198: How Owners Step Back Without Breaking the Business (Part 2)
Moving a Third Generation Into Ownership at a Family Business
Guest: Billy Swanson, President and Owner, Tri County Air Conditioning and Heating — Venice, FL
Billy Swanson's two sons and his nephew are the third generation at Tri County Air Conditioning and Heating, and all three of them hold shares in it. Getting there took six or seven years. Three of those years were standing meetings two or three times a month on sales, cost of sales, liabilities, assets, financial statements, and leadership styles, and a full year went to one book about mission drift. Before anything was signed, Billy asked each man whether they would be willing to own the company and never be the CEO. Joey and Billy get into what a shareholder does, why the next generation wrote the vision instead of inheriting it, and what Billy would do over again.
IN THIS EPISODE, YOU'LL LEARN:
Before shares change hands: Can you own it without being CEO?
What shareholders actually do, and how little that requires.
Why next-gen owners should think like employees.
Why the next generation should write, not inherit, the vision.
Want the deeper story behind this conversation? Read the deeper essay →
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Episode 198 — How Owners Step Back Without Breaking the Business (Part 2)
Joey Brannon with Billy Swanson, President and Owner, Tri County Air Conditioning and Heating
This transcript has been lightly edited for readability.
Joey Brannon:
Welcome to Grow With Purpose. This is the podcast that we do at Axiom to talk about the world of small business: what owners are going through, what it takes to succeed, how do you stay there, how do you grow and continue to thrive in the world of small business.
This is part two of an interview that I did with Billy Swanson. Billy has been a longtime friend of mine. He's also a business leader that I respect a ton, and he's the leader at Tri County Air Conditioning, a company that's kind of legendary in this part of Southwest Florida for the level of service that they bring and how much they care for their customers. And it all comes from how they care for their employees. We covered all of that in the first episode of this two-parter.
In this episode, we're going to shift, and we're going to talk about what it looks like and what the experience has been having now a third generation of ownership at Tri County Air Conditioning. So enjoy this episode as always. There's a Leadership Guide that will summarize the takeaways and give you some actionable insights, some things you can be thinking about to take some of the things Billy is talking about and put them into work in your business.
I want to talk about the family in the business, because you came into a family business.
Billy Swanson:
Yes.
Joey Brannon:
Maybe we've talked about this. I can't remember if we've mentioned it yet or not. But now you're the second generation in this business. Now there is a third generation in this business. So you have two sons who work in the business, and you have a nephew who works in the business.
Billy Swanson:
Yeah.
Joey Brannon:
We talked about statistics earlier. Now you're coming up against even harder statistics to beat out, which are the ones around family business and second and third generation family businesses. But you don't just have family members in that third generation working in the business. Those individuals are actually owners in the business.
So talk to me about the transition, the decision to make them owners, and what you guys have gone through over the last few years to actually make that happen, and to give them the greatest chance of success, and the business and the people who depend on the business the greatest options for success in the future.
Billy Swanson:
In 30 minutes or less. It's been a six year, six seven year journey to get there. And of course, the purpose is to honor Jesus Christ. So how are we going to do that? Not knowing, even if the kids that are growing up, are they going to want to be a part of it, and do they honor Jesus Christ? Do they understand what it means to work in a ministry, nonetheless be part of the ownership?
So there were so many decisions that were going through my head. Do we sell it to a charitable trust? And the charitable trust then would maintain the ministry of the for-profit Christian ministry, and then they hold the CEO responsible to carry out the wishes of the trust, which is all charity. And I thought about that for a long time.
And then, was it Dan something? Tam. God Owns My Business. Read that book twice. Literally gift the shares right to God. So the shares say God. So I really thought about that. That was where I was really heading.
And then about every third day you get something in the mail that says, "I want to buy your business. We're here for you. We'll do whatever you want." And you're hearing all these million dollar things. There was a tension. There was a battle. Sell for money. God owns my business. What do I do?
And this was prior to the boys saying, "I want to come back to work." They worked in it, and then here's your education. Get out. You've got to go to school, and you've got to work for somebody else. And it's what I did, and it was helpful to know what it feels like to be an employee. So that's part of the education. Not knowing they're going to come back.
But there was tension. Which, for-profit Christian ministry, it's tension. Every day is tension. But tension is not bad. Tension is good. And that's when I realized that I had an opportunity to grow through that tension of: am I going to honor God, or am I going to honor Billy Swanson and my family, and just keep more and more and more, just a little bit more, just a little bit more? Or am I going to honor God?
And through that tension, I believe that both my wife and I grew deeper and deeper in love with Jesus through that process. Some failures, but also some victories. And that's when I decided that if the boys were interested in becoming owners, they can be owners of this organization, of a for-profit Christian ministry. And they're going to have to deal with that tension also. When is enough enough? Do I need more? It was healthy for me to go through it, and I'm still praying it'll be healthy for them to go through it as well.
Now, all three of those men have different avenues of where they care. One is just like employees: we've got to invest in employees. Others are in just the honoring Jesus Christ and preserving, making sure that Jesus stays center. And the other son is just different.
But that process was years of driving my wife crazy. What about this? What about that? How would we do this? How do we do that? And we also — I have two daughters that are not in the organization, that we love dearly. And a succession plan had to, they had to play a part of what happened. We can't just give it to the boys, because that's not fair to the girls. And I sort of experienced that through the transition with my dad. So it's a hard issue.
And then it was just all of a sudden I realized I did not start this organization. My dad started it. Yes, I had to purchase it. Some was gifted, but I had to purchase it and work in it at the same time, and there was a benefit doing that. So I found out that there's a good way for the boys to purchase the shares at a good rate, and it seemed to be like a win-win.
But first, they had to agree that the partnership is more important, the business is more important, than any of their individual needs. That as a partnership, the organization is first.
And I spent a journey of just about three years meeting with them at least two or three times a month, just coming together and talking about stuff. Sales, cost of sales, liability, asset, financial statement. What's the most important thing, and leadership styles. And I loved a book that I read called Mission Drift. I've read it a couple times, and we went through that. We took a whole year to go through that book, because if I'm going to sell to someone, they need to understand the mission of the organization and the purpose of the organization. And those boys do, and I am so proud of them.
And it sort of came down to my dad, in terms of who's going to be the owners. My father started it. I'm second generation owner. So now I have my nephew who's been in the organization. He just bleeds Tri County Air Conditioning. All he knows is Tri County Air Conditioning. Loved my grandfather — I mean, my dad — and he loved him. And he's just got this unique gift, which all three of them have got very unique gifts and personalities and abilities.
And it was just one day, just the thought was, what would my dad want? And it was to have his grandkids take ownership. That was cool.
Joey Brannon:
That's pretty cool.
Billy Swanson:
So it was just a good process. But it was like three or four years of training. And what does it look like?
And owners — you think, I want everyone to act like owners. I've been trying to teach them: no, when you walk through that door, you're not an owner. It's like, what? Why are you saying that? The whole purpose is, when you walk through that door, you're not an owner. You can't act like an owner. You can't make decisions like, "Oh, I own it. I got to do it." No, you've got to be like the best employee in the best lane that you have. And if someone asks you, "Why are they doing this? Why are you doing that?" you can't go, "Oh, because of this and this and this." You're like, "No, you need to go ask them." You've got to act like an employee. Act like an employee.
Joey Brannon:
It's funny. I think that in your situation, it is worth talking about that all three of these shareholders — they could gang up on you, right? At this point, they own a substantial amount of the stock. You're still the biggest shareholder, but you have given up the 51% position. And I know that was a stepwise process. It wasn't all at once. You mentioned it was years and years of getting them ready for that.
But none of the other three shareholders are in a CEO spot or a general manager spot. They all report to somebody who's not an owner.
Billy Swanson:
Exactly.
Joey Brannon:
So talk to me about how that has worked, and what did you have to be thinking about? Part of it is piggybacking on this "don't act like an owner" conversation, because you're an employee. You report to somebody. But how did you prepare them for that, and how have you continued to try to make sure that the posture when they're inside the building, so to speak, is one that — they are owners. You can't take that away. They are literally owners of the business.
Well, we'll call it shareholders. Someone told me shareholders. Joey says they're just shareholders. So we'll call them shareholders.
Billy Swanson:
We're all shareholders, if we own a stock, right?
Joey Brannon:
Yeah. Shareholders own shares at the place that you go. Exactly. How hard has it been for them to navigate that?
Billy Swanson:
Well, it's been difficult, because I didn't know how to do it. So I would say one thing one month and another thing another month. So it was sort of confusing to them. But understanding that the organization is first.
What are the roles, Joey? You taught me, what are the roles of shareholders? With an interesting thing, you said they take money out, they put money in, they elect the officers of the corporation. And those are basically the roles of shareholders. And I'm like, "What, you put money in?" I didn't know that. I'm thinking money, I'm just — but that was interesting. But I could see why you would put money in, because you don't want to have just cash out there, and it's a liability.
Joey Brannon:
It's a lawyer magnet. It's a lawyer magnet, right? So you may—
Billy Swanson:
Take it out, and there's times you got to put it back in. Yeah. So, education, doing that.
And then there was a time before we made the actual signing of the shares document, and I asked the boys, would you be willing to own, but never be the CEO? Can you give up the right to be the CEO? And now that's a podcast, to talk with each one of my boys, because they got stories. They have, like, wait a minute. I was 15 years old. You said this could be yours. They have stories.
Joey Brannon:
Yeah.
Billy Swanson:
And I'm sure those are very difficult things that they had to deal with. But it still came back to: we'll make a decision for what is best for the organization, what is best as a partnership. And just because you have a last name, or you own some shares, doesn't make you the best person to be responsible for the growth and preserving the mission and the culture and the vision.
The vision is a whole — we could talk about the vision. We spent a year coming up with the vision. And I might say I did very little of that, because I'm like, vision, man, I'm going home with the Lord. They've got work to do. But we spent a year coming up with a vision of what the organization can look like. And the last statement is, we strive to remain a trusted family legacy.
So those boys are thinking about their children. Interesting enough, they're kids. They're looking at their eight year old son going, I don't know if he's going to be able to run this thing someday. But that process made it easier for them to understand that if it's going to be, it could be a family legacy that they can still work in, but they don't necessarily have to be the person that's in charge. And I think that helped. And they're the ones that came up with the family legacy.
So the plan is not to be, oh, third and sell. No, it's fourth. And they're talking about their kids, whether one's just going to be a receptionist or a warehouse employee. It doesn't matter. But that process, I think, was key in the success of where we're at now.
And now they are putting together the shareholders' documents of the what ifs, the what ifs, the what ifs. They're discussing it now, and I'm just sitting back and just loving it. They're just very detailed. I am, without a shadow of a doubt, they are going to do well. We have an amazing advisory board. Joey, you being of course one of them. And oh, by the way, I asked you to be, what, chairman? The chairman of the board. Why? Because you are 100 times better qualified to chair those men than I am.
Joey Brannon:
Well, thank you.
Billy Swanson:
So.
Joey Brannon:
As you're talking about how deliberate the getting ready for the transition and all the conversations, and even continuing, like the one year track to develop the vision statement — I remember seeing a video not long ago and they were interviewing, I can never keep it straight, the Vanderbilts or the Rockefellers. But there's these two kind of iconic old money families in the U.S., and I think it's those two.
And one, the wealth is still there. They're into like the sixth generation or the fifth generation, and the philanthropy's there. There's not the squandering. Whereas the other side, it's all gone. There's nobody left of that family that has any real wealth, because it's all been squandered.
And the interview was with somebody from the successful side of the family, the family that's done it well. And they said, what is the secret? And she talked about, from an early age, just the education. These are our family values. This is what our family is about. The money is not the purpose. The money is a tool that we get to enjoy to use to accomplish what we've been put here to do. And it was just very, very deliberate in terms of, you'll get the money when you're ready for the money. But being ready for the money means owning the values that the family has been built on for the last five generations.
Billy Swanson:
I'll write that down. Yeah.
Joey Brannon:
But that's in essence what you're describing, is making sure that the next generation of owners cared more about preserving the values than they did about a title or a financial distribution or influence, the ability to sell out to PE one day, if I get these shares that's an asset on my personal balance sheet that sets me up for financial security.
So congratulations. It's amazing that you're there. It's really fun to hear your story, and for me it's a lot of fun because I can picture all these guys. Like you're describing the gifts and abilities, I'm like, I know who that is. I know who that is.
So as we kind of wrap up, one of the questions that I like to ask is, what would you have done different? And I'll make sure that I say this first. When somebody asks that in an interview, and you hear somebody say, "I've got no regrets," I'm like, well, you're just an idiot, because I've got all of them.
But if you're looking back over two things — one, the area of hiring that COO, whose giftings were different than your giftings, his abilities were different than your abilities, and making that whole transition. And then this more latest transition of moving the boys into ownership. In those two situations, if you could go back and optimize things and do things a little bit different, is there anything that comes to mind?
Billy Swanson:
Well, a ton of them. One, whenever you're talking about any kind of with your family, you talk about what could be, document it. With a text, or just write it down. Because if you're not really good at communication, which we are not — which means I say something, then I ask you, so what did you hear me say? And then we correct it. We're not good at that. But if it's written down—
Made many mistakes just not writing things down when we were just thinking things, and that created a lot of fire putting out after the fact. So I would definitely say document. Document. Write things down. We're just thinking. It's just an idea, stuff like that.
Understanding the first mission statement was one that was a bit more business focused. I want to honor God while doing these things. And does your mission statement reflect the values and the real heart of what you want that organization to be? And God took me to the woodshed and sort of worked that out.
Joey Brannon:
When you did the first mission statement, were you putting language in it that you thought ought to be there for a business, instead of what you felt like God wanted you to put down?
Billy Swanson:
Well, again, while building long-lasting relationships. I love the while building long-lasting relationships. And then it was through quality installations and trustworthy service. Not sure that's how you build long-lasting relationships.
Joey Brannon:
You didn't read that in a marriage or relationship handbook.
Billy Swanson:
The point is that you're going to be a long time customer. And the employees, once you come in, you're going to be in for a long time. The whole slow to hire, quick to fire, or something like that? Boy, we were quick to hire, slow to fire. Man, you got in, long-lasting relationship, and he's like, you're just so bad.
So I was supposed to have a mission statement. So I had to come up with one. Oh, here it is. There's the mission. And it was sort of cool. I liked it. The long-lasting relationships had a lot to do with it, on how you treat people, and you just don't kick them out the door. But it didn't communicate that.
Our current mission statement, it is just every word for me. I'm stoked about it. I love every word. And I've had some boys want to change some words. I've had people that say, I think we should change this, and I would get not happy. I'm like, I would be easy going, man. Here it is. You want to change what?
And then thankfully, Simon Sinek, Start With Why. And the mission statement starts why. Honor Jesus Christ. That's where it all starts. Why does the organization exist? Honor Jesus Christ. You can put that up to every decision that you have, and it says, this is honor Jesus Christ.
Joey Brannon:
It's interesting. You said, oh, somebody wanted to change this, and more than ruffle your feathers, the temperature would start rising. You made a statement earlier, like, I don't consider myself a good leader. There's lots of ways I could take issue with that. I think you're a great leader. But I think that what you just said is one of the things that leaders need to embrace, which is there should be some things that you are not willing to litigate, to put before a committee, that are not open to interpretation.
I think there's a couple of them. Like your vision. Now, you went through a very deliberate process with the boys because you wanted them to own the vision for the next chapter of this generation.
Billy Swanson:
Absolutely. Super smart.
Joey Brannon:
They've got to be bought in, and obviously they're going to be the ones that are responsible for carrying that vision. So they ought to architect it.
Values — don't open your values up to committee. What are the values that you believe God wants you to put in place that are going to govern the behavior? That's right. And the mission. I just have a conviction, and it becomes an issue when you have partnerships, because those two people have to be on the exact same page with those foundational elements of culture.
Partnerships, there's no silver lining. You're going to the mat every day on issues that you feel this way, they feel that way, and there's a tendency to just be like, well, this is just culture stuff, or this is just mission stuff. We got projects to deliver. We'll come back to this next month.
So I think your buy-in, your commitment, your conviction — conviction is probably the best word. Your conviction around the mission and the values. I think that is a piece of leadership that if it's missing in an organization, you can't replace it with anything else. There's no operational efficiency. There's no great new hire you can make. There's not a piece of software that's going to fix that. It's a gaping hole that, like you said, to honor Jesus Christ, that's the thing you put in front of everything. If that's missing, if business is operating without some kind of conviction about this, it's a vacuum that you can't fill until that thing is there.
So last question would be on the transition with the boys. Anything that you would change? Anything you could go back and do over again that you would do differently?
Billy Swanson:
Well, I could think of all my parenting mistakes. That was, like, if I could go back. I would love to go back and take back words, take back decisions, take back how much time I spent in the organization. And I would do that over again. And thankfully, God gives you grandkids.
Joey Brannon:
That's your do over.
Billy Swanson:
That's the do over. It's easy when there's so much work that needs to be done in your business and your organization. There's just always work to be done. There's always improvement. And if you're an improving person, then there's no end to it. But there has to be an end to it.
And I know there was a time in my life where the business and the ministry — I'll call it the ministry — was more important than my family. And if I could do that over again, I would make different choices in activity.
Always wanted my dad to witness a sporting event of mine. So what did I do, man? I was like the coach of every one of our kids' sporting events. Overcompensated a lot. I overcompensated a little bit, like a lot.
And I felt safe. I felt comfortable. The rules were clear on the field. Where with my mom trying to raise four kids in the 70s, all by herself, it was chaotic at home. But on the field, it was safe. You knew exactly what to expect. And it wasn't until later I realized I was that because I felt so safe and comfortable and complete, and had a full gamut of emotions and I could express them. It doesn't mean that that's all my children had to do the same too.
Joey Brannon:
And love it. Oh yeah, exactly.
Billy Swanson:
And love it. Definitely do that differently. But you don't go back. You can't go back.
And it takes time. If you have adult children, relationally you're not there. What's more important, that meeting, or that time that you want to build a relationship with the adult? And there was a time that it was the meeting. Got to do this.
Joey Brannon:
Well, I know that's not true anymore, because I've had you leave me standing in the parking lot in the middle of a conversation because you said, I got to go have a beer with my son. It's our time. This is what we do this time of week. So kudos to keeping the first things first.
Billy Swanson:
Yeah, you lived it. I'm like, we've had good meetings, but it's just time. This is time.
Joey Brannon:
Well, I've met one of your daughters. I haven't gotten to spend time around them. I've gotten to spend some time around your boys. Got to spend some time around your nephew. Gotten to spend two wonderful weeks with you and your wife traveling.
Billy Swanson:
Oh yeah.
Joey Brannon:
And you do have a beautiful, wonderful, phenomenal family. In spite of our shortcomings, they turn out pretty good. And if we get a few things right, He's gotten a few things right.
So thanks for being here. Thanks for sharing your story and telling me some things I didn't know about you after knowing you for 20 years. It's been a pleasure.
Billy Swanson:
We have to take a three week vacation together.
Joey Brannon:
That's right.
Billy Swanson:
Pick a country. I got a passport. Thank you, Joey.
Joey Brannon:
Thanks, Billy.Description text goes here
