlock and open the gate for business in the morning. “He has never been able to relax,” Medina says. “To this day, he tries to tell me things, and I’ll say, ‘Dad, stop, please.’”

All of this is loving, respectful banter.

Medina knows that his father is proud of how far the company has progressed, it’s just not easy to step back. But communicating to employees “who’s boss” has been important. “There can’t be two bosses telling the employees different things,” Medina says, relating that the first five years following the ownership change there was some friction. But immediately after taking over, Medina’s brother, Sergio, and wife jumped on board. The new school renamed the business Medina Lawncare and was inspired to continue their father’s legacy.

Meanwhile, Medina assured his dad that he had earned his stripes in business, and could apply what he knew to raising up the family business. “I had run five successful businesses that I bought and sold,” Medina says. “So I had a proven track record.”

In particular, Medina had grown one of his car washes by diversifying into selling auto accessories, window tinting and more. “In my mind, offering the customer just one thing was not enough,” he says.

Medina has taken the same approach with Medina Lawncare. After taking ownership of the family firm, Medina’s wife launched a complementary business, Chicago Xteriors, an outdoor facilities contractor specializing in pavers, concrete and fencing, including wrought iron custom built balconies. The companies work in tandem to provide clients with a broader range of services.

Medina Lawncare’s commercial clients include McDonald’s, Chicago Public Schools, Cook County and various developers and management companies. Time and a track record have shown Medina Sr. that he can step back and enjoy the company’s success. After the first year of taking over the business, Medina doubled revenues. Within five years, he increased revenues to more than $1 million.

And though it may never be easy for Medina Sr. to be on payroll rather than managing it, his son taking over the business has resulted in a strong bond as the family works to preserve the legacy.

In a video Medina created to commemorate his father, the voiceover tells of one man, traveling 2,430 miles as a U.S. immigrant from Los Herrera's Durango Mexico, three generations ago, with a common goal to serve Chicago.

“We work really hard as a family,” Medina says.

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