Jukka Ovaska knows the 5 P’s -- Prior Planning Prevents Poor Performance -- intimately.
The former aircraft maintenance technician and entrepreneur learned some hard lessons when he was part owner in a promising southern Ontario wood composites venture that was done in by poor planning.
Ovaska, the future owner of Nordic Energy Systems in Sudbury, recalls that they had a product with great prospects, but there were “too many heads” calling the shots.
“I was the minority shareholder but the most active.”
When the business flopped, the secured creditors were taken care of. Ovaska is still owed hundreds of thousands of dollars. “When you’re not holding the majority of the bag.....”
With no business plan, there was no clear assignment of responsibilities among the five shareholders and tasks weren’t defined.
“Without any distinct planning, you’re almost guaranteed a catastrophic end,” says Ovaska.
That disastrous outcome was not lost on him. This time, he vows to do things differently.
These days, he’s involved with lawyers, accountants and business planning consultants while working through a succession plan of inheriting the family business
Last year, his in-laws --Aira and Martti Lindroos -- announced they were ready to retire from Nordic, a business they started in 1979.
The husband and wife team began manufacturing water furnaces with a storefront, before becoming an all-retail dealer of fireplaces, wood pellet stoves, gas, oil and heating products. They have a small three-employee firm on Long Lake Road in Sudbury’s south end.
After working in the cyclical aircraft assembly industry, Ovaska dropped plans to move to the U.S., and the gypsy lifestyle of his maintenance career to return to Sudbury where he’s been learning the ropes of the business for the last year and a half.
Ovaska has his own ideas with big plans to transform the Mom-and-Pop shop to a larger, more expansive retail outlet with a bigger showroom to push the big ticket fireplace items out front and to hire more customer service staff.
“I’ve visited a lot of hearth specialty stores and it would be nice to make it a destination store.”
Though it can be a difficult to separate the family ties from a business relationship, he realizes it’s only natural for his in-laws, the original owners, to want to keep their hands on the tiller.
“I know there’s going to be lumps, that comes with the territory.”
But he promises to draw the line. “There’s gotta be a clean break.”
That’s why with a Royal Bank Guide to Retiring brochure in hand, he’s having a third party prepare all the purchase documents, review any ownership questions and address any restructuring issues under new ownership. That will all be reviewed by legal and accounting advisers because of the tax implications.
Most small and medium-sized Canadian business are family-owned and while many owners want to keep the company within the house, many surveys suggest precious little planning is done to pass the reins over to the younger generation. According to RBC figures, 70 per cent of family-owned businesses do not pass to a second generation and only one in 10 move to a third.
Not putting an exit strategy in writing and not understanding the legal and tax issues, as well as not having a qualified successor can have dire consequences for the business, its employees and possibly the original owners’ retirement plans.
His mother-in-law Aira says the process of separating herself from the business is a “day-by-day” process. But she feels confident the business is in good hands.
“So far he’s done well so I’m kind of pulling myself away. It’s doesn’t have to happen overnight (so) it becomes more gradual.”
Says Jukka: “Anybody who starts a business, it’s their baby and it’s hard to give it up.
“From past experience, I’m hoping that by going the right way now, it’ll be a lot less expensive than goofing up by being cheap. You have to be able to admit you made a mistake and ask, can you help someone avoid that?"
