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Passing the keys

Family businesses have unique generational challenges.

(page 3 of 3)

Soderholm Wholesale Foods

53 years

Jay Soderholm, 50, had a very different family business experience. He sold it.

“That was a very emotional day,” Soderholm admits. After introducing the new owners, Michigan-based Lipari Group, to his 75 employees, he got in his car and drove about a mile before he had to pull off the road. “It was tough.”

Soderholm Wholesale Foods was a middleman between food producers and retail stores. “We’d buy yogurt, for example, and deliver it to supermarkets,” Soderholm explains. “We handled about 3,500 different products, and about 95% were either refrigerated or frozen items.”

The company was started by a couple of Jay’s uncles in 1961 but his dad became the sole owner soon after. Jay started working in the business in 1989, joining other relatives, as well. In all, there were four owners — mom, dad, Jay, and his brother. “We got along great,” Jay recalls. “We tried to act like a non-family business. We had to work hard and got promoted only if we did a good job. I think we handled it very well.”

Jay says his parents were hard working east siders who came from meager means. He remembers his dad working long hours doing everything he could for the business, from sales to driving truck. “He’s the best dad, but there were things he didn’t have time to do with me as a kid, although we still did a lot,” Jay says. “By the time I joined the business, I worked Monday through Fridays and had no real physical labor because the company had evolved to that point. As a result, I always had more time for my kids.”

Over time, Jay saw the grocery industry beginning to change. Among the challenges, Soderholm’s biggest customer was becoming its biggest competitor. He also realized that the Lipari Group would want his company to either get bigger or get more specialized. “Bigger called for a greater investment, and I didn’t want to become more specialized.”

His own children were too young to be involved at the time. “Frankly, I didn’t want them to be involved in the business because I knew the direction it was headed,” Jay admits. “I didn’t want to put that burden on them.”

Seeing the writing on the wall, he approached his parents and stated the facts. “They were both in good health and I wanted them to realize that they could reap the benefits of a sale, as well.” They agreed.

Soderholm Wholesale Foods was sold to the Lipari Group in December 2014.

Looking back, Jay has no regrets about why he decided to sell, but with limited bidders for the business, he laments that he couldn’t sell it to a group interested in keeping it local. Lipari was in an acquisition mode, he said, and two months after the sale, some employees were retained but the rest were let go. “There might still be angry people out there,” Jay acknowledges.

Still, it was the right decision, Jay says now. “At the time we sold, our sales were slower than we wanted, or even flat-lined. It took a mental toll.

“One thing people don’t understand is that when you own a family business, you take it home with you every night, every weekend, and on your vacations. It consumed us. The holidays were difficult because we always had to work late on Christmas Eve, so it took some of the fun away.”

Because the company had a written succession plan in place defining specifically how any proceeds of a sale would be split between the parents and their two sons, the transition went smoothly.

Three years later, Soderholm’s parents are healthy and often spend time in Florida. Darren, a musician, found a job he enjoys with a wholesaler in the electrical trades and was able to invest money into his own music studio.

Jay now works for Legendary Way Marketing handling marketing and hospitality for the American Family Insurance PGA Championship. “Now I do what I do because I enjoy it. I was paid well then and make much less now, but money isn’t everything.”

Endres Manufacturing Co.

92 years old

“Emotions make a family business the most gratifying, and the most challenging,” notes Sam Ballweg, the fourth generation president at Endres Manufacturing Co. in Waunakee.

Above, Sam Ballweg (standing, orange t-shirt) joins the third, fourth and fifth generations of Endres Manufacturing Co. in Waunakee. Below, an old-school Endres team.

Endres is a steel manufacturing business that’s been around since 1926 when started by Lawrence Endres Sr. His son, Larry Jr., took over in 1948, and Larry’s son-in-law, Ken Ballweg (formerly married to Larry’s daughter, Diane) became the third generation leader in 1990. Sam, 38, is Ken and Diane’s son.

Sam has two other siblings, as well, and he says the family spends a lot of time together. “My family was always clear that any one of us could work in the family business,” he says. College and working outside the business was also a prerequisite, but Sam admits he knew fairly early on that he wanted to be involved.

As a youngster, Sam remembers visiting his dad at the shop on Saturdays. Sometimes he’d bring a coloring book, and later he’d sharpen pencils or do some filing. “I assumed it was normal to work on Saturdays,” he says.

After starting in the office at Endres in 2004, Sam made his way through most of the departments, from designing the company’s first web page to working on the shop floor.

“I needed to prove that I wasn’t just the boss’ son. I wasn’t going to automatically be president. Sometimes in family businesses, sons of bosses get a bad rap.”

Sam was named president in 2013. Ken remains CEO.

“I think it’s important that the company employees see you work hard,” Sam remarks. “You have to lead by example. If you ask the employees to do more, you also have to do more and listen to them to gain their respect.”

Endres currently employs 66 workers and the company continues to reach out to trade schools for future prospects. “We see some young employees not wanting to get their hands dirty, but our business is becoming more automated, as well, so the work is changing.”

Each of the company’s leaders left their mark through the years, Sam notes. Lawrence, the founder, was an inventor. Larry Jr. started welding and moved the company more into steel and machining. Ken has grown the industrial steel business, and Sam believes his stamp may lie in technology and automation.

“It will be interesting to look back in 10 years. Automation in our business is a sign of growth. We’ve never laid a person off, so it’s about getting more tonnage out the door in less hours.”

The 92-year-old family business does not have a formal succession plan in place, but Sam is confident in its solid management team. “We’re relatively small and private. There are just five of us so it makes planning a little easier. Sometimes there are challenges in a family business.”

The parents and their three children recently redid their shareholder agreement. At this point, Sam says, family members are at different levels of ownership.

His three young children, a 10-year-old and 8-year-old twins, are part of the fifth Endres generation. Might they become future leaders? “It’s difficult,” Sam sighs. “You have to have the right person in the family to keep the business moving forward, but nobody should feel trapped into a job. That’s not normal.”

Can Endres Manufacturing survive without a formal succession plan? “Of course,” Sam answers. “Dad is still active. Right now, we’re good, but if Ken is no longer around, we might reconsider. He’s a nice safety cushion.”

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