Many people can’t wait to retire, but Mitchell Spector, 58, would not have a problem working until he’s 75. Spector likes his job, and why not? He’s the CEO and COO of Woodbridge Home Exteriors, the window and siding company in Texas he founded more than 25 years ago. Last year the company had sales just shy of $20 million.
Long-term, the plan is for Mitchell Spector to be one of the owners while his son, Adam Spector, 29, assumes overall management responsibilities. Adam Spector has worked for Woodbridge since 2007. He started out canvassing, right out of college, spent time in the company’s phone room rehashing unsold appointments, and then, at his father’s suggestion, began a four-year stint in sales before moving inside to work in finance.
Though there’s no fixed agenda, a plan exists so that Adam might, step-by-step, accumulate the experience he needs to make smart, mature leadership decisions. If the process seems prolonged, that’s because the senior Spector feels the need for Adam to have “the space and time to gain his own wisdom.”
Fathers & Sons
Owners who aspire to pass their business along to a son or daughter typically face numerous conflicts. Only a third of family-owned businesses in the U.S. successfully transfer from the founder to a second-generation owner, and just 13% go to third-generation ownership.
Owners of home improvement companies have their own unique challenges. The industry is hardly glamorous and the product consists of quick in-and-out replacement or renovation work, often to a one-time customer. The business model focuses on the endless search for leads and more leads. “We are a business like no other business,” says Nick Cogliani, owner of Newpro, in Woburn, Mass. “We start out new every day. Just because you did a million last year doesn’t mean you’re going to do a million this year.”
All that makes a home improvement company difficult to value and sell. Transferring ownership to children is one option among several. The alternative is to sell to employees or outsiders. But, as many have realized, shifting control within the family is rarely simple. Pulling it off is all in the planning.
Mitchell Spector’s father, for instance, moved the family to Texas from New York in 1960 to sell roll-form aluminum siding to contractors. He was so good at generating leads that he started his own aluminum siding business. Mitchell went to work for his father’s company a month after graduating with a business degree in 1976. He started out managing finance and accounting and eventually supervised administration and production. His father ran sales and marketing. Mitchell learned all aspects of the business, but wanted to grow — to have a place, he says, “where I could spread my wings.” So he left to start his own company, Woodbridge Home Exteriors.
Sweat Equity
Company owners who think of their kids as future owners usually start them early. Many feel that the kids must learn every corner of the business and earn the right to be there. “They needed to see that the business is difficult,” says Ken Moeslein, 62, who, with his wife, Linda, started Swing Line Windows — today Legacy Remodeling — out of their Pittsburgh home in the 1980s.
As teenagers, the Moeslein sons, Jeff and John, worked in the warehouse and in marketing. Ken Moeslein also felt it was important that his sons “see and respect what takes place on the installation side, to know the difference that installers make.”
That knowledge and experience gives the second generation owner a credibility that would never be there if he or she just walked in right out of college. “If you grew up in the business and had a meaningful role, no one has a problem with that,” says Jake Zahnow, president of Ohio window company WindowPro, a fifth-generation owner. “If Junior suddenly comes in as vice president, that may seem unfair to the employees who have been committed and done a good job all along.”
The flip slide is that employees who knew and worked with someone as a teenager may not take him or her seriously as the young adult about to step into a leadership role. “That’s one of the liabilities,” says Nick Cogliani, whose 34-year-old son, Anthony, is slated to be the next owner/manager at Newpro.
The Sales Piece
What helps overcome that is when the son or daughter takes on some part of the business and makes it his or her own. And at home improvement companies, the proving ground is often sales. When Adam Spector came to Woodbridge Home Exteriors right after college, he understood, he says, that “just because my last name is the same as [the owner’s] doesn’t mean I’m going to be in charge.”
At Legacy it was becoming a salesman, and a good enough salesman to become sales manager, that showed Jeff Moeslein how the business really worked and gained him the employees’ respect.
Anthony Cogliani, who had never sold anything and at one point wanted to be a professional golfer, asked his father if he could take a sales job at Newpro. His father pointed out the risks involved. What if Anthony wasn’t successful at selling? But the junior Cogliani became the second salesperson in the company’s history to break the million-dollar threshold. “It helps that he excelled at that,” Nick says.
Education + Experience
Some owner-parents insist that education — often the education they didn’t have a chance to get — is a necessary step in moving into leadership. Larry Smith, owner of True Home Value, a Kentucky window replacement company that also manufactures its own composite product, learned the business from his father but eventually broke away and started his own operation. Smith, who cut his teeth as an installer, says that if his youngest daughter was interested in the business, he would suggest a degree in marketing.
Zahnow took a master’s degree in business, preparing for a career outside in corporate development. He came into the family business of window distribution at age 30 and rebuilt it into a window replacement retailer with five branches. The financial knowledge that came with his degrees is “one of the reasons why we’re here today,” Zahnow says. What he learned, he adds, is that success in home improvement is about finding the right people. He suggests that the most valuable degree a next-generation owner could get would be in human resources.
Ken Moeslein says he told his son Jeff, who took an undergraduate degree in administration of justice, that an additional degree in business was a requirement for the job of company president. Working full time and going to school part time for three years, Jeff got an MBA and, as president, began running sales and marketing. Ken Moeslein says he soon realized that he needed to remove himself from the office altogether so that staff would know who made the final decisions and his son would not feel second-guessed.
Three Key Questions
1) Do they want the business? If your son or daughter has to be talked into wanting ownership of your business, it might not be a great idea to push them in that direction. They need to want it rather than feel they’re entitled to it.
2) Can they manage the business? Home improvement companies involve marketing, selling, and production. A second-generation owner doesn’t have to know every inch of every aspect of the business, but he or she should know enough to manage those who are running its different parts. Fresh out of college, the best course is to put together a plan that enables the aspiring company owner to work in and become familiar with each part of the business.
3) Can the owner walk away? You’d think that after years of the stress and tension associated with running a business that owners would whoop for joy at the prospect of retirement. But many leave reluctantly, and some never go away. As long as the senior family member is there in the office, employees will look to him to make the final decisions. That undercuts the authority and morale of the next-generation owner. Your plan for familiarizing the next generation with all aspects of the business should include a date when you’re no longer there.
Voluntary Demotion
But walking away is easier said than done. Owners are loathe to see their children make mistakes, and sometimes they feel like they don’t have anything else that’s nearly as important to do. “This has been my life for 40 years,” says Larry Tait, owner of Taitco, a New Jersey roofing and remodeling company he built from scratch. Today, at just over 60, Tait is cutting his workweek to three days. Two sons, Lincoln and Spencer, both work at the company. Both sell jobs and run the jobs they sell. Spencer is “ready and willing to do everything,” Larry says.
Seven years ago, Nick Cogliani announced that he was moving to Arizona and would return to Boston once a month to work at Newpro for a week. “We talk every day, but he makes the decisions,” the senior Cogliani says. “Anthony is very good with people, and he understands what it takes to get to the bottom line.”
—Jim Cory is editor of REPLACEMENT CONTRACTOR.
