In 1978 Donald Watkins purchased High School Music Service from Lloyd Reitz, who founded the company in 1946. When Watkins retired in 1997, Greg, Donald’s son, already had a decade’s worth of work experience as a road rep and was well-positioned to lead the organization as second-generation owner. Greg’s highly personalized customer service model had enabled him to successfully build HSMS into the premier school music retailer it is today. I first met Watkins in 2016 while co-leading Yamaha’s Succession Advantage workshop, and have been working with his team ever since.
Now, like any successful leader, nothing is accomplished without help. Let’s introduce HSMS managers: Darren Kuper, general manager and Adam Martinez, repair manager. Both Kuper and Martinez, already working at HSMS more than 20 years, had a strong desire to one day own the business. Knowing that Watkins had two daughters, they were curious if he had made any decision about future ownership.
The problem was how best to initiate the conversation. Kuper took a deep breath and simply popped the question to Watkins: “What are you going to do with this business in the future?”
Watkins said he wasn’t sure because his daughters didn’t seem to have an interest in owning the business, so Kuper answered, “Well, Adam and I would be interested.”
Watkins eventually offered future ownership to Kuper and Martinez and all are moving full steam ahead with a carefully orchestrated transition. There is no training manual a motivated key manger can read to plot out the roadmap for future ownership. There are too many twists and turns. I had an opportunity to chat with Kuper and Martinez and here are eight tips from the manager’s perspective.
TIP 1: Have The Courage To Ask The Question
Kuper’s advice is simple. Go to the owner and say, “I’m interested in owning the business when you are ready to exit. I care about this enough to tell you that this is what I want.” He added, “the worst the owner can say is no.” In my book, any owner ought to be delighted when a manager shows interest in future ownership. This takes ambition, leadership, and courage – key skills a new owner requires.
TIP 2: Working With Your Decision Partner(s)
Having your personal decision partner(s), which includes a spouse, family member or friend support an important financial decision like buying a business, is essential. For example, Martinez said that his wife is certainly more risk averse than he is. As such, he has to make sure that he is sensitive to her needs, and makes decisions together.
TIP 3: Don’t Limit your Learning to Music Retailers
Kuper was really clear on this point. Based in San Antonio, he had access to great companies like Toyota. He said, “Be open-minded and take a tour.” Learning first-hand how other successful companies create value is an important tip.
TIP 4: Keep Moving
As an owner, what can be done to reduce the risk of ownership for successor in training? Moving, and pushing ahead were important to both. Martinez said, “Stagnation is damnation.” Kuper said, “I’m wired to move ahead.”
TIP 5: Communicate When Passing The Baton
The exiting owner needs to legitimize the new incoming owner(s). This ought to happen during the transition period, and well before ownership is transferred. For Kuper and Martinez, this happened during a company-wide meeting where the message was clearly delivered to the team in the presence of Greg. It’s important that the future owners are given the authority in front of the team to make decisions.
TIP 6: Qualities To Be a Successful Road Rep
While a music background is a plus, for Kuper other qualities like being self-motivated, and organization skills and a gregarious outgoing personality are more important.
TIP 7: There Is No Place For Mediocrity
Martinez says, “We hate losing. We don’t like being second to anyone.”
TIP 8: Piranhas Need Not Apply
I asked Martinez what was required to become a repair person at HSMS. He said he used to think skills were the bottom line. Through experience, he now believes it’s all about character. Martinez would rather train a novice with great character, than a technical genius. “The worst decision you can make is to invite a ‘piranha’ into your business. The team will be eaten alive.”
According to a study by Royal Dutch/Shell the average lifetime of the largest industrial enterprises is less than 40 years. Under the watchful eye of Greg Watkins, his team has already beat the average. And knowing Darren and Adam as I do, they will continue the Watkins’ legacy.
Jaimie Blackman – a former music educator & retailer– is a financial advisor, succession planner, and certified business advisor. Blackman helps music retailers accelerate business value through team building, coaching & mentoring. Blackman is a frequent speaker at NAMM’s Idea Center. Visit jaimieblackman.com to subscribe to Unlocking the Wealth newsletter and webinars.
