March 2016 RJO Cover Story

Cover Story

Moving In, Moving Ahead, and Moving On [ Stories of Jewelry Store Transitions ] If one believes what they read in the business news, the idea of a small retail business being transitioned from the first generation to the next is a near impossibility. Research using figures from the IRS finds that more than 70 percent of family retail businesses won’t make a successful transition to a second generation, while nearly 90 percent won’t make it to the third generation.

Jewelry stores seem to do much better than this, as story after story from RJO members can attest. It is likely a combination of factors that keep retail jewelry stores going and going, including having founding roots in previous centuries, as well as carrying inventory—gems and precious metals—that is considered a bit impervious to trends and fads.

Moving In he first generation of any jewelry store has to start somewhere, and for Kristie Pooley, that place is Eagle, CO, population of 4,500.

In 2012, after a successful career in retail and sales, Pooley opened up Broadway & Fourth Jewelers, with equal parts excitement, confidence, pride, and uncertainty.

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“I was actually in outside sales for approximately 21 years in between my jewelry careers,” she say.

“This taught me tremendous skills in sales, and also marketing and management. I have associate degrees in business management and marketing and sales, as well as a Bachelor of Science degree from The University of Toledo.”

“My transition from a non-jewelry store owner to an owner went quite smoothly,” says Pooley.

“I have a history in jewelry sales, working for Keidan’s Jewelers in Toledo, Ohio. There I worked with [RJO member] Bernie Ochs, and Alan Miller, who now have their own stores, too. Alan has been my mentor and has helped me tremendously!”

Pooley explains that her former employer was not a hands-on owner, and she wound up doing most everything for her boss.

“I was 19 years old,” she continues. “Now I am 54.

When I started working at Keidan’s, Alan was my first manager. So, it’s been 35 years that we have been associates.”

Pooley eventually moved to Colorado, where she managed a store for five years.

“I thought and dreamed about opening the store for approximately two years,” she says. “I felt that I could do a better job than my previous employer.

In addition, it was a life-changing event to work on my own, by myself … for the better! I then made the decision to move forward, and it was the best decision ever!”

When the opening finally arrived, Pooley says she had no doubt in her ability to successfully run the store, but she wasn’t sure if the demand would

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sustain the store. She says she was fearful of being accepted in a small community, something that lessens as trust builds over time.

“Many customers were thrilled when I opened,” says Pooley. “The closest jewelry store is a 30minute drive through the mountains, so that helped. The local paper published a very impressive article on me and the store. In addition, the Chamber of Commerce was very instrumental in putting my store in the limelight, introducing me to the community. They touted my business experience and knowledge in jewelry.”

“I was super excited and very proud when I opened the store,” she recalls. “Customers thanked me all the time for being here! I was extremely conservative when I opened the store, only purchasing what I could pay for immediately. As the store grew, I was able to expand my inventory and product lines. I turned a profit in my first months of opening. I found a bench jeweler locally, as I didn’t want to use the same one as my former employer. As time went on, I actually became more relaxed and confident.”

What Pooley brings to her community is what you might expect from a small town jewelry store: a variety of repairs, items in various price ranges, and professional service presented in a professional manner.

“My long-term hope for the store is to be known as the engagement ring and diamond specialist in the area,” she says. “I plan to grow and change as the market changes.”

Kristie Pooley

Not all jewelry owners start their stores from scratch, like Pooley. Many transition into initial ownership, and Debra Shearer did just that in January, taking over a store where she had worked for nearly 15 years.

“I’ve been with Bill Hammen at Bill’s Jewelry in Grinnell, IA, for 14.5 years,” says Shearer. “I’ve been his right-hand girl all these years, so it’s not a new adventure, totally. But owning the store is a different side of it. I’ve always wanted to do this!

I feel like this is my dream job.”

“The transition went pretty well,” she continues.

“I’ve known Bill and [his wife] Jeanne for over 25 years. Bill set the price, and I thought it was fair.

There were a few bumps in the road, but all went really well. I took over on January 4th of this year.”

Shearer says the transition came with many feelings, including relief, nausea, fear and extreme happiness. One thing she truly loves, she says, is having that personal contact with the clients that she knows well. While she’ll continue as Hammen did before her, offering in-store service and repairs, their own designs, and growing, she did make one change once she took over.

“The only thing I’ve changed was our Saturday hours. We were open 9 a.m.-4 p.m., and now our new hours are 9 a.m.-2 p.m.,” she says. “We didn’t have much traffic those last two hours, so we made that change. It’s the only one I plan to do, for a while. My thinking is that if it’s not broken, I’m not going to try to fix it.”

Moving Ahead A theme among the stores in this article is that planning was a large part of the transition process.

Yet, planning ahead in retail is not as common as it should be. According to a recent CNBC poll, less than 30 percent of retail business owners have a succession plan.

Bob Disinger, of Disinger Jewelers in Jasper, IN, is in that small minority.

“My successor, Teresa [Heeke], and I have a fiveyear plan,” says Disinger. “Teresa worked for me in high school and college, and now she has returned after 17 years in the corporate world to prepare to succeed me. My entire staff is supportive of this

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plan, and they are helping prepare Teresa to purchase the business. In addition, she is busy taking GIA courses, thanks to a scholarship from RJO, to become a Graduate Gemologist to complement her business management degree.”

Disinger and Heeke finalized their plan at the RJO Succession Planning workshop in October, 2015.

“We developed it together,” says Disinger. “I want Teresa to be 100 percent behind this. She can walk away at anytime without penalty. Preparing Teresa has invigorated me to continue to grow the business and to best prepare her. If everything works out with the succession plan, I will be happy for the both of us. It must be a win-win situation, and it is my goal to assure she is successful. In addition, I will be available as needed, to be as supportive as possible.”

“Do not wait until it is time to retire,” he continues. “Start attending the RJO Succession events, if possible, five years prior to your planned retirement.”

Five years ahead also is the plan for Don Basch Jewelers, located in Macedonia and Medina, OH. Owners Don and Denise Basch have four sons, all of whom plan to have a role in transitioning the store into the next generation. Son Dustin says their plan is for the transition to start in five years, with a buy-out over ten years.

“I think our parents felt comfortable knowing that each son has his own area of expertise,” says Dustin. “Each one of us joined the company at different times, some straight out of college, and others after trying other adventures and realizing their heart wasn’t yet there. They needed to find that this was their passion.”

Part of the Basch’s planning includes bringing in experts to help with the transition.

“With how dynamic our situation is,” says Dustin, “it is very important to have an expert attorney involved very early in the process, as well as an accountant who can work well together.”

Among the negotiations will be determining the final purchase price for the store.

“We have had outside consultants and accountants do evaluations and look at the total value,” says Dustin. “People we all have felt comfortable with

gave us a starting point. I am sure when we come to that final number, there may be some negotiations that will need to take place. However we all want what’s best for the business, and we are all business people, knowing there can always be an agreement made. You just need to stay open minded.”

While any owner likely feels like a proud parent when their store is passed on to another, the feeling is likely a bit different when you’re actually the parents.

“The strongest emotion I can see in my parents is not necessarily letting go,” says Dustin, “but I see that their not being as involved makes them feel uncomfortable, because this is what they have done for so many years. They get mad if you don’t ask their opinion or keep them up to date to a fault, yet then they say you don’t need to ask because you are the one making the calls. So we’re kind of damned if we do and damned if we don’t.

I feel very motivated to be able to call this the true “second generation.” My brothers [Donny, Dan, and Dennis] and I run Don Basch Jewelers, but we are all motivated to not let down the two people who started this company.”

Dustin say that both of his parents will still work a few days each week, but will take longer vacations, spanning weeks rather than “rushing back.” He also expects them to spend more time with their five grandchildren.

Moving On While planning can go a long way toward a smooth ownership transition, sometimes real life can challenge even the best of plans.

Rich and Nedra Perry, of Geis Perry Jewelry in Atlantic, IA, began their transition plan around 2012.

“We still loved the business, but I found that I no longer had the passion to drive it as it should be driven,” says Rich. “We proceeded to look around at our business acquaintances, friends, and customers to see if we might be able to find someone to train to take over Geis Perry Jewelry.

We were very concerned about the community and

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felt that, if at all possible, we wanted to help continue the store’s legacy rather than to close the store. That was the recommendation that was given to us by virtually everyone.”

In September 2013, the couple had narrowed their replacement search down to two promising candidates and finally decided on one to hire, to learn the business and become its new owner.

“We were totally up front and completely open with our finances as we began the training process,” says Rich. “Things went relatively smoothly, and we felt like progress was being made through the Christmas season and into the New Year. Yet, in August 2014, it became apparent that it was just not the right fit! We had to let him go in order to maintain the employees that we cherished and to salvage our business. This had become quite a financial drain on us, because we had added him as an employee while maintaining all of our other employees as well.”

Rich says that at that time, the couple decided to focus a little less on planning and a little more on prayer. They prayed for guidance.

“In December we got a call from Kent and Patrice Hanson, saying that they would like to buy our store,” says Rich. “We could hardly believe our ears, but did tell them that we would have to think about it. We contacted our current employees to be sure that we were not miscommunicating, in case one of them might like to buy our store. We determined that was not the case.”

It was early February 2015 when the two couples sat down over a cup of coffee, discussing the purchase price, inventory, and other business concerns. Eventually they reached a deal.

Top Seven Reasons Retail Business Owners Decide to Sell

“With the help of a very good advertising 1) The owner is drained wordsmith, we 2) Retirement built our story on that 44-year 3) Physical illness or family history,” says Rich. problems “We were amazed 4) Shortsightedness at the number of customers who 5) Strong, increasing came in to do competition business with us 6) Sticking to a plan before we went 7) Opportunity to capitalize out. We made sure monetarily that our message Source: included the fact www.fairmarketevaluations.com that we had a new, younger couple coming in that would serve them as well or better in the future. We kept that message going out for the next months, until November, when we shifted into a retirement sale mode, which we ran through Christmas Eve. The retirement sale was orchestrated by Chuck Frey, who is an RJO service provider. It was very successful.”

According to Rich, the deal was closed on January 4th, with occupancy set four days later. The Hansons immediately stripped everything out of the store, refinished the tin ceiling, stripped one wall down to the brick, and got everything put back together in time for a February 7th re-opening.

“It is an outstanding transition from our Geis Perry store to the new Geis Perry,” says Rich. “The store definitely has its own new decor, reflecting the personality of the Hansons.”

“Kent and Patrice had already established many friendships in Atlantic through Patrice’s daughter’s family, and it became apparent that the sale of Geis Perry Jewelry was not going to remain a secret for any time at all in our community of 7,300,” says Rich. “We chose to do what would seem to many to be counter-intuitive; we called a press conference on June 1 and publicly announced the sale. We were amazed at the amount of emotional support that we received and the number of customers who stopped in to wish us well and thank us for the 44 years that we had served the community.”

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Nedra and Rich Perry