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Editor's Notebook

Generation Next?

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Generationally speaking, we are at a crossroads. And whether we look left, right or straight ahead, the view is rather dim.

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"The strength of the independent tire dealer is the owner-operator, the guy who unlocks the door every day," Dick Johnson, president and CEO of American Tire Distributors (nee Heafner Tire Group), told me recently.

"When I ask some of our dealers why they sold their businesses, the biggest factor they had were their kids. How many of the kids today whose fathers own a tire dealership want the business or just want the cash?"

When Larry Morgan sold controlling interest in his 700-plus store Tires Plus chain, one major reason for the move, he said, was his children didn’t want the business.

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Occasionally, I get to meet the progeny of dealers, and I casually ask if they were planning to take over the family business. Many look at me as if I had one eye.

Meeting with a dealer group recently, I asked the 60-odd attendees how many of them were second generation owners. Maybe a dozen hands went up. Third generation? Just one. Then I asked how many planned to pass the business on to their children.

Absolutely none.

"It bothers me wondering where those future owner-operators are going to come from once this generation passes," Johnson says. "I think that’s a big issue."

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Yes it is, and if you’re rooting for the family-owned business – tires or otherwise – there are no simple answers.

In our annual Dealer Profile Study last year, only 17.7% of the dealers surveyed planned to either give or sell their businesses to their offspring. And over half of the remaining dealers had no idea what they were going to do when it came time to hang up the torque wrench.

Second generation dealers used to be a given. Even third generation dealers were common. To you and your parents, taking on the family firm meant automatic lifetime employment, a high-upside shot at financially secure independence, and a chance to build a better life for you and yours.

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But that "better life" has reduced the odds that your business will be passed down to your children and your children’s children.

And, really, who can blame them? Your kids have watched you work 24/7, dealing with a dizzying array of problems from all corners, constantly fighting the urge to have a complete meltdown.

Employees, suppliers, customers, bankers, lawyers, accountants. Minimum orders, credit lines, disposal fees, and taxes, taxes and more taxes. Praying to make payroll, fixing broken down equipment, fending off ruthless competition, and watching your supplier sell to every store in town.

Never mind that your sleepless nights have put them well on the road to restful future. Kids don’t see that side. They only see all the things you endure day in and day out, and ask, "Why would I ever want to do that?"

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Who would?

We all want our children to do better than we did, no matter how successful we’ve become. We want them to be happy and fulfilled in their lives, in what they do and in the relationships they build. We want them to reach heights we only dreamed of, and without the struggles we faced.

Better, successful, happy and fulfilled, for many children of tire dealers, means a career in another field.

Why stack a truckload of tires everyday when you could be a liability attorney or a medical researcher? Why listen to customers try to describe the strange sounds emanating from under the hood when you could be designing video games or animated videos? Why deal with share-driven suppliers when you could lead a marketing team?

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By the sweat of your brow, they have opportunities far more glamorous than the lot of a tire dealer. Even if they suddenly gained that all-American entrepreneurial spirit, there are less hazardous and precarious ways to make a living. Certainly less dirty and more appreciated.

The shame of this is not that we’re losing dealers or that the future of the "independent" looks bleak.

It’s that the greatest innovations and the brightest ideas in this industry came from the efforts of entrepreneurs. From you and your parents and their parents.

The strength of this industry does come from the people who unlock the doors everyday.

Where will that strength come from tomorrow?

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