Jack Krenzen has given considerable thought and planning to passing his automobile dealership on to his sons, and he teaches other business owners how to do the same.
Krenzen, 68, is president of Krenzen Indoor Auto Mall in Duluth, Minn. He handed over day-to-day management of the business to his two sons in 1991, but he retains minority ownership and serves as an adviser. Sons Howie, 41, now general manager, and Scott, 34, sales manager, own the majority interest.
The dealership still has its original Cadillac and Pontiac franchises, and over the years it has added Honda, Nissan, Lincoln, Mercury and Budget Rent-A-Car.
In 1991, Krenzen was the national winner of the Time Magazine Quality Dealer Award - the crowning point of his term at the helm. His sons continued the tradition by receiving an Automotive Dealership Service Excellence Award in 1995 from Good Housekeeping and Automotive News.
Krenzen took an interest in family succession well before he began the process himself. In 1977, his brother-in-law, whom he considered a mentor, died without signing his will. That spurred Krenzen into learning everything he could about estate planning and business succession.
By attending seminars, reading and hiring qualified attorneys and accountants, he developed his own plan, which included gifting stock in the business gradually to his sons so that they would not have to pay estate taxes on it.
He has even started this practice with his four grandchildren, the oldest of whom is 14.
'I had to gamble on the fact they were going to be car kids,' he says of his sons. 'I have every father's dream come true with them turning to the business, but we worked hard to make it that way.
'I always said to myself, 'I'm going to be here forever,' but when I started attending funerals and visiting friends in the hospital, I knew it was time to begin to let go.'
Each child was brought into the business at about age 14, sweeping floors and washing cars. They worked their way up but were always paid less than their co-workers to promote acceptance.
After Howie and Scott Krenzen graduated from the National Automobile Dealers Academy in 1987, their father decided it was time to begin turning over responsibilities. Two key people retired, opening up the management spots for the brothers.
Krenzen continues to review the dealership's financial data and to serve as an adviser.
'When we finally made the change, I started telling everyone who had questions or problems to see the kids. They're the boss. It was a difficult thing to do.'
However, he has turned much of his interest to a secondary business, Family Succession Planning by Jack Krenzen, that he started 15 years ago. Drawing from his own experience, he lectures regularly about transferring business ownership at college and business seminars such as the Arthur Andersen Center for Family Business and National Automobile Dealers Association meetings. His ideas have been featured in national publications.
He talks about forming a flexible succession plan, relinquishing control, providing professional training and experience for children, matching family talents to business needs, making nonfamily employees comfortable with family management and maximizing estate tax benefits.
Always a leader in volunteer work, Krenzen tutors students at an inner-city school, delivers food to the elderly and helps out at a tennis benefit for a children's hospital. He also is active in the Minnesota Automobile Dealers Association.
BUSY IS BEST
Remaining active, he says, is essential for anyone considering retirement: 'If you don't have a hobby, don't retire, or we'll be going to your funeral.'
The quality of the operation at Krenzen Indoor Auto Mall has attracted would-be buyers, but the family has no desire to sell. For dealers who are considering the sale of their business, he advises them to get out soon while the market is at a peak.
Krenzen believes the recognition his dealership has earned for service stems as much from quality employees as from good management. Some employees have been on board more than 20 years, and Krenzen has faith that his sons will continue the tradition of promoting respect for and loyalty from the work force.
The Krenzens are committed to staying in the automotive business, and that can mean acquiring new franchises. Quips the elder Krenzen: 'We are always prepared.'