Family-owned businesses are a cornerstone of the American economy, with nearly 90 percent of all U.S. businesses being family-owned or controlled. However, only about 30 percent of family-owned businesses successfully transition to the second generation, and even fewer make it to the third and fourth generations. Succession planning is critical for the longevity of any family-owned business, and it can be especially challenging for gas distributors.
To gain insights into succession planning for family-owned gas distributors, we spoke with Wally Brant, the CEO and owner of Indiana Oxygen. Indiana Oxygen is a family-owned gas distributor, founded by Wally's father and uncle in 1915. Wally is the third generation of his family to run the business and is preparing to pass the torch to the fourth generation. Here are some of Wally's key insights on succession planning for family-owned gas distributors:
-
Plan early and be transparent. Wally's father asked him if he had any interest in the family business before he got out of the air force. Wally decided to come back and join the business in 1979. Since then, Wally has been planning for the transition of the business to the next generation. He believes it's essential to start planning early and to be transparent with family members about the plan.
-
Know your roles and responsibilities. Wally thinks it's okay for someone to be CEO and president, but both roles need to know where their lines are drawn. Wally promoted Gary Halter as the company president, but he didn't know what his responsibilities were. Wally believes that it's time for the next generation to succeed with new ideas and wants to know how top-line managers feel about the succession change.
-
Educate yourself on business. Wally's father studied electrical engineering and started Indiana Oxygen. He didn't take a business course because his focus was getting out of college. Wally believes it's essential to educate yourself on business to succeed.
-
Encourage sweat equity. Wally's two sisters haven't shown interest in Indiana Oxygen. Wally believes in sweat equity and is building the value of the company. Wally encourages Anne and Jay to go out and do something else before they come into the family business.
-
Have clear rules for stock ownership. Wally's parents had an independent appraiser evaluate their holdings, and they owned a minority share of Indiana Oxygen and a farm. Wally has a rule that says if they sell their stock, they must offer it to the other stockholders in proportionate shares. If the company passes on it, they can't try to sell it to anybody.
-
Take advantage of opportunities. When the market took a hit, Wally took advantage of a one-time exemption and acquired a hundred percent of the shares.
-
Build a team with the same goal. Wally thinks it's critical for a family business's survivability that everyone has the same goal, and that everyone gets along so they can work towards it.
-
Hire the right people. Wally believes that it's more important to get the right people in the right seats and make sure everybody's on the same page for the goals.
-
Establish a board of directors. Their primary responsibility is to elect the officers and make sure they perform. The board also has the right to replace board members by a majority vote. Wally believes every company should have a board because something will come up, especially major issues like mergers or acquiring a company.
-
Don't be in the way of progress. Wally's main concern is not being in the way of progress, but he has excellent leadership that can make the company grow bigger and faster.
Succession planning is crucial for the longevity of family-owned businesses, especially for gas distributors. Wally Brant of Indiana Oxygen shares some valuable insights on succession planning, which includes planning early and being transparent, knowing roles and responsibilities, educating yourself on business, encouraging sweat equity, having clear rules for stock ownership, taking advantage of opportunities, building a team with the same goal, establishing a board of directors, not being in the way of progress, and consulting with experts. Family-owned businesses can benefit from these insights and improve their succession planning processes to ensure the long-term success of their businesses.