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Family Matters at Jori International

Step #2 - The Woods family tries to balance success with succession

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The Meeting

Jori International, a Calgary-based freight forwarding and customs brokerage firm, is in many ways the quintessential family business. Like a lot of those in Alberta, Jori  faces the prospect of transitioning leadership from one generation to the next, and doing so while pursuing expansion. For Jori International,poised to benefit from growing trade with Asia, a new free trade agreement with Europe and the exponential growth in the movement of oil by rail, those opportunities are particularly appealing. It all makes a smooth transition even more important.

The first advisor meeting between Next Step participant Jori International and the advisor team provided by Alberta Venture was held on Monday, December 2, in Calgary. Jori CEO Rick Woods and his son, Sam, along with members of their executive team, met with program advisors Wellington Holbrook, executive vice-president of ATB’s business & agriculture division, Douglas Ballou, a lawyer with Macpherson, Leslie & Tyerman, and Sharaz Khan, a professor with the Haskayne School of Businesss. And while HR concerns loomed large over the conversation – due in no small part to the fact that one of the company’s employees had just recently quit – it was the issue of transitioning the business that clearly mattered most to all parties.

The Goal

Rick Woods has built a successful business in customs brokerage and freight-forwarding, and it’s one he thinks could – and should – continue to grow. “It didn’t take me long from when I first started in the business to realize that, as you drive down the street, you see nothing but opportunity,” he says. “And I just see it growing and growing and growing.” But he understands that he won’t be able to run the business forever, and he wants to find a way to pass the baton to his son Sam without disruption. “This is really our life’s investment. I want to make sure that we do the transition right so I protect myself for the future.”

The Challenges

ATB’s Wellington Holbrook has seen this story before. “It’s an issue that a lot of businesses in Alberta are dealing with right now,” he says. “When you look at the average age of entrepreneurs, I think that suggests that something like 40 per cent of them are 55 or older.” And, he says, it doesn’t always have a happy ending. “Many businesses do run into difficult situations, and unfortunately not all of them work out well. We’ve seen situations where businesses actually end up getting wound down because the first generation couldn’t let go and the second generation gives up as a result.”

In this case, can the father give his son the room he needs to succeed? “I have a lot of faith in him, but he needs to see a few more things,” Rick Woods says. “He needs to make a few mistakes, and bounce back from them. You can learn a lot at school, but there’s still the school of hard knocks.”

The Way Forward

Rick and Sam have time before the transition has to take place. Holbrook says the fact that they’re already thinking about how to do it gives them a decent head start – but  they can’t do it alone. “You’ve got to engage your professionals in the right conversations, and have people around you that can give you the right advice,” Holbrook says. “You’ve got your accountant, your lawyer and your banker, and if you don’t have professionals in those three categories who can really understand the challenges of succession or who aren’t willing to give you the tough feedback that you might need to hear, you need to get new professionals.”

Macpherson, Leslie & Tyerman’s Doug Ballou says they also need to make sure they don’t conflate the process of transferring the ownership of the business from one generation to the next with the handoff of managerial control.  “They might get very different advice – and come to very different conclusions – in terms of how to address those two issues,” he says, noting that just because someone has a 25 per cent ownership interest doesn’t necessarily give them a 25 per cent say in how it’s managed.

The Debrief

AV: Is Sam ready to step forward?

Rick Woods: “I think some of them might just be waiting for him to step forward quicker. I think most of them believe in him. As a matter of fact, I can’t think of any that don’t. But to get into certain positions, you need to experience some stuff. You need to have a complete understanding of what the business does, and he recognizes that – he probably recognizes that more than I do.”

AV: What’s Rick’s biggest strength?

Wellington Holbrook: “I think he’s doing the right thing. He wants to talk about it, and he wants to get the right guidance and support to do it. But going through the motions and actually doing it at the end of the day are two different things, and I certainly believe it’s going to be a challenge for Rick. Jori is part of his DNA, and he’s going to have a really hard time leaving it.”

AV: On the importance of next-generation leadership when it comes to implementing new technology and systems

Sharaz Khan: “If you don’t have executive buy-in, everything is just a wash – nothing will go forward. And while Rick may be gun-shy about investing [in new systems] and not seeing the return, hopefully Sam will understand that.”

The Next Step

Rick, Sam and their advisor team will regroup in February, after they’ve had time to reflect on the road ahead. And Holbrook, for his part, thinks that the strengths that helped get Rick where he is today will come in handy. “Rick is totally what you would have expected to see in that environment. He’s got a kind of street fighter mentality. This is a guy you’re not going to hold back, and he’s going to fight his way through any challenges he comes up against.”

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