Transitioning the Family Business
Dean Fisher says it was even more difficult than he expected.
On Dec. 31, 2013, he walked out of his shop, CARSTAR Yorkville in Yorkville, Ill., for the final time as an owner. With him, he carried pictures from his office, awards he had racked up as a top CARSTAR franchisee, and 20 years worth of business ownership experiences.
“As an owner, you need to realize there will be this definitive day,” he says. “That was really tough for me. Harder than people probably know. There’s that day when you’re going to pick up and you’re going to walk out. It’s a hard moment for an owner, but it’s a healthy moment for an owner.”
The next day, Fisher’s 32-year-old son, Justin, took over as sole owner of the shop, while Dean took a new position as vice president of operations for CARSTAR corporate. It appeared to be a swift, seamless changing of the guard, but it was actually preceded by a careful transition plan.
“Even before I left my other position to come here, everything was already negotiated between us,” Justin says.
Thanks to the carefully crafted plan, which included job shadowing, a focus on systems and numbers, and the inclusion of Justin’s strengths from outside the industry, the transition—initially intended to take three years—was completed in 18 months. And since then, CARSTAR Yorkville has continued to maintain its impressive $2.2 million annual revenue and consistent spot as one of company’s top 25 franchises.
Hiring for the Job Description
Since opening in 1994, CARSTAR Yorkville has proven to be one of the company’s most successful locations, thanks to Dean’s focus on systems, SOPs and lean processing.
But after running the business for 20 years, Dean says he started considering new challenges and opportunities.
“In beginning to give consideration to stepping out of the business, my son and I started talking about a transition,” he says.
After receiving a bachelor’s degree in business administration, Justin had spent most of his career working as a project manager for a manufacturing company that designed and built cafeteria and food service environments.
After taking that company national, Justin says he was interested in purchasing a business. When his dad brought up the idea of taking over the family shop, Justin says he surprised himself by giving it some serious thought.
“I wasn’t the guy who wanted to work for my dad,” he says. “I wanted to make it on my own and be successful on my own.”
Justin says that, though he was new to the industry, he felt his experience as a project manager, specifically his work building a project tracking software that incorporated every aspect of the manufacturing company, would lend itself well to a repair environment.
Although Dean is no stranger to hiring from outside the industry (both his production manager and general manager had no prior industry experience), he says he thoughtfully considered Justin’s qualifications before presenting the offer.
“My advice is to very carefully examine, particularly when it’s a family member, if they really are the right fit for the job,” he says. “In other words, we need to have a job description and hire for the job description and not conform a job description to the person. When I looked at Justin, I tried to determine if he fit the ownership skill set. I knew that with his management background, he would be a good fit.”
Before Justin officially came on board in 2012, the father and son sat down to hash out a three-year transition plan that included a firm end date for Dean.
“You need to know when you’re done and when you need to get out,” Dean says. “I think the most important thing you can do in a transition like this is empowering the person. Continue the three Cs: coach, counsel and consult with them.”
Learning the Ropes
Because Justin had spent little time in a shop, Dean says the first step of that plan was having Justin shadow various staff members, starting with the production manager.
“The production manager is intimately involved with your front end and the scheduling and the process of the cars, getting them into play and getting them staged for the production process,” Dean says. “I felt that [Justin] had good managerial expertise already, so if he could get through that, he would have a greater understanding of how our business worked.”
After that, Justin spent the next six months managing the estimator and the general manager. During this time, Dean says his own focus on processes and SOPs became even more useful.
“When you can build a shop and you have certain SOPs in place and certain processes in place and you adhere to that and you have a disciplined management system for your production flow in the shop, people can insert themselves into your facility and manage it really well,” Dean says.
Besides learning the ins and outs of the staff’s responsibilities, Justin says the shadowing also allowed him to earn the respect of his soon-to-be staff.
“I’m a big advocate of ‘the attitude reflects leadership,’” he says. “I didn’t want to be the young son of the owner taking advantage of the situation. I earned my way here and deserve to be here. I came in here with that mentality and I didn’t take for granted any respect level from the guys. That’s the way I wanted it to be.”
Customizing the Workflow
After becoming trained in the estimating process and working with the management system, the next part of the transition plan was Justin’s biggest undertaking yet: customizing a new management system for the shop.
Justin installed a new management system (Mitchell’s Repair Center, which is referred to as the CARSTAR Solution) and switched to cloud-based software to streamline the communication happening between different departments of the shop.
To install the new system, Justin says he relied on his previous experience building project tracking software, along with his recently acquired knowledge of every aspect of the business and how the different departments worked together throughout the repair process. Customizing the system, he says, forced him to evaluate each aspect of the business and how they could best work together.
“After learning each person’s responsibilities, I was able to tailor their job descriptions with an entirely new workflow for the new systems,” he says. “That was a huge benefit to the implementation of the new systems that we have available.”
Dean says that assigning Justin to the job was both a way for Justin to utilize his previous experience and gain a deeper understanding of the processes in the shop.
“I knew that if he was intimately involved with the IT resolution for our management system and strengthening that process and working with the CSR and our office manager and things like that, then he would become intimately involved with the business,” Dean says.
Anticipating the Next Step
To keep that eye on business oversight, Dean says he and Justin met on a weekly basis for management meetings, which included learning the reports, refining SOPs, going over the significant KPIs the shop tracks (cycle time, closing ratio, and CSI), and the analytics of understanding how to remain profitable and maintain proper margins.
The meetings were also a way for the duo to check in and evaluate how the transition was going. Eleven months in, Justin had taken over managing, and Dean says he realized the transition was moving quicker than anticipated.
“I was beginning to realize after a year that Justin had some strong attributes, a lot of talent, and was picking up the business very quickly,” he says. “So this probably wasn’t going to be a three-year transition. I was beginning to look at some of my business interests so that I could get away from the business because I realized that I wasn’t ready to retire.”
That’s when David Byers, CEO of CARSTAR, approached Dean at the end of 2012 with the offer to become vice president of operations for CARSTAR Corporate.
“That was unexpected and caught us off guard pretty substantially,” Dean says. “But it was good timing for me because I think one of the issues when you’re transitioning, particularly with a family member, is that you have to be smart enough to understand when you need to get out of the way and allow someone to make their own way.”
Although the initial succession plan was planned for three years, the new position at CARSTAR meant that Dean would be out of the business by April 2013. What that meant for the shop was that instead of allowing Justin to continue managing while Dean slowly phased out over the remaining two years, as they had originally intended, Dean only had four months until he stepped out of the business.
During those next four months, Dean says he turned over the day-to-day operations of the business completely to Justin and acted more as a hands-off consultant.
After Dean began working in the new position full time in April, he and Justin structured in monthly reporting meetings for the balance of the year.
“We would have a call to review a standard monthly reporting packet and then we’d have a weekly call to talk about any concerns or issues that he was working on in the business,” Dean says. “I also had a live meeting with him on a quarterly basis.”
Justin, meanwhile, says that the transition to becoming the sole owner was practically seamless.
“After being here a year, I kind of ran with it,” he says. “Having those systems in place offered us an opportunity to jump to the next level a lot quicker.”
Becoming the Sole Owner
At the end of 2013, Dean decided to move the transition phase up again, and the Fishers created a contract sale for Justin to purchase the business. The purchase agreement is a contract sale, as well as a triple-net lease on the facility, which Dean owns. By January 2014, Justin was the sole owner of CARSTAR Yorkville.
“I’m very comfortable with it,” Dean says. “It’s a high performing store and it does very well. He’s managed to maintain that high performance, all the relationships with insurance companies and he’s added and strengthened some of those relationships. He is a great operator.”
So much so that not only has the store maintained its $2.2 million annual revenue, it has also improved some of its already strong KPIs and regularly ranks in the top 25 of all CARSTAR shops. The shop boasts a combined driveable and nondriveable cycle time of 5.8 days, a closing ratio of 87 percent and a net promoter score (NPS) of 90.3 percent.
As for Justin, he says his next goal is to prepare the business to run without him and begin looking at expanding to multiple locations.