Outside Job: How to Plan for Non-Family Succession

Outside Job: How to Plan for Non-Family Succession” by Peter van Aartrijk originally appeared on IAmagazine.com and is reprinted here with permission.

Jim Garner, 63, says the sale of his agency will close in January—13 years after he started planning.

Garner and his two partners learned from the prior owners of Wayah Insurance in Franklin, North Carolina to identify future successors early. “We made it obvious to them that they’re potential owners, and treated them as such,” he says.

Two buyers are producers who have been working at an agency for 10-15 years; the other has been on hand for 10 years and now handles operations. All are in their mid-40s—and none are family members.

“My son works here, but it’s not his turn,” Garner says. “If he’s successful and does what he needs to do, he’ll be in the group that buys the new guys out. But he’s barely 30. People look at me like I’m crazy, but I’ve seen too many agencies have family struggles with people who haven’t carried the mail as they should.”

If 13 years sounds like a long time, that’s because it is—intentionally. A successful perpetuation plan can take a decade to create, especially when no family members are lining up to take the helm. “Preparing for perpetuation may be the most important thing an owner invests in,” warns Mike Strakhov, domain expert with Live Oak Bank.

Failing to plan early will put a smooth succession takeoff at risk, agrees Robert Pettinicchi, executive vice president and chief lending officer of InsurBanc, a division of Connecticut Community Bank, N.A., which serves independent agents nationally. “It’s all about having that runway.”

Finding The One

Succession deals work best when buyers and sellers work together for a while. Stacy Reid joined her Lovington, New Mexico-based agency as a CSR in 1992 and bought it in 2008. “Definitely get someone started five to 10 years prior to your retiring so you can mentor them,” she advises.

Reid spent five years under the wing of the former owner. “I learned every bit of the business,” she says, noting that producers typically learn just insurance. “That was the hardest part for me—figuring out accounting, expenses, agency bill and direct bill. You need to know that upside down and backwards, even if you hire someone else to do it.”

Reid bought the firm in 2008 with a combination of financing from InsurBanc and personal savings. Since then, she says, business has doubled and she looks forward to starting her own perpetuation plan.

“I can’t emphasize enough that this is an execution of a plan versus an opportunistic play,” Strakhov says. “The sooner you have the people identified and acting together, the quicker this will go.”

The significant revenue generators for an agency are typical candidates for a purchase. But top producer skills might not be transferable, says Mary Eisenhart Belka, owner & CEO of Eisenhart Consulting Group, Lincoln, Nebraska.

“Many good producers don’t necessarily have the ability to lead or to run the agency like a real business—especially when the agency hasn’t been run like a real business in the first place,” Eisenhart Belka explains. “You need a very good business-minded CEO.”

Try targeting someone who has worked through four of five years of various cycles in different parts of the organization, and demonstrated they have the outlook of a business owner. “Surrounding yourself with the right people builds the value,” Pettinicchi says. “Talent usually flows to equity.”

Property-casualty producer Jeff Gingerelli and employee benefits specialist Lenny Barone, both 36, recently became equity members of Lynoxx Group, based in Mahwah, New Jersey. Barone produces and oversees accounting and administration; Gingerelli handles production and marketing.

Four years ago, Gingerelli says, “We were both the same age, we both were recently married and had young families. I said to Lenny, ‘Where is my future here? Lenny said, ‘I want to buy this place someday. Maybe you and I should be partners.’”

That is a lesson for other junior producers looking for ownership, Gingerelli says: “You have to be patient. Lenny and I had aspirations, and it took four years to come to fruition. Your patience can run thin when you think of it every day. But don’t do something rash.”

Fred Serra, CEO of Serra & DelVecchio Insurance based in Shelton, Connecticut, says he and buying partner Justin DelVecchio brought different strengths to the table in benefits and p-c production. The two had individual firms and began discussing concepts and sales philosophy in 2008.

Communication has been crucial to their partnership. “We both understand each other’s business and how it worked and how to make the sum greater than the parts,” Serra explains. Eight years later, “it couldn’t be better.”

Upping Your Value

Want top dollar for your firm? Of course you do. That’s why a buyer or lender shouldn’t have to hire Sherlock Holmes for forensic accounting on the books.

“Run your agency like you’re selling tomorrow,” Strakhov advises. That means keeping company contracts, corporate documents and financials clean and updated.

Agencies should have a strong controller or CFO on staff to guide the direction. “It’s hard to get a deal approved when the financials are a mess,” agrees Patrick Burns, vice president of small business lending at CapitalSource.

Consider Gingerelli and Barone, who worked 60-hour weeks for three months to organize financials for a valuation their lender, Live Oak Bank, requested. Lenders say an agency’s performance in the last two years of a three-year valuation window could result in a significantly higher valuation—and a better loan.

Consider two agencies with $1 million revenue each, but one shows a $150,000 cash flow and the other $300,000. The latter is twice as valuable. “It’s like a house—before you sell it, you clean it up and paint,” Burns says. “You hire a realtor to help you assess how to maximize the value of your house. Don’t do this alone. Get a consultant.”

The clean-up process could expose some uncomfortable inefficiencies. “Someone who is taking a six-figure salary but is doing very little work—like 20 hours a week—is not efficient,” Burns says. “If he takes on a 40-hour week for a couple of years, you can see a dramatic increase in the value of the business.”

When preparing for a valuation, “too many times, agencies look at 35,000-foot level metrics,” says Dave Evans, Big “I” senior vice president. “A valuation is not a commodity.” Instead, a good valuation dives in, covering areas such as producer relationships, the impact of certain large accounts, overall mix of business, niches, technology prowess (or lack thereof), marketing skill, cash flows and strategic planning.

In most agencies, Eisenhart Belka says, six to 20 top accounts pay for the remaining unprofitable accounts—or as many as 80% of clients bring in only 20% of revenue. “That’s a vulnerability,” she says. “Valuations take that into account.”

And remember: An agency valuation is required for tax purposes.

Paying For It

Once buyer and seller agree on a price, the next step is funding the deal. You might not need a bank: Garner is financing a 10-year note by himself. But “that makes a lot of people choke,” he admits.

Many local banks don’t understand the value of an independent agency. They want collateral. Several cater to the industry and understand it, and several offer succession loans for independent agencies—such as InsurBanc, which was created in a partnership with the Big “I.”

Strakhov meets with every borrower prior to a loan to discuss profitability and cash flow, ability to pay back debt, business plans, E&O concerns, carrier mix, book of business, expansion plans and more. In many scenarios, the bank funds 75% of the note, with the seller financing the remainder.

If you’re elevating a single person to ownership status and they have major accounts, “you might want to hold some stock back and say to them you’re going to reward them for keeping accounts,” Evans suggests. “Continuity is really important for a typical agency.”

While loans will be lower or higher, typical succession deals are $1.5-3 million and range from four to 10 years—longer if real estate is involved. With financing, buyers won’t overpay because all parties are held accountable in the valuation, points out David Tralka, president & CEO of InsurBanc.

Cutting the Cord

Eisenhart Belka urges selling principals to let the newcomers run the show. “I’m not a fan of the former owner staying on,” she says. “It absolutely doesn’t work 95% of the time. They stand in the way of progress.”

Garner will assist with some key accounts for a while after the sale happens in January. Beyond that, he’s out—and he advises his fellow agency owners to consider doing the same.

“There is no shortage of talented younger folks to buy these agencies,” Garner says. “The downside is owners not willing to turn them loose. We don’t think anyone can replace us. But they’re better than we are.”

Peter van Aartrijk is an IA contributor.

Pharmacy Podcast Presents: TelePharm Empowering Pharmacy

Many pharmacists are interested in telepharmacy, but have questions about structure and functionality. Join Greg Janes, Chief Marketing Officer of TelePharm, as he shares the vision of telemedicine delivered by community pharmacies, empowered by TelePharm’s advanced technology. Greg will answer questions like: What is telepharmacy? How does telepharmacy work and why is it important? He’ll also discuss how telepharmacy can be used to expand an existing pharmacy business.



Understand the Numbers that Affect Your Funeral Operation’s Fiscal Health

Understand the numbers that affect your operation’s fiscal health

Written by ICCFA

Recap of “Vital Signs: Is Your Funeral Business Healthy?” presented by Tim Bridgers

Debt service coverage explains how much money you have to cover every dollar of debt. The national average here is 2.02 times. What that means is you have $2.02 to pay every dollar of debt you have in your business.

I can tell you, as a financial institution, I’m looking for 1.25 for every dollar of debt. So this is a nice average—two times is really good. The higher the number, the more profitable that business is.

Let’s look at this example:

We have Funeral Home One with 140 calls and a 73 percent cremation rate, and we have Funeral Home Two with 800 calls and a similar cremation rate.

Funeral Home Two is around six times the call volume of Funeral Home One. However, Funeral Home Two’s revenues are about seven times the revenues of Funeral Home One, therefore the revenue per call of Funeral Home Two is greater.

What does that mean for Funeral Home One? Well, if you look at Funeral Home One’s cost of goods sold, you notice that it’s about 20 percent higher than the state average. That’s one thing to look at.

Number two, look at the debt service coverage. Remember when we said that as a banker, I want 1.25 as a minimum for you to be able to acquire, expand, add debt? It’s 0.95. That means that Funeral Home One has 95 cents to cover every dollar of debt they have.

When you look at it that way, that’s a pretty important metric to know about your business—especially if you’re thinking about adding debt.

What can we do to improve this? One, the revenue per funeral call from Funeral Home One is less than the revenue per funeral call from Funeral Home Two, so there might need to be an adjustment of price points.

Maybe you evaluate things. “Am I charging enough? Is my service charge in line with my competition? Or am I trying to gain market share by dropping my prices, therefore hurting my cash flow?”

Maybe you consider changes. “I’m going to increase my price, but I’m going to justify that by adding more experience for the customer.” Maybe this starts driving the direction of your business.

Be aware of what cremation is doing to your company’s revenues

The first thing I do when I look at financials is I look at the trend of revenue over the past four to five years. Are revenues going down as call volume goes up? Obviously that’s a sign of cremation increase. To me, that sparks the question, what are you doing to increase the service charge for cremation, which is obviously impacting your revenue.

And I can’t tell you how many times I’ve had a funeral home owner say, “What do you mean? I’ve increased my calls by 15 this year.”

Yes, but half of those were cremations, and it caused your revenue trend to drop. Be aware of what your profession’s trends are doing to your revenue model.

A webinar recording of this presentation is available here.

Posted with permission from ICCFA. Download the article here.


Free Webinar: Veterinary Practice Renovation vs. New Construction

Build New or Renovate: What’s Best for Your Veterinary Practice?

Date: Wednesday, August 31

Time: 5:30 PM EST

Register here

Presented by: Will Frazier with Live Oak Bank and Mark Moore and Melanie Friedman with FMD Architects



Is the layout of your practice no longer functional? Has an increase in clients made the building seem smaller? Are you starting to notice wear and tear or outdated features?

You know it’s time to update the facilities, but how do you decide between constructing a new building or renovating your current space? During “Build New or Renovate: What’s Best for Your Veterinary Practice?” the experts from FMD Architects and Live Oak Bank will guide you through what to consider when making this decision. We’ll help you:

  • Weigh the short-term and long-term benefits
  • Explore key factors in your current practice location that could make a renovation favorable or unfavorable
  • Determine your “revenue generators” to support the new build or renovation
  • And more!

If you have questions regarding veterinary practice financing or veterinary practice renovation prior to the webinar, we’d be happy to help! Contact Will Frazier at 910-207-0168 or will.frazier@liveoakbank.com.

Bank On It: Lending a Helping Hand to Independent Community Pharmacies

Download PDF here by Josef Aukee

In the past six years, Live Oak Bank has helped community pharmacists start, build, or expand their businesses with more than 600 loans totaling $650 million. Meanwhile, the industry  evolved, health care  plans  and providers  saw radical  change, and the technology revolution arrived for pharmacies. With challenges facing the transition of legacy pharmacies (such  as predatory chains and reduced reimbursements), Live Oak brought a laser focus to pharmacy lending.  It has  a dedicated a team  of seasoned experts  in the field to help facilitate  the transfer of ownership to a new generation of pharmacists with an entrepreneurial spirit.

This profile of the bank’s early assumptions and objectives  offers a close-up view of how pharmacy business financing has grown, the influence of industry changes, and practical tips for taking advantage of all that Live Oak offers.


With a strong national footprint  in small  business loans  for startups in industries as disparate as dental and veterinary  practices, a few like-minded professionals met in the hallway at an NCPA conference in 2009. The organization  would later officially partner with Live Oak to facilitate the financing of independent community pharmacies. Existing and prospective owners soon  began to apply for the funding required to refinance, expand, or acquire pharmacies.

This new partnership and a growing awareness of the bank’s capabilities created a link to thousands of pharmacy owners  and allowed prospective buyers to flourish. Many would be owners  were often turned away by traditional lending  institutions, which treated community pharmacies much as they would any other small business, either rejecting proposals or offering financial  terms  that were impractical for the industry and prospective owners.  By contrast, the Live Oak team,  experts  in both pharmacy and Small Business Administration (SBA) loans,  understood and recognized the earning potential  of community pharmacies and the value of resalable inventory and prescription files.

Commenting at the time, NCPA CEO B. Douglas  Hoey, Pharmacist, MBA, said, “Independent community pharmacies focus on patient  care and a wide array of services that their competitors  cannot replicate, but it can be difficult for prospective owners to secure financing for these purchases. That’s why this partnership between NCPA and Live Oak Bank is a game changer. NCPA will use the full weight of its assets to alert potential  buyers of this great  lending  resource.”

While the size of this explosive market is difficult to determine, doing the simple math  of a generational change in a health  care sector supporting some 22,000 pharmacies means that more than  1,000 such legacy pharmacies change hands each  year. Live Oak’s first customers were often those needing refinancing of current loans, but the bank quickly moved into acquisitions, working capital  for growth, expansion into compounding labs, specialty  pharmacy and LTC facilities, and equipment and file buys.

“No one else has dedicated as many resources to pharmacy as Live Oak with 19 people on our team  to provide the highest level of service,” says Jimmy Neil, Live Oak general manager.


If you want to own a pharmacy and/ or expand  your business, you’ll need good to excellent credit, and be prepared to contribute the most uncomfortable amount of cash you can toward the acquisition (typically 10 percent). You’ll also want to be ready to convince  an expert team  that you have the skills necessary to accomplish your goals.

“We are looking for individuals who have a passion for succeeding,” Neil says, “and have the ability to manage and operate a small business in a very challenging environment.”


While some prospective entrepreneurs have connections to a legacy pharmacy, others have to do their research identifying potential opportunities in desired locations.

While there  are a handful of business brokers  who specialize in pharmacy, most  drug wholesalers have sales forces  that manage specific  territories and have a steady  pulse  on opportunities in a given local market. Wholesalers have a vested  interest in keeping community pharmacies independent. NCPA offers an independent pharmacy matching service devoted  to bringing buyers  and sellers  together. Also, consider attending NCPA’s Ownership Workshop  sponsored by McKesson, a continuing education program designed to help a prospective buyer become a successful independent community pharmacy owner. Networking is essential. Use tools readily available such as local business groups, trade conferences, social media  platforms such as LinkedIn, and community health  care connections. Live Oak has found that the average  age of pharmacy owners is 62, and recommends using  a low- key confidential approach to connect with existing legacy businesses. Many traditional pharmacy owners  are interested in a dedicated new generation of pharmacists who are committed to maintaining an established business with close ties to both employees and patients in a community.

Recent  trends indicate high interest not only in acquisitions, but also in demand for expansion through long-term care facilities, specialty drugs (such as HIV, Hep C, fertility and others), compounding labs, and other high touch, patient-centered care services and automation.

“The winning characteristics we find in those seeking  financing are often similar: those who are knowledgeable in pharmacy combined with a passion for caring  for patients, a people-centered approach to innovation,  a sense of customer service, and reliance on training  staff to reflect their philosophy,” Neil says. “These are people who take the time to know their patients by name and are engaged in the community where they live and work.”


Lower reimbursements from health care  plans, PBM requirements, bottom  line costs and the like are just a few challenges facing community pharmacy. In many cases, a willingness to innovate  can address these issues. New technologies can help reduce staff time required to accomplish routine  tasks,  increase patient adherence to regimes, process claims, and automate communications with patients, providers,  and suppliers. Embracing change has been the leading  trend  in the most successful pharmacies.

In the past,  only 20 percent of disbursements were generics, but now as many as 90 percent of prescriptions are filled via that route. Community pharmacists have found ways to innovate by developing  front-end merchandise offerings, providing medication synchronization and delivery services, offering vaccinations, compounding, and specialty drugs, along with servicing  LTC facilities.

Many of these services require  investment  that can pay dividends for years to come, not only through customer loyalty, but also by expanding the services that attract and maintain new patients and provider referrals.


Live Oak Bank sees a bright future for community pharmacy. A team  of industry experts  in both pharmacy and financing can help bring businesses into the competitive  landscape, rewarding those  dedicated to patient care in ways that chains can never replicate. It has invested  in programs with organizations such as NCPA to bring awareness to owners  that tapping the resources required to meet new challenges is available for those pursuing success. Neil says, “A strong  track record needs no defense. We are confident in the future of pharmacy and are fully committed to helping  both those businesses in transition and those stepping up to meet the challenges and opportunities for tomorrow.”

Josef Aukee is a writer and marketing communications consultant based in Sausalito, Calif. His work covers a variety of business, events, health care, technology, and travel topics






How to Qualify for Veterinary Financing on Your Own

We often talk to women veterinarians who are unsure if they will be able to qualify for financing, especially without a co-signer or partner in the deal. With little money to put down and often high student debt, practice ownership seems inaccessible.

However, this is not the case! Depending on the situation, we often encourage a first-time practice owner to put the practice only in her name. Becoming a business owner and practicing medicine at the same time can bring a lot of stress, and in some cases, partnerships create more stress. So, what does a lender consider when qualifying someone for financing?

Your lender will look at the full financial landscape, including both the business’s finances and your personal finances. If you plan to purchase an existing vet practice, the bank will look at the cash flow of that business. The lender wants to know the practice is bringing in enough money to cover the business expenses, business debt and your salary. When determining your salary, student debt payments should be taken into account to ensure the practice can support our lifestyle.

When preparing for ownership, do not let student debt hinder you. Instead, focus on protecting you personal credit by paying bills on time and avoiding unnecessary or lavish purchases that require opening a credit card. Filing for bankruptcy will make qualifying for financing very difficult and should be avoided at all costs. If your personal credit and the practice’s financials are strong, you will be in a good position to purchase the practice on your own!

Take a look at this example:

veterinary financing


In this example, the monthly payment equals $13,800*. When you add together the yearly loan payment and the owner’s salary, the practice still had excess earnings of $123,000.

As you approach ownership, it may be helpful to work with an industry consultant to find the practice that matches your style of medicine and meets your financial needs.

If you have questions about financing or the process, don’t hesitate to ask!

*Each business, and business owner’s situation, is unique, we evaluate the rates on a loan-by-loan basis. Your specific rate and terms will be solidified in a loan proposal once this evaluation is complete. Monthly payment amount in this example is based on the Live Oak Bank loan terms plus the seller carry note terms.

Claiming Your Brewery Business on Untappd

You invest tremendous time and energy in producing craft beers that display your personal creativity and that appeal to the tastes of your customers. But how do you ever truly know what customers think about your brews? Connecting with your patrons and enthusiasts via the social mobile app Untappd is one great way to consistently measure the success of your brewery’s products.

What Is Untappd?

The Untappd platform allows you to claim your brewery business then create a profile that helps start conversations online about your beers and small business. You can gain incredible insights into the popularity and distribution of your products through this application’s data analysis tools and trend reports. The ability to match the performance data of your craft beers against the current industry is a highly valuable tool.

How To Claim Your Brewery Business

Claiming your brewery on Untappd is fairly easy. First, you must attempt to search for your brewery on the Untappd website from a desktop, laptop, or tablet device. You cannot search for your business using the app or any device that uses a small screen for navigation. Start searching for your brewery here. If your brewery isn’t found, then contact Untappd here.

Once you’ve found your brewery, then look for a blue button on the page that says “Claim This Brewery.” Click the button to begin the claiming process. If you instead see a blue star next to your brewery, then someone has already claimed it. You should contact Untappd support here to inquire about or dispute this claim. Otherwise, confirm your request on the next screen by selecting “Yes, continue” to proceed.

Next, you will see a form that needs to be filled out with basic contact details about you and your brewery. When signing up, you should use a primary email account that you monitor closely. This will ensure that important notices and customer feedback are received and addressed promptly. After the form is accurately completed, click “Submit Request” to advance.

Upon receiving your brewery claiming request, the Untappd staff will reach out to you directly to confirm your identity and verify that you’re the true business owner. They will assist you with finalizing your account so that you can begin logging in to manage your profile, add beers, view insights, and engage with your customers. If you require further assistance, you may go to help.untappd.com. Now, you’re ready to get Untappd!


Not so fast! Let’s briefly talk about badges. Untappd badges are a popular way that customers can express their devotion and admiration for your beers and breweries. Each time a customer checks in, their activities are logged by Untappd and users can be awarded various badges as marks of achievement or participation.

These badges can spark competition amongst friends and drive business for your brewery. Custom badges can be designed on a limited basis for your brewery in collaboration with Untappd. And, of course, all these badges can be shared with friends on Facebook and Twitter.


For further updates and resources about this popular craft beer app, follow Untappd on Twitter at @Untappd.  Still curious about how Untappd works? Watch this short overview video or visit their blog to learn more. Cheers!


Welcome to Untappd! from Untappd on Vimeo.

Top 5 Ways to Update Your Bowling Center This Summer

Project planning has become a year-round proposition for bowling centers across the U.S. As the industry continues to enjoy better revenue streams, many customers are in a prime position to take on remodeling projects that will further enhance their operations, solidify their market position and improve their cash flow. These projects are our top five recommendations to consider for updating your bowling center this summer.

1. Personnel & Staff Training 

When prioritizing how to invest back into a bowling center operation, your staff should always be first and foremost. As part of the yearly planning process, a curriculum should be developed for in-center staff training as well as scheduling outside training, such as BPAA’s Bowling University. In addition, center operators can take advantage of industry conferences & events such as F2FEC. Don’t overlook the multitude of independent consultants who offer training programs in virtually every aspect of your operation. This funding of education, although small in comparison to other center expenses, pays large dividends in customer satisfaction, employee ratings and maintenance of a stable workforce over time.

2. Exterior Remodeling: 

We continue to see the new casual customer take an interest in bowling, making curb appeal that much more important. You may want to ask yourself these questions:

* What is our image to the general public from the street?

* Is our facility attractive and inviting?

* How do we fare with nighttime guests? Your exterior image is your calling card to all those potential customers who most likely have never stepped foot in your establishment.

The first step in external remodeling is determining the size and scope of a potential project. Some modest exterior remodels can cost as little as $30,000 and are quite effective in creating visual appeal for the venue. On the other hand, major exterior projects can exceed $250,000, and touch all aspects of the exterior offering.

There are several points to keep in mind when determining the type of project that makes most sense. First, determine must-haves and develop a budget that makes fiscal sense for the operation. Prioritize the project, with entrances being a priority. Because this is a nighttime business, design should address both daytime and night business—lighting should be a critical component in the project. Second, security for your patron should also be addressed with lighting systems. Lastly, remember that signage—both freestanding and on the building—play an important role in a project of this nature.

3. Synthetic Lane Replacement: 

For most bowling proprietors, offering synthetic lanes to your customer base has been a mainstay for the past 25 to 30 years. Many of you are now contemplating replacement, and the options are endless. Consider something you haven’t done in the past! As the bowling industry continues to evolve, centers are equally serving the league customer and the casual guest. For the competitive bowler, there are synthetic lane systems designed with down-lane markings that will benefit bowlers of all skill levels.

Now think about the opportunities with synthetic lanes for your casual customer. The lane area of a bowling center takes up the most square-footage of a bowling venue. For those guests looking for a “Wow!” effect from their bowling experience, the newer, colorful and custom lane options are endless and provide a real entertainment environment. The colorful lane options offer a sophisticated look compared to traditional synthetic lanes. Custom lane offerings also create distinctive themed bowling environments. Just stop for a moment and look around the U.S. at all the high-profile venues installing these systems—they scream entertainment!

For budgeting purposes, we recommend starting at $6,500 to $7,000 per lane, with custom options increasing from there. Take some time to really investigate the entire family of synthetic lanes, there are some real opportunities to take advantage of for both the competitive and casual customer.

4. Automatic Scoring, Center Management Systems: 

Over the last five years, automatic scoring has become a focal point for many customers reinvesting into their business. Many of those owners take the wrong approach and only replace older, tired systems or just upgrade the overheads and leaving the existing scoring in tact. If you are investing in new scoring just to replace what you have, save your money and take the time to really learn what options are available for automatic scoring and center management systems.

The real driver of new scoring and management systems should address and provide the proprietor with tools to drive and increase customer traffic, enhance the guest experience and increase the per capita sales ticket. Providing great guest experiences enables you to market to and create a repeat customer. Automatic scoring isn’t just about keeping score anymore. In today’s marketplace, it’s a shining star that also drives revenues while controlling expenses. For planning purposes, new systems today are averaging out at approximately $7,500 per lane.

5. Concourse, Settee Modernization: 

Recently, many owners have considered remodeling the concourse/bowlers settee area of a center. When taking on renovations of this scale, always keep in mind what you want the end product and design to look like.

Masking units and sidewalls should always match in design and color. The type of ceiling—drop or open air—along with lighting schemes should be identified early on. These are modernization pieces that should be part of the overall design process, but we’ll put them aside and only focus on the concourse/settee remodel.

When focusing on the concourse/bowler settee area, the first order of business is to develop a budget and color board depicting the project. You may want to consider moving away from the “glow” carpets and into some of the newer stylish designs being offered by the carpet companies servicing the bowling industry. There are some great designs and color palettes available to choose from.

For all of those centers with step-down settee areas, you may want to consider creating a level surface throughout the entire area. You can fill the area in with either concrete or wood—both options offer varying cost benefits. Wood laminates have become very popular for floor coverings in the settee area and offer a wide spectrum of design opportunities. Filling in a settee area should only be undertaken if the end result offers a more open and spacious seating area.

For years bowling centers have utilized “hard” tabletop seating arrangements that cater to both the competitive league bowler and the casual guest. Today, these arrangements are still a viable option, with some of the newer wood options being made available as well as newer color laminates being introduced.

Because of the shift toward casual business, more and more centers are now using soft furniture arrangements. Although more expensive, soft furniture arrangements offer a wide variety of design layouts, create an entirely new look and feel to the bowling venue and most importantly, drive incremental food and beverage revenues. One word of caution: select higher-quality furniture options. Improved durability is worth the dollars spent on the front end. This type of remodeling does offer the center a dramatic change and create a “Wow!” for the bowling patron.

The league business has finished up and we’re in the midst of summer, so it’s the perfect time to put a plan in place to make improvements in your center. If you have questions on where to begin planning, or how financing can help you get started, contact Ben Jones, FEC Domain Specialist at Live Oak Bank at ben.jones@liveoakbank.com.

Written by Kurt Harz

About Kurt Harz 

As an advisor for Live Oak Bank, Kurt Harz brings lifelong dedication and passion of the bowling industry to enhance Live Oak’s Bowling Center and BEC lending expertise. Harz recently retired from Brunswick Bowling & Billiards after 39 years of service. During his tenure, he held a variety of sales positions including most recently the Vice President Capital Sales, North America. His sales background focused on new center development as well as major modernization of bowling venues.

International Bowling Industry Magazine Presents: Ben Jones the Serial Entrepreneur

Download PDF here via International Bowling Industry Magazine

Ben Jones is a serial entrepreneur with a record of success in the hospitality and family entertainment industries. An avid athlete and adventurer as well, in his early days he played hockey for the Detroit Junior Red Wings and helped pioneer the sport of freestyle skiing. When it comes to conquering mountains, Ben knows what he’s talking about.

Since 2013 Ben has been the entertainment center specialist for Live Oak Bank, which provides financing to entertainment centers. He also coproduces the acclaimed F2FEC conference for experienced FEC operators; the fourth such event will take place in February 2017.

A constant road warrior, Ben recently stopped in at the IBI office long enough to let us catch up on his eclectic career and latest activities.

IBI: You’ve run your own FEC. How did you get started in the business?

Ben Jones: When I skied professionally, I trained in Arizona in the summers, and I played mini golf at Golf N’ Stuff in Tucson. This was in the mid ‘70s and I thought, this is pretty cool, one day I want to own a mini golf course.

IBI: You were a snow skier, right?

Ben: It was freestyle snow skiing. There were only 40 or 50 of us worldwide, and we, in essence, created freestyle as a sector of the skiing industry.

There was no money back then. Only a handful of us actually made a career of it, if you could even call it that. It wasn’t really a sustainable profession, but many skiers went on to have very successful careers in other areas like sales and R&D.

IBI: What did you learn from freestyle skiing that helped you in your business career?

Ben: When you get dropped off by helicopter at a peak, there’s one way out and it’s down the mountain. So you have to get into it, physically and mentally, because it’s the only way you’re getting out safe. That’s the one thing I think that we all learned on that tour — gravity is real, mountains are unrelenting, falling hurts and mistakes are sometimes life-changing.

IBI: So you left skiing and had a liking for mini golf. How did that evolve into your own mini golf business?

Ben: I owned a hotel and there was a piece of property adjacent to it that became available. I acquired that piece and then started looking into miniature golf as a business model. I started camping out in parking lots and doing that old school due diligence, counting people, looking at dayparts, how business grew. I visited miniature golf courses in lots of states and decided ‘I’m going to do this.’

My first miniature golf course was Congo River in Kenosha, Wisconsin; it opened in 1987. I had it for 23 operating seasons, and it was an amazing place. I sold it in 2008, but I developed others in the process and became a pretty good designer of miniature golf and a good space designer of entertainment centers.

IBI: How did that evolve into Recreation and Entertainment Consultants (REC), your FEC consulting business?

Ben: I began to speak on customer service,which evolved into training and professional development. Then people would ask me to come and talk to their staff and while I was there, they would ask, ‘Tell me what you see about the facility.’

I didn’t set out to be a consultant. I was still an owner/operator of hotels, of businesses and just started helping other people. Then one day I said, ‘Wait a second, if I’m going to do this, I might as well get paid for it.’

IBI: Did you learn something from that experience that helped you to evolve your own way of thinking and working with people?

Ben: Absolutely… that good due diligence really does pay off and that milestones and good planning are how you win. It’s the same in sports. You talk about great basketball players like Michael Jordan or hockey players like Gordie Howe or [Wayne] Gretzky and their ability to [think ahead].

IBI: Gretzky talked about knowing where the puck was going to be in a couple of moves rather than where it was right now.

Ben: If you look at old film of Gretzky where he’s behind the net and then the play is over here and Gretzky just calmly [makes] what looks like a random move and then sure as heck if the puck doesn’t end up there somehow.

IBI: So you had a consulting business, REC, which led to your involvement with IAAPA.

Ben: I joined IAAPA and started doing a lot of volunteer work. I became a consultant to the association for entertainment center programming, and I was the liaison for the entertainment center constituency, owner-operators, manufacturers, suppliers.

I developed programming on training and development for the association. I had a really nice run with them, and then we simply decided it was time to part ways.

IBI: Where did the idea for the F2FEC conference come from?

Ben: [I have] two partners, Rick Iceberg and George Smith. [Collectively known as The Three Amigos –ed.] Rick Iceberg runs a beautiful family entertainment center just outside of Detroit called CJ Barrymore’s. George Smith is the president of Family Entertainment Group [in Chicago]. They were both members of the IAAPA family entertainment center committee.

We [agreed] that the way we were delivering educational content needed to change and that there wasn’t really good programming for experienced, existing, seasoned operators. Most of the focus was entry level, mid-level management, which is also needed.

We just started brainstorming and decided that we were going to put together a small conference and try to get it off the ground through IAAPA. We had several false starts and a lot of pushback, because it was a real departure in terms of attendee, conference style, length of time, everything about it. Eventually we put on what was called FEC Phoenix under the IAAPA umbrella. It was a sell out.

IBI: What makes F2FEC different?

Ben: It’s one event over a two-and-a-half-day period where the social interaction is as important as what we call “being in the room.” There are no breakouts. There’s one big general session. It starts at 9:00 in the morning and it goes until 10:00 at night. We mix the room. We mix the content. We design and facilitate the interaction.

The theme this past year [was] design and development. How do we know a good design? Well, what’s the science behind good design? Who are the leaders? Why do you follow them? How do you know? We pose more questions, and we look for dialogue from the room more than trying to provide answers.

IBI: Has the conference developed into any other gatherings or ways of sharing information?

Ben: It’s formed a lot of small independent networks, trading partners, and small groups have emerged that have become good friends. That aspect of it is working extremely well.

IBI: How did you get involved with Live Oak Bank?

Ben: Through [Bob Rippy] a friend at IAAPA [and] former chairman of the board, [who] is also friends with the founders of Live Oak Bank. He talked a lot about the need for financing in the entertainment and amusement community-at-large and said this is an underbanked, underserved and misunderstood industry, and there’s some real opportunity to have a small niche division of Live Oak.

I put together a little state of the industry survey and I met with Live Oak and we just talked. Months later, we went on a road trip to visit various entertainment centers. Over a three-day period, we were in seven states and hit 13 locations. Everything from water parks, traditional FECs, laser tags, hybrids and [I] introduced them to my friends in the industry.

At the end of the road trip, Chip Mahan [Live Oak’s founder] said, ‘I’m interested in this industry, would you agree to join the bank and see if there’s a real opportunity here?’ I became a contractor for Live Oak and helped them establish the parameters and the criteria that we would look at [for] loans.

My role with Live Oak involves being a face for the bank to the industry and helping the industry understand how to become visible and bankable and relevant and attractive [to a lender] whether it’s to Live Oak Bank or to their local community bank. Real growth in almost any industry happens with leverage, with good debt, with good business structuring, [and with] good financial structuring.

IBI: How can an industry that seems to be as well-established as family entertainment or bowling not have made an impact on those community- based banks, and why are they having trouble getting financing?

Ben: Those proprietors and business owners that have been able to forge good relationships in the community have been able to borrow money effectively within that community. When they then move or decide to open up a second location, if they are outside the comfortable lending territory of that bank, they are now starting all over. They have to recreate the relationships, becoming well-known in that community, because, generally, the lending has been specific to product and individuals in the community. Being able to grow in terms of a chain and be able to develop two or three or four [attractions] in multiple cities can become a very difficult task.

IBI: Were there fewer FECs than there were dry cleaners or gas stations or whatever so that the bank really didn’t know what to expect from that industry?

Ben: Correct. They didn’t. As a community lender or even a national lender, you have to pick the industries that you find where you have good expertise and where your own learning curve is going to match the potential of the industry. If you’re going to make an investment as a bank to learn about an industry, you want to know that you’re going to benefit from making that investment. When there’s only half a dozen bowling centers in a community but there are 50 gas stations or 30 party stores or 400 restaurants, there’s more growth potential.

IBI: That in a sense is the opportunity that Chip Mahan saw?

Ben: He did. He saw an opportunity to focus teams and lending groups in very specific industries, and he brought in domain experts, people from the industry who support the banking and the lending side with industry expertise. Every division of Live Oak is run by a domain expert.

IBI: So you are merging your experience as an operator and a consultant with what you’re doing as a lender.

Ben: Yes. We don’t agree or approve everybody, but even if I say no, I’m going to tell you why it’s no. If there really is an avenue and I understand what you’re trying to accomplish, I’ll say here’s what I see and here’s why I don’t think you’re quite ready for that today and here’s what you need to do from a banker’s perspective.

IBI: I’d like to close by talking about trends that you see in how FECs may be evolving or what you see coming down the road in the next few years.

Ben: I see more convergence. Bowling alleys becoming bowling entertainment centers and continuing to move in the direction of family entertainment, adding games, upgrading food and beverage, adding more of a restaurant component. I also see the same thing happening in the entertainment centers.

Traditional entertainment centers are also looking for ways to grow horizontally, to widen their appeal and market space. Entertainment centers are moving into boutique bowling, adding four or six lanes; mini bowling is becoming popular.

Both are morphing but the convergence is coming to the middle. I see that as being a potential challenge for the industry, because where we have had bowling alleys and bowling centers and family entertainment centers growing in their own vertical, there’s now going to be a convergence which means that market spaces are going to become more crowded. The offerings are going to look more similar. Pretty soon, when those lines blur, well, then they’re going to blur for the consumer as well.

IBI: How do you see that blurring affecting consumers or being a challenge to the industry?

Ben: From a consumer standpoint the consumer that [once] differentiated between their experience in the bowling center and their experience [in the FEC], as convergence occurs, they’re going to spend it one time instead of perhaps two times. The real issue then becomes who’s sustainable and who’s relevant and who is going to survive the next downturn in the economy.

IBI: Then marketing becomes a big issue in terms of relevance.

Ben: Relevance has lots to do with demographics, sociographics, operating style, offerings; customer experience comes into play. I really differentiate the customer experience from the simplistic view of customer service which to me is nothing more than technical dos and don’ts. The experience is how you feel. It’s the intangible. It’s the takeaway of those very rudimentary processes.

To me an experience wins . . . the really cool aspects of life to me are the intangibles, the subtle. Those are what I think are exciting.


About the Author:

Robert Sax is a writer and PR consultant in Los Angeles. He grew up in Toronto, Canada, the home of five-pin bowling.



5 Things a Lender Likes in a Funeral Home Acquisition Deal

If you are considering acquiring a funeral home, there are a few key components you should look for in the business. In addition to your personal credit, the lender will be interested in these five elements when examining the loan request.

  1. Positive Trend.  Lenders like to see positive trends when examining a business’s financials. A decrease in sales or revenues can be a red flag. If the funeral home you are looking to purchase has negative trends, be sure you can identify the problems and include ways to increase business in your business plan.
  2. Business Plan.  Buyers have to provide the bank a basic business plan for the business they are acquiring. Lenders want to see that you have a clear understanding of the business you are buying and the death care industry. Plan to include ways to improve the funeral home business where you see fit.
  3. Key Employees.  When purchasing a funeral home, remember the reputation of the business can be considered an intangible asset. The staff and community relationships play an important role in the success of the business. Secure commitments by existing managers, funeral directors and other key staff members. Lenders like to see key employees continue working with the new owner as it diminishes risk.
  4. Seller Training.  Lenders want to see a well-thought-out transition plan. The transition and training period can be anywhere from one to twelve months, depending on circumstances. Work with the seller to negotiate the training and transition up front and clearly define them in the purchase agreement.
  5. Seller Financing.  When a seller finances even a small portion of the deal, it shows the lender that the seller is confident in the new owner’s abilities and leadership. The terms of the seller carry note are negotiated between the buyer and seller.

If you are looking to purchase a funeral home, financing is readily available. Talk to your lender about your loan options and how to prepare for financing.

Tim Bridgers – Senior Loan Officer


To get started on your loan request, click here.