A Success Story: An Interview With Steve Fox, President Of Hoy-Fox Toyota
By Loyd Rawls
What were your circumstances three years ago?
We had had general discussions about the need to formulate a succession plan for a number of years, but we were at a loss as to how to go about it. We had stopped communicating like partners. Our vested interests were in conflict. It was very difficult to discuss openly our true thoughts and feelings for fear of offending or hurting. When we would have these discussions about what we were going to do, it appeared to us that there wasn't an immediate solution. We knew Steve [Bob Hoy's son] was going to play an important role in our plans, but we weren't sure what that was and we weren't sure what he wanted to do as well.
How did Toyota participate in your succession planning process?
A very important and fortunate event occurred while I was on the Toyota National Council. While attending a meeting at Toyota's headquarters in Torrance, California, one of Toyota's executives, Don Doudna, made a presentation to the Dealer Council and the Executive Board about a program his department was considering, which would help dealers with their succession planning.
Don indicated that there seemed to be a tremendous need for the dealer to properly plan for their dealership continuity. He said they were going to be looking for dealer volunteers to test this program. I was sitting there and thought, "Boy, that's exactly what we need." So, I approached Don after the meeting, asking more questions about the program he was talking about. I was excited that he was talking about something we needed to do. I asked Don if I could be one of the dealers that participated with Toyota in this test. Don indicated that he was going to involve an outside company that had a lot of expertise in this area to assist us in this process. It was definitely good for us and very timely.
How challenging was it to include the future career of Steve Hoy, Bob's son, as part of the succession discussions?
One of the first steps that our succession planner took, which was possibly the most important step, was that he spent whatever time was necessary privately interviewing my partner and his wife, his son, Steve Hoy and his wife, and then myself and my wife. He spent hours and hours speaking in confidence with us and never breaking the confidence he shared. But he found out what was making each of us tick: our goals, aspirations and dreams. He used this information to find the common ground we all shared. It was something we could never have done on our own. It would have been far too emotional for us. We could never have been so candid, open and vulnerable. A family friend or family attorney could never have done this because of perceived opinions and prejudice. Uncovering genuine feelings requires an outsider with a special understanding of interpersonal communication and the succession process. Our planner also demonstrated his experience by interviewing our key managers. He learned that they were also concerned about our succession planning. Their perspectives and feelings helped him build a succession plan for us that addressed all the critical issues.
Another thing I thought was wise was interviewing the wives. It gave him a very candid perspective and understanding of their preferences and feelings. He knew it would be very difficult to develop a plan that would work for all concerned. I learned that if I go home and my wife thinks a plan is not a good deal, that I am probably selling myself short. Having our wives' understanding and bringing them into the process makes them feel appreciated.
What impact has this had on your relationship with Bob and Steve Hoy?
One of the nicest blessings was moving from a stalemate. This process put us all on the same page together, united in a common goal. Prior to creating our succession plan, we were each overwhelmed with what we perceived as being an insurmountable roadblock. With the help of an experienced facilitator, we learned that if you stay in communication, a workable solution can be found.
A very nice thing that has come out of this is that we have seen Bob's son and now my partner, Steve Hoy, really mature and take a leader's role in our organization. Our succession planner helped us to be ready for his new role by recommending he attend the NADA Dealer Academy. We found the school to be very good in helping to prepare Steve for his new role as GM of the World Auto Marketplace which is comprised of Volkswagen, Volvo and Mercedes franchises, and also the Acura & Infinity dealerships.
One of the interesting discoveries during this process was that Steve [Hoy] was not unhappy in the business. He was simply frustrated. Steve had been working with us for over 10 years. Many promises had been made about his future role in the dealership, but those promises had not been delivered. That lack of follow- through had started to wear him down. Neither Bob nor I understood this issue and the impact it was having upon him. It wasn't the car business; it was unfilled commitments. He was sensitive to his father, and didn't want to push him ahead of his own time schedule over owning dealership property. Communications have been improved and relationships are stronger than ever. We are no longer afraid to bring up the previous topics for fear of having a confrontation and hurting one another's feelings.
What impact has this experience had upon your overall business performance?
Our business continues to be successful, however, the morale has improved now that we have answered the monumental succession questions. We feel better about where we are going and our managers have peace of mind that they are not going to be part of a train wreck.
How has this impacted you personally?
It's been a real blessing for me, because I am now able to chart a path for the rest of my career. Prior, I was feeling a lot of frustration not knowing what steps I needed to take to enhance the rest of my career. I did not want to abandon my friend and partner of 23 years at that time, and I didn't want to continue at status quo nor did he. So by formulating a succession plan, we were all able to find an acceptable plan for the immediate and foreseeable future.
It took a lot of pressure off of Bob too. He wanted very much to accommodate my goals and wishes, yet at the same time it was important to have his son involved, successful and happy in the business.
Were there any other surprises you hadn't counted on during this process?
Thankfully no. We were each well prepared for the whole process. I don't feel there were any large surprises at all.
How has this affected your family?
Getting this completed helped my wife, because I had been venting my frustration over this issue at home. Then a strange turn of events occurred the week of Bob Hoy's retirement party: I was diagnosed with cancer. This was a very frightening and shocking experience because I was the young one. I was healthy and all of the succession plans had been put in place for Bob's retirement and for Steve & I to continue the business. As I faced this challenge, I was extremely grateful that on my long list of things I was worried about, our succession plan and my family estate were in order. And I can't tell you how important that is when you are faced with a possibly life threatening situation.
Is there anything you would do differently?
Well, I'm satisfied that the overall planning was done very well. The only thing I would have done differently was to buy the recommended life insurance early on when it was available. In retrospect, there was no advantage for me to wait. Unfortunately, I was not as bullet proof as I thought. My succession planner had urged me to do this, and I chose to put it off. Now with my health condition, insurance is not available.
How did bringing in a succession planner effect your relationships with your attorney and CPA?
Our succession planner did an excellent job in working with our local attorney and CPA. At the outset, he told us, and our advisors, that he was merely the leader of a team effort and that he would rely upon our attorney and accountant to do their part. His firm helped design the documents developed to accomplish our business and estate needs. It was a real nice feature. We were able to keep long-standing relationships with these valued advisors.
What advice or recommendations would you make to an auto dealer, or for that matter, any business owner, who has been postponing succession planning?
Recently a friend of mine in the car business told me a similar horror story about being diagnosed with possible cancer. They felt they needed to do emergency surgery on him. The night before he was scheduled for surgery, he was in a complete state of panic with his attorneys, trying to put together a will and a succession plan. Fortunately, it turned out his surgery worked out fine and tumors were benign. However, it gave him a good look at how unprepared he was.
In light of the peace of mind I have as I face a significant health challenge, I strongly urge business owners to address business succession and estate planning. There is just so much, so many at risk. I also recommend that you get good advisors and listen to them. I had been recommended to buy life insurance, but I was waiting for reasons I can no longer recall. We all seem to have the belief that nothing bad or serious will happen to us, so we put off what we know we need to do, until we have no other choice.
Any last thoughts you would like to share?
Yes. I guess it doesn't really matter what company you choose, just be sure to use somebody to get this work done. Keep in mind that this is a different process than personal estate planning. Without someone with this specialized succession planning experience, I do not think you can expect the same high level of result.
Our succession planner was very candid and told us the truth, whether we wanted to hear it or not. That was one of the things that moved us off from the center position. He was polite, but brutally honest when we were wrong. When our thought process was going down the wrong path, he wasn't afraid to tell us we were going down the wrong road. It is hard for a friend or family attorney to tell you these truths, because they don't want to hurt your feelings. Our guy was there to do a job, and I thank God for that.
Loyd H. Rawls, CLU, ChFC, MSFS, of The Rawls Company, Orlando, Fla., has specialized in family estate and succession planning for closely held family owned businesses since 1973. lrawls@dealeronline.com
