Get Our Email Newsletter

Planning Ahead: What Will Happen to Your Business?

Hometown Pride

Obermeier Hardware & Rental

John ObermeierJohn Obermeier’s return to Obermeier Hardware & Rental in 2009 not only ensured the carrying on of the family business, but the self-sufficiency of the small town of Rockport, Ind.

Though John Obermeier had worked in his parents’ store, Obermeier Hardware & Rental, since he was 10 years old, life after college took him to another retailer, Target, rather than directly into third-generation ownership.

Obermeier’s decision to leave his managerial position at Target to return to the family business in 2009 was made in part because he knew climbing the ladder at Target would mean moving his family around, in part because he wanted to help get Obermeier Hardware & Rental on a forward-moving track, and, perhaps most of all, because closing the store would devastate its small town of Rockport, Ind.

“We’re in a small community of about 2,500 people,” Obermeier notes. “It was us and Carter Lumber. [We didn’t sell building materials,] so when Carter Lumber closed, we saw those dollars going across the border to Kentucky. The day they closed their doors was the day I decided to go into the lumber and building materials business.”

LBM Resources

Impactful Innovations: Four Ways Manufacturing and Technology Upgrades Elevate Window Performance

The demand for energy efficiency, performance, and resilience has never been higher in the home remodeling and building materials industry.

And go into it they did, investing a million dollars in a new 9,000-square-foot drive-through lumberyard and additional inventory. A solar-generating power system was added soon after.

In the three years since completion of the expansion, the dealer has seen growth of 120%. But Obermeier stresses that, in a town where stores were closing left and right, the investments were about more than making money. “I didn’t want to see more dollars leaving the community. If I hadn’t come back, if we didn’t create a succession plan, you’re looking at a town of 2,500 people who wouldn’t have a place to buy a toilet flapper. I didn’t want to see that happen.”

Obermeier credits his parents with giving him the freedom to make decisions that would ensure the company’s future. “My mom and dad said they want it to make sense for you and work for you. We want to be compensated at a rate that’s fair to you and not unfair to us,” Obermeier recalls. “We worked on the pricing of the business together. Here’s the inventory, the property, the fixtures. We put a sweat equity piece in there too for the work I put in and the profit I brought. That was a fairly easy process.”

- Advertisement -

His parents also agreed to an owner-finance structure, believing in the investment as well as recognizing that John Obermeier’s young age would make it difficult to get the large amounts of capital required to make needed improvements. The payback plan also ensured they could retire sooner rather than waiting for their son to take gradual ownership over time and borrow against that.

Obermeier officially took over full ownership on Jan. 1 of this year. Along with capital investments, he has implemented numerous updates to modernize the business, including updating policies, creating a company handbook, and instituting job titles. He also brought in someone to help run the operations and hired an assistant manager with decision-making power.

Each investment, each decision not only ensures continued strengthening of Obermeier Hardware & Rental on a day-to-day basis, but creates a firm foundation on which to grow, ensuring the dealer will remain a key fixture in its small town for years to come.

- Advertisement -

Family Affair

National Lumber

National Lumber

As National Lumber near downtown Baltimore approaches its 100th year in 2019, behind the scenes fourthgeneration owner Arnold Fruman has been quietly transitioning ownership over to his two sons, Neal and Kevin. It’s a strategy that is paying off in several ways, most notably in its apparent ease and in its assurance of continued stability for employees and future owners alike.

“My father deserves a lot of credit,” Neal Fruman says. “He understood the importance of identifying the issue. He really involved us in it and gradually turned over responsibilities to us.”

But first, Arnold Fruman sent his sons to other industries to get a feel for different ways of doing business. As they entered their late 30s/early 40s, he began pushing more opportunities their way and allowing them to implement new ideas. Through it all and to this day, he passes along knowledge and wisdom on everything from dealing with issues to building relationships with customers.

That’s not to say that the process was completely internal nor easy. Neal stresses the importance of using outside professionals, including an accountant, financial planners, and an estate attorney, all of whom must be able to work together. “You have to have those conversations together,” Neal notes. “We are committed to the industry, but we are certainly not financial planners, we’re certainly not up on the latest estate planning laws and tax laws. Do not fragment that stuff.”

What’s more, “It’s something that constantly evolves,” Neal says. “Several times a year you have to have conversations. It’s really important to define the responsibilities of everyone, to get every person on the same page. It’s all about communication and planning.”

Today much of the ownership has transferred to Neal and Kevin, and they have established different roles in the company based on their strengths and interests—Kevin handles sales while Neal oversees operations and finance. “We’re lucky in that we get along and have different skill sets,” Neal says. “I give my father credit. I’ve seen a lot of businesses where the older generation is not willing to pass on ownership and responsibilities, and it makes it murky for the next generation and the employees.”

FrumansFourth-generation owner Arnold Fruman, left, has been transitioning ownership over to his two sons, Kevin and Neal. It’s a strategy that is paying off, most notably in its apparent ease and in its assurance of continued stability for employees and future owners alike.

Indeed, having a plan is just as essential to the staff as it is to the leadership team. “Potential employees ask, ‘Are you planning to sell the business?’” Neal says. “It’s important that the ownership communicate to employees that you’re committed to it and there is a next generation so that you can recruit talent.”

Appealing to young talent also goes back to Arnold Fruman, whose flexibility in relinquishing gradual control to his sons is ensuring modernization of the business. “He’s done an awesome job getting the business to where it is,” Neal says, “and it’s our responsibility to take it to the next level.”

Leading on Leadership

Manufactures Reserve Supply

Steven Boyd“Some of the things employees are always cautious about is the movement of succession planning and how it’s going. It’s incumbent upon the owner to over-communicate the process, how it’s going to look, and how it’s going to evolve.” says Steven Boyd, President of MRS.

Stephen Boyd has led Manufacturers Reserve Supply (MRS) as President since 1983. Although he has no desire to slow down, knowing who will take over the helm of the family- owned, fourth-generation company—whether the circumstances are planned for or unexpected—has always been at the top of his mind as well as the rest of the leadership team.

Even though Boyd has two children, how succession would unfold at the Irvington, N.J.-based wholesale distributor was never set in stone. His daughter, Nancy, went into pharmaceutical sales and his son, Brian, went to work for another building material distributor after college for five years.

Brian did decide to join the company, returning to MRS in 2010. Like Stephen, who also spent some of his early years outside the family business, Brian’s experience brought a different level of work ethic, knowledge, sales experience, and vendor management, helping him fully understand how businesses operate. It also gave him unique perspectives to bring back into the MRS fold that allowed him to establish his own worth beyond his lineage.

Upon his return, Brian entered into a multi-year program in which he immersed himself into two-year stints in different areas of the company, ensuring he understood every element, from cleaning the warehouses to dealing with financial matters. Six months ago he was promoted to General Manager and is surrounded by a strong leadership team that MRS carefully built and is working together to define the company’s future.

As such, Steve’s own role has gradually changed. Today he’s more focused on strategic issues, including mentoring and training, rather than the day-to-day operations. It’s a role he’s not only enjoying, but also allows him to keep a gentle but hands-off eye on the leadership team while fostering programs within the company that engage employees and increase their investment and loyalty. In other words, he’s continuing his career-long efforts to keep the company on a strong footing and growth path.

Manufacturers Reserve SupplyManufacturers Reserve Supply

Throughout the process, planning and communication have been key. “Some of the things employees are always cautious about is the movement of succession planning and how it’s going,” Steve notes. “It’s incumbent upon the owner to over-communicate the process, how it’s going to look, and how it’s going to evolve. Current management also needs to understand that their job is not threatened, that their job is whole and their loyalty will be rewarded.”

Outside partners also need to know what’s going on, he notes. “You need to take a proactive approach to discussions, whether managers, employees, customers, or suppliers, which I don’t think everyone does.”

Boyd and the managers meet with a business coach every six months, which includes occasional evaluation of their skill sets to determine where there are weaknesses or vacancies that may need addressing through new executives. The management team also is continually evaluating its “catastrophe” succession plan, which is in place to guide the company in the event of Steve’s unexpected departure.

Thirty-four years after he took the helm, Steve has no desire to slow down, continuing to work up to 60 hours a week and still loving the action each day brings. If and when he decides to pull back, he’s ensuring he’ll leave the company in the well-prepared and capable hands of a thoughtfully curated leadership team that will continue the MRS legacy.

Get our free newsletter

Join thousands of other lumber and building material industry leaders and keep up with the companies, people, products and issues shaping the industry.

What's New

Digital Partners

Become a digital partner ...

Sales Comp Study

Download this 55-page, in-depth study by LBM Journal of industry trends in sales force compensation and benefits. See how your organization stacks up.

Webinars

- Advertisement -

White Papers

View all ...

- Advertisement -

Partner Content

View all ...

- Advertisement -

Registration is now open for the LBM Strategies 2024 Conference