Stewart Surfboards founder Bill Stewart, described by his daughter Ashley as the “accidental businessman,” always thought his son might take over the business when he began mulling a sale.
But his son was deep into the music industry and not looking to enter retail, so that idea didn’t pan out.
“I went to Ashley and I said, ‘Look, I called a lawyer and I’m going to sell my business,’” Bill recalled. “I said that to her thinking she would respond to that, and she didn’t.”
Two weeks later Ashley came around, asking if Bill would consider selling the San Clemente business to her and her husband, Erik Leines. The two officially took over as owners in 2021.
Succession planning isn’t easy, nor is working with family all the time. But, in the case of independent surf shops, planning for the future can be a more nuanced endeavor, saddled with questions of which kid will take the reins, how to structure a buyout, and valuing businesses that, in some cases, are in day-to-day survival mode. However, when well planned and fully executed, it’s an opportunity to continue family-owned businesses critical to the core specialty channel.
Once Ashley came to her father about taking on ownership, there was plenty to consider.
“Now the question was how do you financially structure (a deal)? That’s the biggie,” Bill said.
Knowing the couple would not be able to outright buy the business with a lump sum, Bill created a long-term buyout plan. He also side-stepped the lawyer and handled terms of the deal himself.
“I wrote the contract myself,” Bill said. “The reason I did that was because I didn’t want outside influences on what I believed was right and wrong. I really believed in my daughter, and my son-in-law is the most trustworthy, honest, hardworking person; he’s from Minnesota. So when you have family members of that caliber, they warrant owning this place.”
The Nuts and Bolts
Every family’s transition in passing the torch has been different. In many cases, the children organically began working in the business by tagging along with their dad or mom, sweeping the floors, or working the cash register.
Aaron Pai’s kids have been a staple at Huntington Surf & Sport for more than three decades, coming into the business when they were children. As of this year, sons Trevor and Taylor have taken the lead with the business and will push it into the future as owners and co-vice presidents.
Mark Richards from Val Surf has his sons Brandon and Blake serving as president and vice president, respectively, along with his niece, Denise, who is the secretary/treasurer.
“Many years ago, my brother and all of us in the family agreed that the three of them should go forward as equal partners in the business, inclusive of all inventories, assets, et cetera, as they were, and will continue to be, the future of Val Surf,” Richards said. “We drew up the proper paperwork and have been in the process of passing on shares of the stock on a yearly basis.”
It was never predetermined which of Tom Brown’s three kids might take on 17thStreet Surf Shop of Virginia Beach. Instead, Brown offered all three of his kids the opportunity to work at the shop in the summers to gauge their interest.
“In today’s world, young people are searching for a balance between work and lifestyle,” Brown said. “There has to be a balance between a job you love and a life outside work. When you are not passionate about your work, it becomes a 9-to-5 that supports what brings you happiness.
“Tyler was the only one who loved the business of retail. He spends the time to get the job done because he enjoys the work. It was obvious by his work ethic that this was his passion. My other children are very excited with the work paths they have chosen.”
Tyler Brown now largely runs the business on his own, with Tom helping on special projects.
Long-Term Thinking
Visions for a business can differ from one family member to the next. In many cases, questions abound as to what the growth possibilities are when a new generation steps in and what expansion looks like, even if it’s not about opening more stores.
The Hansen family – where Josh Hansen, the son and youngest of founder Don Hansen’s children, serves as CEO – talks about Hansen Surfboards‘ business and where it’s going during quarterly board meetings. However, Josh also has sit-downs on occasion with his brother Christian and sister Heidi, who are floor manager and buyer, respectively.
Ownership of the business is split down the middle, with the parents owning one half and the siblings owning the other half.
The conversation has come up many times before about opening more Hansen stores, and those talks typically follow a similar pattern.
“It always goes like this: When things are really good, you have conversations about, ‘Oh, if we had another location there, we could be really successful and grow,’” Josh said. “But when you get into those tough times, you always fall back on, ‘We have a very simple business where we’re able to control our destiny very quickly. We can make changes and control our inventories. We’re nimble.’”
Hansen’s at one time counted two stores, until Don realized they were spread too thin. He shuttered one door and focused on the Coast Highway location, which has been home to Hansen’s since the ’60s, and managed it with a conservative philosophy.
“Over a handful of years, we realized that there was more potential to grow the business within our own location,” Josh said. “So, we started to take on more inventory risk and became more active in all of the marketing channels, but have also kept the idea that our plan isn’t to go open 10 doors or 20 doors. We have a really great location that we’re blessed to occupy. We own our own real estate. So, within those guardrails, we grow the business.”
Come back tomorrow for a deeper dive into surf shop owners’ experiences transitioning to the next generation of ownership.
Kari Hamanaka can be reached at kari@shop-eat-surf-outdoor.com.
Editor’s Note: For a more in-depth look at businesses transitioning to the next generation of leaders, see our story “Surf Shop Founders and Their Kids Discuss Passing the Torch.”
