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Keep it in the family?

Published March 20, 2013
From the magazine

Editor's note: The following article appeared in the March 1 issue of Bicycle Retailer & Industry News and is part of our series of articles on succession in the bike industry.

When Peter Enright agreed to friend Spence Wolf’s suggestion that he help Phil Wood sell the company that bore his name, he took a leave of absence from his nuclear engineering consultancy business.

Somewhere in the process of learning about Phil Wood in order to better sell the business, and seeing Cino Cinelli riding on Phil hubs on a trip to Italy, Enright realized traveling for his engineering job took him away from 9-year-old son Garrett too much. Before long he talked himself into buying Phil Wood, and 20 years later Garrett is the company’s president.

From a son’s perspective, Eric Hawkins saw working with his dad, Howard, at Park Tool and the bike shops he owned as a great way to get more dad time. Sure, he thought about doing other things, but that paled next to watching how his dad handled people and the business.

“My father Howard turned 80 in September and is still in good health. He lives nearby and stops by Park Tool regularly when he’s not traveling,” said Hawkins, Park Tool’s president.

“My dad is overwhelmed when he visits the new place and with Park Tool’s growth in general. We both agree we are blessed and are extremely thankful for our success,” Hawkins added.

Are Hawkins’ own children involved in the business? So far they are not, and while Hawkins is open to them being in the business, he is also open to them doing whatever they like.

Succession is succession, and it is difficult.

Though several businesses have transitioned to new owners, or a new generation, they do not share common succession strategies or business philosophies between generations or companies, yet they have proved successful. 

One difference between a family transition and a change of ownership is the overlap of leadership. Family transitions stretch out years, with many next-generation successors starting in the business at 8 or 9 years old and continuing through high school and college.

As Richard Schwinn jokes, in his case he was groomed in the family business, but there was no family business to transition into. And though his apprenticeship at the Schwinn Bicycle Co. was long, it was not without pitfalls.

“For those working in the Schwinn factory, seeing me working down-and-dirty jobs must have been a little like seeing Prince Harry fighting in Afghanistan. It just bothered some people,” remembers Schwinn, president of Waterford Bicycle Co. and great-grandson of Schwinn Bicycle Co. founder Ignaz Schwinn.

“I would need a broom to sweep up, but all of the sudden there would be no brooms. Or I needed a lift truck to move something and it was always broken down, so I couldn’t use it,” he said. 

Waterford was created in 1993 out of Schwinn’s Paramount division. It is part family legacy and part entrepreneurial fortitude. The continuity with the Schwinn legacy was tempered by the fact that the commitment to domestic manufacturing at Waterford had just contributed in part to Schwinn Bicycle’s downfall.

“Under my dad before he died, and then working for my uncle Frank, I got a very well-rounded education in running a bike company, from bike design to the back-end bike business. Do I run Waterford like Frank ran Schwinn? No. Do I use what I learned? All the time,” Schwinn said.

Schwinn enjoys having both his children in the industry. His daughter, Anna Schwinn, is a bicycle designer at Quality Bicycle Products’ All-City Cycles, and his son, Tucker Schwinn, works for SRAM in dealer service.

Bob Fox remembers, and benefited from, RockShox’s troubles when company founders Paul Turner and Steve Simons took it public in 1996. So he was apprehensive when he sold his company to Compass Diversified Holdings five years ago. The bike business is an enthusiast business, not the type of thing banks or big business understand well. 

“In a way it was sad not keeping this a family business. Family lives and breathes the identity of a company in a way an outsider can’t,” said Fox. 

Fox’s daughter Elizabeth worked for years as chief financial officer at Fox Racing. But as a mother of four, running the entire company was not her passion. 

“Compass has turned out to be an excellent match. I feel like they have really allowed company culture to continue and they have managed at a distance. And the sales growth over the last five years has been very strong—kind of proves Compass is doing the right thing,” he said. 

Fox retains an ownership stake and sits on the board of the company. And he still comes into work every now and then.

He admits having his name on the company makes it hard not to remain involved at some level, but he also enjoys not having the risk associated with owning a business. 

On the other hand, Hawkins, president of Park Tool, and Arnold Kamler, president of Kent International, knew the business intimately when they took over from their fathers. Since the industry is such a relational business, this was a big help.

But both are quick to point out that their businesses have little in common with the companies their fathers ran.

“My dad Philip was a micromanager who enjoyed controlling all parts of the business. I’m completely different; I hire people to do a job and I don’t really have any interest in how they get their work done,” Kamler said. 

“Part of my dad’s intensity about business was typical of that generation. Still, he gave me the freedom to make mistakes and we worked well together until he retired,” Kamler noted.

As the face of retail changed with the growth of Wal-Mart and the demise of regional retailers, Kent International’s customers changed and sourcing switched almost exclusively to China.

“We still have employees that worked with my dad, but so much of the business is entirely different,” Kamler said.  

Hawkins remembers there were six employees when he started working with his dad, doing assembly, machining and some welding. And Park Tool was small enough that he knew all aspects of the business.

“If any of my kids become interested in the business now, it will not be that way for them. It really can’t. The business is too big now for one person to know the way I knew the business. I am open to their interest, but their experience of the business will be very different from mine,” he added.

Changes challenging the next generation. 

In the late ’70s Philip Kamler began importing a few bikes from China for Kent International. When his son Arnold took over the business in ’87, China dominated their business.

“The biggest challenge for me is going to be figuring out the business after China—what’s next? Will I need to turn to a different continent?” asks Scott Kamler, the fourth-generation Kamler in the business.

“And another issue is Internet retail. This is already having a big impact, but I expect in 10 to 15 years the retail channel will be entirely different than it is now,” he added.

Arnold Kamler has told Scott that he plans to be mostly out of Kent International in eight years. 

“That’s another thing—most of the people my dad has done business with are also looking to retire, so I’ve been making relationships with their children who will be taking over as well,” he added.

For Doug White of White Industries, it’s helping his son Alec appreciate the importance of keeping the company’s hand in other markets, not just bike parts. 

“My business used to go up and down depending on what was in fashion. I diversified into other industries to keep employees and my machines busy. But over the last few years we have been so successful in bike, that is all we do now,” he said.

“I got lazy about diversifying, but bike might not always be here and Alec will have to think about what other things he can do,” he added.  

Garrett Enright, who took over at Phil Wood last year, has a business degree and sees different challenges to the business going forward than his dad did.

“A big change from my father’s generation is young people are used to buying the cheapest thing they can, expecting to replace it when it wears out,” Garrett Enright said.

“Many of our older customers, my dad’s generation, understand the importance of ‘made in the U.S.’ and the cost savings of buying something that doesn’t wear out,” he added.

And he embraces the Internet for giving the company a global reach.

“There are a surprising number of cyclists in really remote locations hundreds of miles from a bike shop, yet this is exactly why they seek us out. They need the reliability our parts provide,” he said.

Topics associated with this article: From the Magazine, Succession Series

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