Succession plans often avoided
By Dan Nakaso
Advertiser Staff Writer
Greg Tatsuguchi sat down with his father, Samson, three years ago to talk about rejoining the family business.
Jeff Widener • The Honolulu Advertiser
The next day, Samson died at age 63 of a heart problem.
Greg Tatsuguchi made the smooth transition to running his father's tax services and property management business even though there wasn't a written plan for succession. He credits his family's closeness for avoiding problems.
His death left a leadership vacuum for S.M. Tatsuguchi & Associates because Samson — like many other business leaders — did not write a successor plan for the tax services and property management company he founded.
At some point in their lives, all three of Samson's sons worked for their father. But despite the lack of a successor plan, the transition went smoothly because none of Greg's brothers wanted to take over.
"We were lucky," said Greg, 39, the oldest. "Because the family was tightly knit, there were no problems."
Other businesses without successor plans aren't so lucky.
In Hawai'i, the lack of a plan has become particularly apparent in recent years as familiar long-time businesses have closed because no one had been groomed to take over.
The companies were often run by matriarchs and patriarchs whose knowledge, personality and reputation kept the businesses running. But a well-planned effort to train someone new can keep a business humming.
"Often in Hawai'i, a business depends on a family name or one key person," said Bev Harbin, small business advocate for the Chamber of Commerce of Hawai'i. "If you break that continuity long enough, it can kill the business."
Harbin has reviewed the operations of 60 big and small Hawai'i businesses and has yet to find one with a formal plan outlining what happens when the top person leaves.
• Build consensus. Get input on deciding whether the family wants to continue ownership and management when the top person leaves. • Pick a candidate and help him or her build authority in the family and in the business. • Define the roles of the other family members concerning the business. • Inform clients, suppliers, creditors and employees of the plan. Source: Family Business Center of Hawai'i. (808) 956-4298
Succession plans are as important as business plans, Harbin said. But Hawai'i business leaders don't like to write them because they often raise uncomfortable issues about family and the future, she said.
Think ahead for future of the family
"Even big corporations, including some that are over 100 years old, don't have succession plans," Harbin said. "There might be some informal assumptions. But with multiple generations where there are kids and kids of kids, it's so politically hard to do because you have to make choices."
Louis Tory, Jr. also had no successor plan for Tory's Roofing and Waterproofing Inc., the company he founded 31 years ago.
There was no question because his oldest son, Mike, had dreamed of running the company since he was a boy.
Mike loved working on the hot roofs during his summer breaks from school. He still has the scars from the time he disobeyed his father and went up on a roof wearing only slippers and got 500-degree asphalt splashed on his right foot.
But neither father nor son talked about the details of the transition. Mike didn't know that Louis couldn't wait to hand over the company and retire.
When Mike was 19, "my dad said, 'Here you go, boy.' I couldn't wait to just be with him and work with him and spend time with him," Mike said. "Instead, I had to learn on my own. I had to deal with all kinds of problems and my dad would say, 'Just figure it out. Just figure it out.' "
Five years after he took over, Mike at age 24 was burned out and wanted to quit. For the first time, he and his father talked about Mike's disappointment over the transition.
He now has the help of his two younger brothers and their sister. And now Mike, 31, is teaching middle brother, Bryan, in sort of the same way that he learned.
"I say, 'Think of what dad would do in this situation,' " Mike said. " 'Think of what I would do.' "
One day, Mike hopes that one or all of his three children takes over. And Kimberly Fujiuchi, director of the Family Business Center of Hawai'i at the University of Hawai'i College of Business, hopes they get a well-written succession plan.
A good plan might play out over years but describe how a successor will learn the business by meeting creditors, suppliers and others.
Sometimes a good successor plan doesn't even include a family member being in charge, Fujiuchi said.
Some families may decide years in advance that they only want to retain ownership. They could decide to leave the operations to a key employee or professional management, Fujiuchi said.
Without that kind of planning, Fujiuchi said, lots of sons and daughters in Hawai'i have found themselves in charge out of guilt and family obligation.
"I have quite frankly not seen any local families with a written succession plan," Fujiuchi said. "You get a lot of unhappy people that way."
Reach Dan Nakaso at dnakaso@honoluluadvertiser.com or 525-8085.
