Episode 19 – Passing the Torch

Welcome to the TRSA podcast. Providing interviews and insights from the linen, uniform, and facility services industry. Most Americans might not realize it, but they benefit at least once per week from the cleanliness and safety of laundered, reusable linens, uniforms, towels, mats and other products provided by various businesses and organizations. TRSA represents the companies that supply, launder, and maintain linens and uniforms. And in this podcast, we will bring the thought leaders of the industry to you.

Welcome back to another episode of the Linen Uniform and Facility Services podcast interviews and insights by TRSA. I’m your host, Jason Risley. TRSA kicked off its 2019 Clean Show experience with its 2nd annual leadership summit on June 19th, a day before the official start of The Clean Show. Held at the Hotel Monteleone in New Orleans, The leadership summit began with a keynote by legendary Saints quarterback Archie Manning and closed with a highly informative panel on succession planning for your linen uniform and facility services business. The panel was moderated by doctor Jean Meeks Koch, a consultant with the Family Business Consulting Group.

The panel featured insights from several industry leaders including current TRSA chairman, Jim Buick, the president and owner of Roscoe Company, James Guthheim, the president of James Guthheim and Associates, and Mark Kowalski, the managing partner of Envise Partners LLC and a former employee of AmeriPride Services. Let’s listen in on the discussion recorded live at TRSA’s 2nd annual leadership summit in New Orleans. Well, we’re going to get going. We’re going to get going. And I want to put this in context again.

This is a secession planning conversation. The little bit of difference, we’re gonna focus on next gen. How do you bring the next generation in if you’re a family enterprise, family business, versus exit strategies? Price, family business, versus exit strategies. We might talk a little bit about valuation exit strategies, but, really, the perspective is focusing on how do we go from 1 generation to the next generation?

How do we do it successfully and continue to really have a strong thriving business? I’m going to kick it off here with Jim, starting with first Jim, Jim Beatt. Here’s my first question. So as a third generation leader of an almost 100 year old business, the other aspiring family members in your business, how are you encouraging them or discouraging them in their involvement with the family business? Every morning, I come in and, I do as much annoying stuff that I possibly can to try to drive Julie out of the business so that I can sell to one of the nationals and cash out.

So a few years ago, I went through 20 years ago with my family working with the family business consulting group, and went through 3 years of family meetings, family business meetings. And so we’re repeating that experience. We’re utilizing outside resources to to help us understand, you know, what are my goals, what are Julia’s goals, what are my wife Teresa’s goals, and and what are Dan’s goals. And and so I feel like that’s an important part, besides kind of learning, you know, what to do and how to do it from other people that have gone through similar experiences. And it wasn’t so long ago that I went down to, Brightstar in Texas and I I met with Robert McIntyre at that point.

They they had a, you know, the father son team. We went to lunch and I drove with the father, to lunch and he said, listen, here’s the deal. There’s so many kids that come into the business and then exit within the 1st year or 18 months. They said it’s your job to bite your tongue and keep that kid in the business for the 1st 2 years, and once you’ve got them there for 2 years, they’re hooked. Now, as Julia can tell you, I rarely bite my tongue, but I think it’s important to create an inviting environment that your kids can succeed in, that you expect from them to to go out and work somewhere else first and and establish an identity outside of the family business.

And then once they come in the business, make sure that they have some focus and direction, and not always from you as the parent and the owner, you know, to get them to that next stage in their development with the business. So it’s a, it’s a journey. Every so often, I look up at the sky and wink at my dad who I put through, a lot of stuff. I think, you know what, dad? I’m getting it back a little bit.

Just a little bit, Julia. Just a little bit. I think it’s important for us as operators and allied trades to recognize that the longevity of this industry is through carrying it to the next generation. The easiest thing to do is sell the business. Probably the most profitable thing to do.

Maybe, maybe not. It’s certainly not what I’m interested in doing, and not what my dad or mom were interested in doing either. Thank you, Jim. So I’m gonna go to Mark. So being an advisory firm, really in the buy sell, mergers and acquisitions, what do you see as the greatest challenge when your firm gets involved with what’s more of a multi generational family legacy when they’re looking to sell?

What are some of those hurdles that you see? Sure. You know, I I tap into the experience that I had at AmeriPride, and I think about what we did at AmeriPride as a family owned business that was around for 127 years, I believe it was, from the moment that they started until they sold the business, and we put a lot of things in place. A lot of the things that Jim is talking about were put in place years years before that decision ever came, so you know, Jean, what you do and what Jim talked about, put that structure in place so that the family knows how to operate and own and function as a team, a company. So what happens when when you’re looking at should you potentially sell your business, I think the key there is that you first got to make sure that everybody’s aligned with what the best objective is.

What we just heard in the last presentation about buy in and alignment, what we did at AmeriPride, the first thing we do is we got the ownership group together with the guidance of management and asked ourselves what our objectives were. We had a lot of shareholders, so we had a lot of opinions on what people wanted. That was difficult to navigate. I will openly admit that, and I think Bill would as well, that it was difficult to navigate so many different opinions, but at least we had a framework and a structure for doing that. So now Mark takes that experience, goes out, starts his own company.

If I can refer to myself as a third person for a second, I have people come come to me, say the same thing. They usually say something like, I don’t know what I wanna do next. I’m thinking about selling. I’m not sure what the next piece of my business is. I wanna take that same approach with them, which is we don’t have to talk about selling just yet.

Let’s take a look at the business. Let’s assess the status of the business. How have you been doing financially? How are you doing in the marketplace? How are you positioned?

Who’s in the business that’s working with you? What family members are working with you? Are they ready? Are they going to be ready in your time frame? We have to look at all those things before we can decide whether selling, staying, merging, changing, doing a strategy, all those things are what follows that initial assessment.

So in my mind, it’s assessing the business with the family, getting alignment on what’s best, then make a development plan forward. Great. Thank you, Mark. I’m gonna go down the line there to Jim, Jim g. How are you today?

I’m good. How are you? Good. Very good. Welcome.

So my question to you is when you get involved with multi generation family businesses, what are 2 of the most significant risks you’ve seen in navigating from 1 generation to the next generation? Yeah. I I took a little different tact, when I when I got the question. So I I saw it slightly different. One was somebody new, like Julia, who’s just coming into the business, moving up 20 years or 50 years, whatever.

And then the other thing was somebody had been working for a while, and now it was a situation where the owner wanted to pass it on to daughter, son, nephew, whatever, somebody in the family. And so I was thinking that in the number one scenario, which was somebody was there for a short time, I thought one of the best things you could do would be to have that person work in a different plant. I’m a little biased to that because that’s what I did with my son. Because he came to me, and he said he wanted to be in the business, and he didn’t know anything about it. And I said, you’re not coming just walking in here and being in the business.

That doesn’t work that way. So I made him, work for another company. And one of the best things he did was he was on the route with the route person delivering. I want you to understand, when the rubber hits the road, the way things really are. You know, we’re up here.

We’re having this great meeting, and we’re talking about things, which is good. But a lot of times, you don’t understand the mentality of the right person and the problems he has. And you need to understand that. You need to see what’s happening there. I know a owner of a very large company once a month, once a quarter, he goes on the he goes with a Rautman, and he says that’s the best thing he does.

He thinks he gets the most information when he arrives with the Rautman. And all of a sudden, Rautman says, we’re doing this. He goes, we’re doing this? How long have you been doing this? We’ve been doing it for a long time.

This is stupid. He says, yeah, everyone says this, thinks it’s stupid. So he calls up being the president makes it a little easier to call up and say, we’re not going to do this anymore. We’re going to change this. So those are the kinds of things that you learn.

And I think for a new person and an old person, too, but particularly a new person to be with another company and or together being on the route is something that I think is a great idea. The second part of this is, when somebody is ready to transition in other words, you’re getting older, and someone wants to buy the business from you or take over, what what are you gonna do? There’s 2 variations. One variation is, okay. In 3 years, I’m going to pass this business on to my daughter, and it works exactly like that.

And that’s fine. The other one is, in 3 years, I’m gonna pass on to my daughter, but something happens. You pass away. You’re incapacitated somehow, and that becomes a problem. One of the key things is that you need evaluation from an outside source.

By the way, if you make up your own evaluation, the IRS can challenge that. You say, yeah. I’m gonna this is the price. You just decide. You and your son, daughter decide this is the price you’re gonna have.

They can challenge that. But forget that. When the owner is there and he has evaluation and the owner buys into the evaluation, then if anything were to happen, then everybody else who was involved says, yeah. Yeah. Well, the owner agreed to this.

This was what he thought the valuation was. And so that’s good because you could end up with your wife who may or may not know anything about the business. Let’s say she doesn’t know anything about the business. Now she has to negotiate with your owner’s cousin to buy the business, and now we have a little bit of a fight over what the actual amount of the business is. So I’m gonna interject here, Jim, because I said you’ve said 2 really very, important pieces of the conversation, and one is really best practices as we we’ve heard from both gyms, is really when you’re coming into the business is, you know, look at that, new next gen coming into the business and best practices that they work outside the business.

You’ll get variations from 2 to 5 years outside of the business. But again, the ability for them to gain their own identity away from mom or dad or, you know, aunt or uncle, those are important things. I think the other thing that Jim said that’s really good is we don’t think about it often. So if you don’t have your crisis management plan in place as a business owner, you know, what happens to you if, an untimely event happens, k, and that’s not in place, I would, leave today and go do that right away. So I’d encourage you to do that.

And, again, with valuations, same thing. If you’re not on a regular schedule of getting valuations, look at that as part of your checklist plan. So those are really, really good good, checkpoints there, Jim. Thank you. I’ve I’ve got a question now I’m gonna open up to all 3 of them.

So it’s kind of like, you know, Jeopardy, whoever slaps first is gonna is gonna get the opportunity. Okay. So what is one piece of advice that you can give a next gen coming into the family business? So all of a sudden, we we get that that individual, that niece, nephew, son, daughter that wants to come in and they say, hey, I’m really excited. You know?

Went to college, went to trade school, whatever. I wanna come into the business. What is that one piece of advice that you feel is paramount? I’ll throw my thought out there. So what I’ve seen is when I talk to owners, the ones that are struggling the most with succession is when there’s a family member working in the business that isn’t as passionate as they are.

They’ll even say that. They’ll say, well, I’ve got my son or my daughter in it, but I don’t think they think about the business quite in the way that I do. Probably not going to work out as well for them. If someone wants to come back in this business, I think this is a business built around passion. When you talk to people in the room, when we get together, it’s something that people are just passionate about.

I think if the next generation wants to get in, they have to have that as a foundation, and that can be successful. It’s not just a numbers game. It’s it’s it’s something deeper than that. And I think that the businesses that are the most successful have that and convey that to the family members. Yeah.

I agree. The other thing I would say is I told both of my kids that, you’re welcome to join the business, but prior to joining the business, you need to get a degree, you need to work outside the business, for a period of time. And then one thing I remember telling Julia, just before she started was, look. This is my thing. And if you get there and figure out that it’s not your thing, you’re not locked in.

You’re not stuck. And you have the right to say, you know what? This isn’t for me. It’s important because they do have to have that passion, and they can’t feel like they’re trapped because that’s just kind of a terrible place to be. Jim?

And when you have somebody come into the business, I think it’s important to try different things in the business that ordinarily they wouldn’t do. You know, it’s the son of the owner, and he’s gonna be in marketing. Well, that’s great. But I’m a great believer in I think you need to go I’m I’m not gonna keep repeating myself, but I will say I’m the right one. Or maybe you should go with the salesman, or maybe you should work out in the plant for a few days and see what it’s like to get a feel for the what the people have to go through out there and how they feel about things, so you really understand the business as you know, it shouldn’t be a top down.

This shouldn’t necessarily be a bottom up either. I’m not saying that. But I think you have to understand the mentality, and the problems, and the things that people go through to really understand it, and what everyone says here. I mean, if you don’t have a passion for it, then it’s not going to work no matter what you do. I appreciate that.

Thank you, Jim. And I also think it humbles you a little bit, right, when you’re coming in as a daughter or son of the owner, a lot of times in the work we do, we see entitlements and I’m that you it doesn’t happen with Juliet. No no entitlements, but, we see that and and the opportunity to get the next generation really, really being able to see what’s really happening from all around the organization, you know, brings humility to it and brings respect for the people that are working within the business. So appreciate that, Jim. Thank you.

So sometimes you do see team members giving deference to the owner’s son or daughter. And I’ve had to step in and say, what Julia said is not correct and nobody around this table is calling her on it. That’s wrong. It works both ways sometimes. Sometimes, the owner’s kid gets deference, and sometimes, the owner’s kid gets a pile of shit.

It shouldn’t be either, but that’s the territory that you’re walking into. And you gotta understand that. And as that next gen leader, that’s the territory that they’ve gotta work with. And they’ve gotta they gotta work through that and be productive and excellent at what they can do. They can fail, but they have to ultimately be really excellent at some things and show that they do have a chair or a seat at the table.

They deserve it. So I have a, quick question for you, Jim, kind of not on not on my notes here. So you have another son, Dan. Mhmm. Dan’s in the business or not in the business?

He’s not. At one of the family business meetings, we kinda went around the table, and Dan and Julia you know, at this point, Julia wasn’t in the business, and she expressed interest in the business. And my son said, I’m 10% interested. Well, that’s at that point. He’s in college or he’s just graduated.

And at that point, he’s just saying, dad, I don’t wanna hurt your feelings, but I don’t wanna have anything to do with your business. But you never know. It’s been a few years, and and we haven’t revisited that, but you never know. He’s blazing his trail on his own right now like Julia did, and, we’ll see. So how do you handle the family dynamics between what’s happening in the business and then the family dynamics on how what could be happening on the home front.

That’s a real problem. He’s talking about you, Jeff. We don’t have problems on the home front. Right? It’s all just peachy keen.

I like that, Julia. Peachy keen. Yeah. So how do you separate that, Jim? I I I think I think that to change it slightly, the the question, You know, a lot of times, we talk about, well, this person who’s new doesn’t understand everything.

But the other side of the coin is, the person that’s new brings in fresh ideas and thoughts that you were incapable, didn’t understand. My son, computer guide, I’m not. So he brought that all into the business. So there were lots of things that you can bring to the business. So it’s not all, well, they have to understand how we do it here.

Maybe the way we’re doing it here needs to change a little bit too. Yeah. So being open to new ideas, new conversations. I think sometimes, you know, owners are this is how we do it because we do it. And and sometimes owners are open to new ideas.

And, hopefully, you are open to new ideas because it’s kind of a you’re going downhill if you’re not open to especially now the way things are changing so quickly, and technology, and all kinds of other things. Very good. Mark, you had something to say. Yeah. I think to latch onto what Jim’s talking about, I do hear kind of the patriarch of the business say, describe their kids that are in the business as they do things a little differently than I do, or they run a little differently, or their take is a little different, or this is my style, that’s not theirs, I’m not sure theirs is going to work, I’ve even heard.

I think, you know, one of the, it’s difficult to do, but the world is changing, and leadership styles are changing. I think earlier on, I know know you have to be careful, because it’s the family members that are getting more responsibility in the business, they have to earn it. But I think giving them more of that responsibility earlier on, so they can kind of prove their metal, prove their style works. What I often what I’ve seen with businesses, when somebody comes to me, and let’s make up some numbers, They’re 60 years old, they’ve got a son or daughter who’s been in the business for 10 years, but they’ve run it their way the whole time. And now in 2 years, they want out, but they’re not sure the son or daughter can run the business.

Well, that’s not going to work. So at some time between when you were 16, you want 2 years left, you know, sometime before that, you probably had to start giving them more rope, more leash, more responsibility in the business, more of a chance to show that their style can work and be effective. I I think that’s really, really insightful because when you look at and I like to call succession planning because I think that word secession kinda gets people a little bit nervous, like, okay. They’re kicking me out. I’m going to the curb.

You know? They’re coming in. I’m out. You know, what am I gonna do with my life? There’s several good books on that.

Yep. But, so that’s why I like to call it continuity planning. And, you know, really when you’re looking at these generational changes, how do you create continuity? Because continuity says, okay. I have to be forward thinking.

And if I wanna retire in 2 years and I’ve had a son or daughter or niece, nephew, or several of them in business, and I haven’t put some thought into it, and in 2 years, you wanna exit. That’s not continuity. That’s running off and dumping. Run and dump. Right?

So really, we say that good continuity or succession planning really needs to start at least 5 years out. So really getting together and really looking at what are the areas that next generation coming in need to start gaining some bench strength in, so how do you let go a little bit so they can lead more? More? So I think that becomes really important. Yeah.

I think my dad, made me president of the company when I was 32. He, continued on with the business obviously and and watched me, do things differently. Had some toe to toe discussions occasionally about, how things were going in one direction or another, but he was smart enough to to give me 8 years to, experience success and experience failure while he was around so that, he could coach me, if that’s what she called it occasionally. He could coach me and, you know what? That worked well or, hey, that that didn’t work out so well, did it?

And, and so my job over the next 10 years is to step back more and more, and for Julia and Dan and the leadership team to step forward so that they do have plenty of runway to experience things and succeed and also fail. It’s really good that you said that having that runway, that runway is pretty critical. And for anybody in the room that is really looking at when are you starting to, let go a little bit more and become more of a mentor, you know, it’s not easy to become that mentor, that coach like your father did. So again, from being the doer and the leader to mentor coach actually takes some development work. So when you think about that, you know, it’s different to coach than to lead.

So Yeah. Now for a brief message from TRSA. Gather with top industry executives and emerging leaders to enhance information sharing and relationship building at this year’s annual conference. Begin with t r s a committee meetings, including 30 minute open discussion round tables on industry issues such as market and job specific perspectives and ideas. Network and socialize at the reception following the meetings.

Professionals from managers up through CEOs and owners are encouraged to participate. The management development program provides a day of breakouts and general sessions featuring subjects beneficial to leadership of all levels. Next generation executives, emerging leaders, general managers and other plant based management, graduates of EMI and PMI, owners and c suite executives will be inspired by keynote speaker, Steve DeFilippo, restauranteer and author of it’s all about the guest. Steve’s family has been deeply involved in the laundry business and he’ll bring that perspective as he shares the deliberate steps taken to transform his upscale restaurants into multiple locations. During his presentation on mastering hospitality for business.

Breakout sessions feature the best of the best top rated speakers and topics from TRSA’s range of programs covering communications, management, recruiting and retention, and safety and skills development. Close out the day by sharing experiences and networking at Wednesday’s welcome reception. Opening keynote Bill Taylor will rev up the audience with questions such as what separates us from our rivals in the marketplace and what holds us together as colleagues in the workplace. Here ideas, diagnostics and case studies and be guided to a new world of work and a cutting edge agenda for recruiting, evaluating, organizing, and retaining talent. Receive a complimentary copy of Bill’s most recent book, simply brilliant.

How great organizations do ordinary things in extraordinary ways following his presentation. Get informed on trends and get tips with general session topic, riding the digital wave with Andrew Littman, MIT Media Lab and co director of Digital Life. This highly animated engaging presentation will translate the latest digital technology trends into clear business ready insights that are effective in any industry. The closing keynote speaker, presidential historian and Pulitzer prize author, Doris Kearns Goodwin, will discuss leadership in turbulent times. Inspired by her current New York Times bestseller of the same name, Doris’ engaging and entertaining address will bring to life some of the actions of the most successful US presidents to provide perspective for today’s leaders and to underscore that the US democracy has survived and even thrived through troubling times in the past.

Receive a complimentary copy of this book following the keynote. Unwind with colleagues by participating in a secrets of old Boston scavenger hunt, a competitive yet fun small team activity for all conference attendees. The TRSA annual awards dinner will recognize and celebrate the contributions of top industry leaders with the presentation of the operator and Maglin Biggie associate lifetime achievement awards. The Hyatt Regency Boston Harbor is close to the Logan International Airport and offers free shuttles for your convenience. The city of Boston is a 15 minute ride via water taxi, Uber, or subway from the hotel.

Register by August 9th to save $100 on registration. Take full advantage of TRSA’s 106th annual conference package this fall in New England. View the full brochure and register today at atwww.trsa.org/annualconference. Now back to the episode. Now I have one of my favorite questions, leading the family business to help the transition go smoother.

I’m gonna start with Jim on the end. Okay. Alright. I would say and I’m not talking about Jim, because I know Jim. I’m sure you’re not.

But for everybody else, I I think the point is, to keep an open mind. I think it’s it’s just you know, I know it’s kind of a simplistic thing, but I think somebody comes in and they come new ideas and new thoughts. And there’s a tendency, no, no, no. And I think to keep an open mind and really evaluate what people are doing. And the opposite side, if it’s really a stupid idea, then to say that too.

But I think it’s important. It seems a bigger problem that the owner can’t accept advice from somebody younger, particularly their son, who they grew up with, and and now this is a baby. And all of a sudden, this baby is working in the business, and this baby is telling how to run the business, and it’s hard sometimes for some people to wrap their head around that. Yeah. Very well said.

Very well said. Mark. You know, I think there’s 2 main pieces to the secession piece. There’s the how do you convey the leadership piece, which we’ve talked about quite a bit here. There’s also the how you convey the value piece.

You know, one of the things I’m learning a lot talking to folks is for those that are ready to retire and pass it on, a lot of the value of the business is in the business. They want to retire, they’ve lived a lifestyle because the laundry business allowed them to live that, well now they’re going to retire. Okay, so where’s the money coming that’s going to fund the retirement? Well ideally, it would come out of the business, right? Yeah, they’ve got some money set aside, but let’s assume that most of it’s in the business.

Well so now how are you going to convey that value from the business? So I’m going to make up some numbers here. If a business is worth 6 to 8 times EBITDA, you probably can’t go to the bank and get more than 3 times EBITDA. You can’t borrow to pay your parents to take the business over what the business is worth. Owners can say, well, I’ll take less, that’s Okay, my kids can have it, and I’ll take You can negotiate through all that stuff, but no matter how you slice it, it takes a lot longer than 3 or 4 years to figure out how to actually cash flow this transaction.

Because you’ve got to have some value come out of it, because you’ve got to retire on something. And so I think most of the time, my math would say 10 or more years in advance of retirement is probably what it takes to realistically get the cash funding out of the business, to give you the value you need to retire and not strap your kids with a whole bunch of debt for 20 years, because then they can’t invest in business. So just being pragmatic. That’s really great. Well said.

Thank you. Jim, how can you make this transition a little smoother for Julia and Dan and maybe even your wife on the family dynamic side of it? Yeah. My wife said better or for worse, but not for lunch. So I’m at the end of a 20 year note.

My dad and I negotiated for part of it. My siblings who had stock wanted cash naturally, and they deserved it because, oh, wait. Yeah. So I went to We’re not gonna go there right now. That’s the family dynamic.

Oh, that’s the best part. Yeah. So I went to the bank for for that cash, told the story, and and did get that financing for that. But my parents had the foresight to to do a 20 year note to allow me to, cash flow it. They also, had the foresight to you know, I had 12 a half percent at that point.

They gifted me another 12 a half percent, which one of my siblings was livid about. Told me to find the cash value of money to me. And and I said, thank you very much. It created a lot of hard feelings. And and it was a few years before we kinda, you know, worked through that.

What I’ve been doing is is putting away as much money as I can possibly put away so that I depend less on the value of the business. And so that I don’t put myself or my kids through, some of the things that that I went through. I want, you know, them to have the opportunity, to have a good solid cash flow to pay their bills in a more timely manner and be able to grow the business. I’m restricted at at the level I can grow the business because of this note that I’m under, but I’ve got 6 more payments to make. And then I’m out from under.

So it’s a plan that worked, but it takes time to develop a plan. And everybody’s plan is different and everybody’s appetite for for risk and and borrowing is different. And so you have to work with somebody who somebody from the family business consulting group or or somebody who’s been through this. You have to work through those experiences to really understand what your options are, because there are a ton of options. And then what you feel comfortable with as the owner and what your kids feel comfortable with, as buyers.

Very good, Jim. Thank you. Thank you. And it’s interesting how you talked about the other siblings because that does create a lot of rift in families, families that that that rift is so great, it never gets sewn back together. So, and I had another question here.

This is one that came in from members of the audience, but let’s talk a little bit about professional development and formal training for family members and non family emerging members. So again, so tell us how you determine the development needs of the next generation or other emerging leaders, but let’s first focus on family members. How do you determine the development needs that they need to, acquire in order to step into higher level roles and then how long do you expect them to be in a development program? And then the biggest question is how do you know if they’re successful? How do you measure success?

Well, I think you I think you set the same standards for, your your kids that you do for your other team members and team leaders, and and expect the same success on measurable objectives and and deadlines and whatnot. And and so, I mean, you measure it the same way you measure, the rest of your team. The the differences with, a next generation successor is they do have to be as as as Mark and Jim have pointed out, they have to be exposed to a lot of different areas and riding their routes and going out on sales calls and going out on service calls. And and and so besides the formal education, they have to have that varied exposure and they have to, you know, they have to lead somebody. They have to lead a group of somebodies and then they ultimately have to lead the entire company and and hopefully do that while you’re still around to coach them and and provide them with, feedback on on what what what’s going well and what’s not going well.

And Jim’s exactly right. Julie has a different style than I do. Thank God. And so we all have different styles and we all bring different things to the party. And it’s it’s all about putting a team together that supports each other and backs each other up and covers each other’s blind spots.

So. Thank you, Jim. I have a little diff do you want to speak to this? Okay. Great, Arne.

Thank you. I think the one thought about that, you know, from my experiences with AmeriPride is sometimes when I meet with folks, I ask them, you know, if they have a board or an advisory board, and sometimes they joke you’re looking at it, right, because that’s their their own advisory board, but some actually do. And so one thought would be family members who are active owners in the business don’t have to work in the business to be helping with the business. So at AmeriPride, one of the things that we did, one of the things that Bill really engineered was getting the next generation of leaders on a rotational membership on the board, because a lot of those folks lived in other states. They had other careers.

They might be doctors or lawyers or financial people or whatever, but brought a lot of business and world skills that they could bring back to the company. And so we had a rotational thing. Some of our strongest board members were becoming some of those G4 members that were just starting to be on the board. So I just want to throw out an idea that you can tap into people’s experiences. They don’t have to necessarily work in the company, but you can tap in tap into them in more of like a board or an advisory level as well.

Just a thought. Thank you, Mark. I think that’s really a powerful way to utilize family members that aren’t actually working in the business and bring in their expertise and their world experiences. Jim, how about you? Well, I think there’s 2 sides.

One side is the educational within the TRSA groupings, all of the seminars they put on, The Clean Show, Cost Bureau is a good idea. So so you’re finding out specific information on what other people do, But in addition to that, it it would be nice to get an MBA or go to college and take some advanced courses in management and things like that. So kind of a management that has nothing really to do with this industry, and at the same time, I think you wanna get information about the industry itself, how things are done. Like I said, cost groups, TSA has all kinds of seminars that are great. Just come into The Clean Show is a good idea.

A lot of people say, oh, I’m not going to The Clean Show. So jeez, you know, just come here. You just learn by walking around, I think, is a good thing. Very good. Thank you.

Appreciate that. So now I’m gonna start with Mark and Jim, and hold your last there, Jim. So, how do you approach, have you been involved in a situation where you have been in companies or gotten involved in companies where you’re there and there’s a family member that’s really failing in their role of the business, and that owner or owners can’t see it. How do you deal with that? Yeah.

Unfortunately, we’ve been in various situations with that situation. The problem is it it’s hard to tell your brother that he’s doing a lousy job, and everybody knows he’s doing a lousy job. You just have to pick it up and and say it. And and I think it helps when someone from the outside comes in, not necessarily saying us, but anybody from the outside because it’s kind of brother against brother or brother against 2 brothers or all that. Had one situation with 3 brothers.

And all 3 brothers, nobody they didn’t like anybody of the other brothers. And so if they brought us in or anybody, not necessarily us, to kind of referee the thing, and I think that helped them. So this was an outside person who had no preconceived notion, no agenda, they didn’t know anybody, has nothing to do with them, and that seemed to help and seemed to get things going. In this particular case, one of the, brothers, the the other 2 brothers decided that he should leave, and he did. So that was a a good thing.

Jim? Yeah. So my dad approached his brother and brother-in-law and said, it’s either you or me, And had a terrible experience that I won’t necessarily get into the details about. But because of that, my dad had the foresight to bring in the family business consulting group. You know, this is 25 years ago.

We had, you know, 3 years of of family meetings. And he did that because he he knew he had a a cast of characters in his family, his kids, that that had, a lot of type d personalities and a lot of strong feelings. And it was important to kind of understand where everybody stood and how we were gonna do this. And still, it was difficult. But, you know, we’ve had situations where we’ve had to terminate employment of of a cousin of mine because of unfortunate circumstances.

And and so, ultimately, you have to treat people exactly like every other team member. And if their behavior or their performance is unacceptable, then, I mean, that’s that’s that. Good information. So I want to ask a little bit about what outside development opportunities do you recommend for next gen for aspiring leaders, more in the succession planning, the realm of not so much the technical aspect of this industry, but more on, you know, leading a family business in governance and family operations and family dynamics. Are there any programs that you strongly recommend for next gens that are up and aspiring?

Well, in most, most major markets, there are family business, councils. In Chicago, we have 2 groups. 1 with Loyola and 1 with DePaul. They’re in Denver. They’re in all the major cities.

And so I’d strongly encourage, you to be involved in those. Julia is in a forum group, meets once a month with both peers as well as owners of companies, and share experiences, kinda like YPO. So it’s a, that’s a valuable way to gain education, and I learned so much from being involved in the cost bureau. I didn’t have a production focus. We started in 1985 with with Jim’s group, and I learned a tremendous amount, from that.

And and I hope Julia can can learn a lot from from that group as well. The more you can the more plants you can visit, the more seminars you can go to. You know, you get a golden nugget from each one of these and brings home value. But that peer to peer experience where people are experiencing family business development, I think, is critical. Okay.

Very good. Thank you. Mark? I think so. Yeah.

I mean, I would just echo that. I think there’s so many opportunities, you know, tierSA, regional associations, cost groups, I guess my advice would be like with the family council and those kinds of things, go get outside advice. Not just because of the expertise of it, but also it’s just an objective third party that can help a family navigate through something that can be very emotional, very personal. I would always recommend going to get some outside help on how to structure running the family business, how does the family manage the family, how do they manage the operation, how do they manage the session? How do they do all those things?

You know, you need outside help to do that stuff. That’s not something you just wake up one day and know how to do. So Yeah. Very good. Thank you.

Jim, anything to add? Yeah. Well, I agree with everybody. I’m a little biased, but I’ll say it anyway. I think the cost group, where it’s more of a 1 on 1 thing, where 10 owners or 12 owners sitting around the table.

It’s pretty good. It’s, like, fantastic. I I didn’t come up with the idea. The idea’s been around for 1,000,000 of years. I don’t mean that.

But the idea that that someone could speak, and since each person’s independent, nobody has to hold back. Where if it’s in the corporation, I think that there’s a little concern about if you say something about your boss, it might not be such a hot idea for your career. Whereas at the cost bureau meeting, people people say everything they wanna say, which is the whole idea of it, which is the whole and some people don’t like that, but you learn an awful lot. Very good. So just a couple of things if you’re taking notes.

A couple of resources, that you can look into is if you Google ffi.org, which is the Family Firm Institute, it’s the global professional organization, just like TRSA is for your industry, it’s for family business practitioners, but if you get on that, there is a directory. If you click on the directory, it will you can click on family business centers and there is 110 across North America. They’re all, related to an academic institution and get on those sites, the ones closest to you, and you’ll find all the forums they’re doing, all the seminars they’re doing, the peer groups they’re doing, so that might be a benefit to you. The other thing is if you don’t subscribe to the Family Business Magazine, the Family Business Magazine is a wonderful resource. It’s published, 6 times a year.

It has a, I want to think, a monthly, electronic copy that comes out also, but it highlights best practices in family businesses. It also highlights practices in family businesses. It also highlights different family businesses, and it also has 5 specific family business, conferences a year that are just for families. So you’re not gonna get any consultants there. You’re not gonna get any anybody but a family family groups coming there.

So those will be some nice resources for you also. K. So this is another question. What advice do you have for those individuals here in the room that are getting close to bringing in a next generation? They’re thinking about, do I bring in the next generation?

Is it time? They wanna come in, how do you tee that up? Well, I think it’s important, as I mentioned, that set the expectations that, you know, you need to set some ground rules as far as working someplace else, get your degree, and then this is how you’re gonna come in the business. And once you come in, you’re gonna report to somebody else, and and you’re gonna have, you know, daily responsibilities and and whatnot. And and set a plan up, so that they can, be integrated into the into the team.

And Jim points out, you know, ride routes, be out in the plant, experience what what’s going on, build relationships with, fellow team members, and then check-in with them. Julie and I are supposed to, go out to lunch occasionally and that’s kinda few and far between, but I think we gotta get back to our our lunch schedule. Those are some ideas. There are a number of great books as well that Ward has written and and John Ward and a number of other people have written. One of the worst things that you can do with a new family member that you bring in is give them the project that nobody else wanted to deal with.

And they fail at that project because it’s the project from hell. And then it reflects poorly on them and reflects poorly on you. Mhmm. So it’s important to give them regular responsibilities. And and then once they’re ready, they can take on project from hell, which Julia is in the middle of right now, but she’s about to crush it.

Right, Julia? Anyway, she’s in the middle of doing a major reroute project. So it is definitely project from hell. But she’s been there two and a half years, so she has the confidence to get it done. She was ready for it.

Mark? Yeah. I agree with, you know, having if someone is gonna be brought into the business, hopefully, they’re out doing something else, developing some skills outside of the business to start with, very important. I’ll speak a little bit to the the one Steiner in our company that, attained the executive level. There was a plan for, and Andrew Steiner, if you guys know Andrew, there was a plan for him, and he got moved around the business a little bit, but not outside of his skill set, not asked to do something he wasn’t capable of doing, and not promoted to another level until he had earned what any other employee would have had to have earned.

And so when Andrew got his promotions, it was like, almost, well, finally. Like, he deserved that or we were almost expecting that, not, oh, he just got moved up the organization because last name was Steiner. And unfortunately, when you’ve got the last name of the owner, there’s gonna be a little bit more, you know, people are gonna be watching a little bit more closely. Sometimes it’s almost even tougher for them, I would imagine, because they always have to earn a little bit more to get get the promotions or whatever. But having them go outside the business, having them choose to come into the business, because they want to be there, and then treating them like you would treat any other employee, making sure that they’re set up to be successful.

Those are pretty good pieces of advice. Very good. Jim. I wanna see passion. I wanna see somebody who really wants to do this, not just kind of, well, yeah, I’m the boss’s son, so therefore I’ll just be working here, and, you know, I’m all set.

No. I wanna see passion from you. That’s what I wanna see. I wanna see that you really wanna do this, not just because because you have lost a son and all that. Passion takes you a long ways.

Mhmm. And and I’d like to see, I’d like to see somebody like that. Also, the utmost obvious thing, I don’t think I have to say it, but, you know, not to somehow coerce them or in some way get them to join the business because they’re supposed to, because this is the 4th generation. So they have to wanna do it, but it’s more than just do it. I think passion.

That’s what I like. Yeah. I like that word passion. Absolutely. Absolutely.

I think we’re gonna wind it down right now. So I wanna thank Jim and Mark and Jim for all of your wisdom and knowledge. Thank you. I hope you enjoyed that discussion on succession planning and found some useful takeaways on getting the next generation of leadership involved in your family business. TRSA also has a next generation executives committee that recently gathered in Chicago for a full day of industry education and networking.

The morning kicked off with a presentation titled, TRSA Next Generation, Forging a Path to Excellent Family Business HR, and wrapped up with a trip to Wrigley Field for an afternoon Cubs game. If you’re an up and coming leader in your organization and would like to join TRSAs next generation executives committee, send us a message at podcasts at trsa.org. That’s podcasts at trsa.org. If you liked what you heard today, make sure you go back and listen to our previous 18 episodes of the podcast and subscribe, rate, and review the show. We’re available on iTunes, Google Play, and Stitcher.

For more information on the Linen Uniform and Facility Services podcast, visit www.trsa.org/podcasts.