The son also rises: Next generation takes over
The time had come. For both of them.
A father retired; his son took over the family business.
“Growing up, I never had any intention of running my dad’s store,” said Jeffries Hardware store owner Chris Lewis, about his father, Leon.
“My business is a little different from the usual store,” he said of his Columbia, Kentucky business. “I have a 5,000-square-foot Do it Best store but I also have a 5,000-square-foot electrical basement.”
Lewis has a wife, Megan, and two kids, son Griffin, and daughter Greyson. He’s been married for five years. “I wanted to be an accountant, I thought. After I graduated college, I got a job at our local golf course.”
After five years of that, he talked to his dad and they discussed a plan. “It started out with me working for Jeffries Hardware but then it turned into me buying my dad out.”
[Related article: Father and son – and hammers.]
What motivated him the most to make this transition, he said, was seeing his dad build the foundation – and now the son wanted to keep it growing.
Succession ownership advice
Sam Brownell, managing director for Stratus Wealth Advisors, LLC in Kensington, Maryland offers the following guidance:
• Intrafamily transitions need to be aware of the dueling goal of buying out the existing owner while also having enough cash flow to sustainably run the business, said Brownell.
“Families might think about creating an emeritus position for the outgoing owner as part of the transition plan. This position would provide a salary to the departing owner to aid their buyout and keep their knowledge and connections involved in the operations,” he said.
• The multi-year buyout would help to keep the outgoing owner in a lower tax bracket and the salary would be tax deductible to the business, thus reducing taxable income for the new owner.
• “In any succession, taxes become a major consideration for the existing owner and the next generation. To help manage tax liability, we recommend all owners get an unbiased valuation of their business and then run a post-ownership cash flow analysis to determine if they need the full value of the business to fund their post-ownership lifestyle.”
“If, for example, the existing owner only needs 70% of the value, then setting up a multi-year gift to the next generation can be a great way to reduce taxes on the sale and lower the cash needed for the buyout.”
“What made me decide to take it over was that I saw how successful my dad has been running it, so why couldn’t I?”
Lewis knew they had an electrical department right where it needed to be, “but we didn’t have a lot of plumbers who shopped with us. We only kept 2-4 fittings of each size,” he said.
So Chris Lewis reached out to the local plumber and asked him how he could make it better.
“He gave me a list of what I needed – which was basically the pvc pipe, pvc fitting, and fittings to plumb a house. I said let’s do it and we made room for all this plumbing,” said the owner.
They had to add 1,000 square feet just to keep the plumbing going, he said.
“We now carry 2 to 4 boxes of each fitting. Our plumbing had grown 700% from 2019 to 2023. The transition was simple but not simple,” he said, “it has its good points and bad being a family buyout.”
All that comes with it
There are other aspects to family succession when the next generation takes over – and becomes owner.
“People always think, ‘oh he owns a business and doesn’t work anymore,’ said Lewis. Or, ‘he doesn’t work at all and just has people to work for him.’ Wrong.”
Since taken over Jeffries, for more than a year now, he said he’s working all the time.
“I don’t mean I stay at Jeffries from open to close, but even when I’m not working, my phone is constantly ringing. When I was growing the plumbing department, I gave my personal cell phone number to plumbers and contractors. It was great at the time and still is, but they call me instead of the Jeffries phone,” said the owner.
“There is just so much that goes into owning a business,” he said, since his father retired.
“I can leave whenever I want, or take off when I want, which is nice,” he said, “but I also have to cover when my employees are taking vacation. I have the best employees ever. I could not be where I am today without them. That’s 110% true.”
Succession brings up some finer points from customers as well.
“One thing that kind of gets on my nerves, since my dad owned it before me, is people think he just gave it to me,” said the owner.
“My parents have based their whole life on selling Jeffries as their retirement. People just think I walked in, took it over and reaped all the rewards. I just keep my mouth shut and shake my head,” said Lewis.
The best tip this owner said he could give someone from a first generation transitioning to the next is don’t be greedy.
“Work with each other,” he said. “Help each other out anyway you can to make both sides easier. Taxes are a big thing in a buyout, so remember that on both sides of the coin. It’s not worth getting mad or angry if one side disagrees with the other. Family is all that matters at the end of the day.”
One piece of advice that has helped him so far is this: Don’t get stuck in today.
“What I mean by that is look into the future,” he explained. “I try to imagine something six months to a year from now and how I think it will be—like costs, and will this new product sell.”
He took a chance on their plumbing department and it paid off, he said. “If you feel like expanding a department or improving something, just ask your customers, or reach out to the plumbers like I did.”
Family succession in a hardware store is full of the good things and the challenges, but that is why owners love it, isn’t it?
Lewis said: “I’m always looking for ways to grow and stay above my competition.”
As the saying goes, don’t let it take you over – take it over. At one hardware store in Kentucky, owner Chris Lewis did just that.
