Tek Deburr founder seeks an exit strategy
During the week, Donald Lippman arrives at his Deer Park business at 4 a.m., often ending his workday 12 hours later. Although he relishes running the metal finishing firm he founded 47 years ago, Lippman, 81, no longer has the energy that his company, Tek Deburr Inc., requires.
"As I'm getting older, it's getting harder and harder," said Lippman, whose eight-employee firm deburrs, or smooths out, metal surfaces by hand and machine for more than 40 customers including hardware, aeronautic and medical equipment manufacturers. This year, it generated more than $500,000 in revenue, up 11 percent over 2012.
Lippman, who gained experience finessing rough edges as a diamond setter and repairing submarines during the Korean War, regards finding a trusted second-in-command as his exit strategy. Such a person would not only enable Lippman to spend more leisure time with his wife, Mimi, 75, who works 25 hours a week as the firm's office manager and bookkeeper, but to retire with a steady income from the business. And after his lifetime, and courtesy of a loyal manager, Lippman envisions his heirs receiving regular payments from the company.
Leaving a legacy
"That would be my legacy," said Lippman, who has a daughter, 54; a disabled son, 51; and two grandchildren, ages, 21 and 26.
Still, he fears that a promising hire will slide into the firm, learn the ropes and leave. It's a scenario that stung Lippman 12 years ago, when his company foreman didn't just strike out on his own but courted Lippman's accounts by slashing prices.
"It's a classic problem of a small-business owner who wants to pass responsibility down to someone and is afraid they'll leave and, unfortunately, that does happen, particularly with someone 35 to 40 years old," said Richard Strautman, president of Picus Enterprises LLC, a Port Washington consulting firm.
Alternatively, he suggested targeting a person in their 50s, a demographic "not looking to steal knowledge and still young enough to run the company."
Lippman could also vet top management candidates with a behavioral assessment test that provides insights into their personalities, including what motivates them, said Strautman. He cited the Myers-Briggs Type Indicator and TTI Success Insights as popular tests administered by human resource professionals and career coaches.
Among firms providing such assessments, Portnoy, Messinger, Pearl & Associates Inc., a Syosset-based human resources consulting firm, charges $40 to $150 per test, depending on the skills or behavior analyzed, said Mary Simmons, director of HR consulting.
Use of noncompete clause
At Farmingdale State College's Small Business Development Center, associate director Erica Chase-Gregory recommended "hiring someone under a noncompete contract which could, at least, deter" a manager from leaving the company with its accounts. And to foster loyalty and hard work, she advised making the new executive -- after he or she is proven on the job -- part of the succession plan and, at some point, backing that up with some equity in the company.
Chase-Gregory also said Lippman should consult a lawyer to legally protect the income stream he wants for his family, as well as ensure that the manager remains motivated to succeed -- and doesn't resent the Lippman heirs benefiting from his or her efforts.
For his part, Lippman is focused on building sales to "afford someone with a high salary." So this year, he hired Holtsville-based Suffolk County Webmasters to revamp his website, which enabled Tek Deburr to score a dozen new accounts. With his 20 deburring machines humming steadily, Lippman plans to lease an additional 5,000 square feet adjacent to his current 5,000-square-foot facility.
"Five years ago, it would have been difficult for me to even consider walking away from the business," he said. "Now, it's easier for me to make that decision."
AT A GLANCE
Name: Tek Deburr Inc., Deer Park
Founder and president: Donald Lippman
2013 revenues: $500,000-plus