BANGOR, Maine — Theresa Soucy was in her mid-30s when she started picking up occasional management duties at Frank’s Bakery, the business her grandfather Frank Soucy founded in 1945, along with his two sons, Joseph — Theresa Soucy’s father — and Frank Jr.
Before long, in the mid-1980s, Soucy was a fixture at the bustling bakery, and her parents were spending more and more time at their second home in Florida.
“It was becoming obvious it was time for my dad to retire,” Soucy, one of five siblings, said in a recent interview. “I told him, ‘either sell out to Uncle Frank, or let’s buy him out.’”
In 1989, her uncle sold his share of the business to his semi-retired brother, and Soucy, now 66, officially took over the management. When her father died the following year, she and her four siblings inherited the bakery.
Over time, under Soucy’s watchful management, they have made many changes at what is now called Frank’s Bake Shop & Custom Catering. They tripled the physical space, added an inviting sit-down cafe, boosted the retail selections, computerized some routine business operations and outsourced others, updated essential equipment and reconfigured the catering side to focus on smaller, more intimate functions.
These days, Soucy’s sister Bernadette Gaspar oversees the bakery operations. Their brother Dick Soucy takes care of maintenance. Two other siblings live out of state but remain engaged in business decisions.
“We have a strong, strong business. … Sometimes at night, I drive by the building and I ask myself, ‘How in the hell did we accomplish this?’” Theresa Soucy said.
A generation approaches retirement
From large employers such as L.L. Bean and Lee Auto Malls to local corner convenience markets, the great majority of businesses in Maine are, like Frank’s Bake Shop & Custom Catering, family-owned. And with the aging and impending retirement of their leaders, many of these family businesses face a major transition.
According to the Maine office of the federal Small Business Administration, in 2014, there were an estimated 147,000 registered businesses in the Pine Tree State. About 142,200 of these were designated “small businesses” with 500 or fewer employees, accounting for about 60 percent of Maine’s workforce. In Maine, 22 percent of all workers are employed by companies with fewer than 20 workers.
Larger companies typically develop formal business strategies that include succession planning. But experts say that among smaller family businesses — those with 50 or fewer employees — few have a fleshed-out plan for passing the torch when the present owners retire. The smaller the business, the less likely it is to have a succession plan.
“Small business owners will usually answer ‘never’ when they’re asked when they’re planning to retire,” said Nancy Forster-Holt, a professor in the College of Business and executive director of the Richard E. Dyke Center for Family Business at Husson University in Bangor.
Sometimes that’s because they haven’t developed a retirement nest-egg that allows them to step down, she said.
“But often it’s because they’re doing what they like and they don’t really want to stop. One thing business owners are really good at is thinking they’re going to be there forever,” she said.
Whether a business transfers ownership to a new generation, an outsider, its own employees or some other entity — or even closes its doors — the exit process is unique to each situation. The common thread, Forster-Holt said, is that advance planning ensures a more successful outcome for all concerned — buyer, seller, owner, successor, employees, extended family members.
And for baby boomers contemplating retirement, the sooner that planning starts, the better.
Unique but with commonalities
“People don’t really like to plan,” said Catherine Fossett, executive director of the Institute for Family-Owned Business, a nonprofit organization headquartered in Brunswick. “It’s hard for the current ownership to let go, and it’s hard for the younger generation to step up.”
But a five- or 10-year plan allows the retiring leadership to get company and personal finances in order, build an effective management team and explore all viable options for succession, she said.
Many small businesses require an eager family-member successor to take a position with another firm for three to five years, Fossett said. This builds experience, confidence and character, she said, while also demonstrating to other employees that the new owner — their new boss — has not simply been handed the business on a silver platter.
In other families, the younger generation initially rejects the idea of taking over the business, only to decide later that the financial opportunity and family friendly culture of the business is appealing. Some companies make a rule that the younger generation must commit by age 40, Fossett said, and then must be prepared to find another buyer if a family member doesn’t step forward.
“The next generation may also fear that if they take over the family business, they won’t have a chance to realize their dreams, to put their own stamp on it,” she said. “They need to hear from the family that they’ll be able to take it in a new direction.”
There are many resources available in Maine to help guide small businesses through a change in ownership. The Richard E. Dyke Center for Family Business at Husson and the Institute for Family-Owned Business offer a range of workshops, classes and get-togethers aimed at getting business owners talking to one another and exploring solutions.
“Family businesses are very private, and they all think they have unique challenges,” Fossett said. “But when they get together, they find there are many commonalities.”
The centers also bring in specialists in bank lending, human resource management, tax laws and other areas to help business owners understand these important aspects of a transition.
In addition, there are several regional Maine Small Business Development Centers, funded with state and federal dollars, that provide guidance on all aspects of business planning and development, including succession planning. Along with paid professional staff, the Small Business Development Centers also connect current and prospective business owners with a network of experienced volunteer mentors who can help guide a transition.
Regional chambers of commerce also offer resources, and booster organizations such as Fusion:Bangor help younger business owners get established in the community.
Lessons learned and shared
In addition to her day job at Husson University, Nancy Forster-Holt and her husband, Steve Holt, are co-owners of Shaw & Tenney, a 150-year-old business in Orono that specializes in high-quality wooden paddles, oars and other classic boating accessories.
She uses the day-to-day lessons learned at Shaw & Tenney to illustrate business principles in the classes she teaches on entrepreneurship. She always includes a focus on what she calls “ endrepreneurship” — a phrase she coined to illustrate the importance of including succession planning in the earliest stages of business planning.
For her own business, succession planning has been on the radar since Day One, even though she acknowledges there’s no sure solution in place.
“We agree that it is not in our best interest or in the company’s best interest to run it until we drop,” she said.
At Frank’s Bake Shop & Custom Catering, Theresa Soucy said the transition to the third generation of family was not without its challenges. It wasn’t always easy, for example, for her Uncle Frank, who stayed on as an employee after selling his share of the business, to accept his niece’s management decisions, but there was no lasting ill feeling. He died last year at the age of 86, after retiring at 84.
Soucy and her siblings meet several times a year to plot the course ahead — something that’s meant they had to brush up their communications skills to ensure that everyone feels included and heard. Fortunately, there haven’t been serious disagreements.
“We have this job to do, and so we have all moved forward to do it,” she said.
Succession planning for the bake shop is still in the hopeful phase.
“We’re hoping our grandkids will grow up really fast,” Sousy semi-joked, then added, “If I had known how much work it was going to take [to take on and transform the family business], I don’t know if I would have done it. But I am really proud of what we have done. I’m an optimist, and I have no regrets.”