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Companies Learning How to Succeed

In Need of Repair

Father-Son Appliance Company Navigates an Emotional Transition

September 02, 1998|CYNDIA ZWAHLEN | SPECIAL TO THE TIMES

The bramble of emotions entangling father and son has made passing the torch of ownership a difficult and painful process at Angel Appliances, essentially stopping the company in its tracks as sales stagnate in the leadership vacuum.

Bronx native Hal Kassner, who started the North Hills company in his spare bedroom in 1955, has hit the traditional retirement age, but until recently he had no plans to leave. He thought he might cut back to a few days a week, maybe in a consulting role. How that would work was unclear, given his aversion to sharing power.

"I cannot work someplace unless I am the boss, unless I'm in charge," said Kassner with characteristic bluntness. "I'm not apologizing for it; that's who I am."

For his son Scott, 41, an 18-year company veteran, the consultant scenario looked to be an excruciating extension of the professional limbo he says he has been in for years.

"He is who he is, and being critical is where he is, so it seems unlikely that he'd ever wake up one morning and say, 'OK, Scott. You've jumped through all the hoops. You're ready.' "

But something happened between father and son earlier this year to change Hal's mind about leaving. Although Hal wouldn't disclose details, he has decided to retire at the end of 1999. He'll sell the company. If Scott wants it, he can buy it, Hal says. If not, an outsider will do.

Scott was only a little more forthcoming about the split. "In essence, I said, 'I'm not jumping through any hoops. . . . Enough of this, I want a succession plan.' "

Since then, though, the two men have continued to operate in their separate spheres at the Sepulveda Boulevard building Hal Kassner owns. From his executive-style chair at an old metal desk, Hal oversees the company's most profitable division, which leases coin-operated washers and dryers to apartment management companies. Division sales were $1.56 million last year and generated a $50,000 profit, after salaries, and enough cash to subsidize the other parts of the business. Hal also handles the books and does the hiring and firing.

Scott has carved out his own territory in appliance sales, something his father has no interest in. ("It worked out as something where I got less criticism," Scott said.) He also manages the parts business, where he takes pride in the company's reputation for being able to locate hard-to-find items. A service manager handles the repair end and helps out in parts.

But Scott's end of the business is struggling. At $700,000 last year, revenue was down about a third from its level of five years ago. Operating losses grew to almost $57,000 in the fiscal year ended March 28--four times what they were two years ago.

Scott and his father blame outside forces: the arrival of deep-pocket competitors such as Sears and Energy Pacific (an affiliate of Southern California Gas Co.) in the repair business. They also point to an influx of fly-by-night operators with rock-bottom rates and little experience. At the same time, consumers today often choose to replace rather than repair an appliance.

Company's Long Success Is on Line

Business consultant Michael Russo acknowledged the outside forces battering the company, and he praised the business for its solid reputation in the industry. He was impressed with Hal's natural entrepreneurial instincts and success at creating a company that has lasted for almost half a century.

But that success could be in jeopardy, he said, because of the lack of vision, including a succession plan. His basic advice: Dump the victim mentality on all levels. Stop managing the past; start creating a future.

"As the world changes, if you don't reinvent yourself to meet customer needs, then you are going to have difficulty staying in business," said Russo, a certified public accountant who has created a training program for entrepreneurs.

The first order of business for the Kassners is to agree on a succession or sale plan for the company. In addition to settling disputes, a properly prepared plan will increase the value of the business and save more than $1 million in taxes, Russo estimated.

After a meeting with Russo, Scott Kassner was less sure he wanted to own and run the company when his father leaves. Russo, he said, made it clear that extraordinary results, the kind the company needs to thrive, come only when there is a passion and commitment to achieve them. Although Scott had resented his father for not sharing power in the past, the son is now pondering whether he himself has the drive and desire to acquire the needed entrepreneurial skills.

"He's basically a parts manager waiting for Daddy to give him the business," Russo said. "As an entrepreneur, you don't wait for anything. If he had the skill set to run that business, he would have taken it over a long time ago."

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