The Retirement Problem

Jake Boyles was in second grade when his parents opened a hot tub dealership, Crystal River Spas, in Carbondale, Co. He remembers it vividly.

“Back then, the hot tubs were one piece — they’d be plastic inside and out. The sales pitch was to give you a baseball bat and tell you to hit the side of the hot tub because it was basically indestructible,” he says. “I distinctly remember going into the store and getting to hit everything in the store with a baseball bat, thinking this was the coolest place in the world.”

But that was childhood. When Boyles grew older, he adamantly thought he’d never join his parents in the hot tub industry.

“I always had plans of being much more important than the ‘hot tub guy,’” he says.

Boyles’ situation is just one example of an industry-wide concern. A generation of pool and spa professionals — the spa industry in particular — have hit retirement age. But without family members or a thriving younger generation to pass their businesses off to, many business owners are staying in their jobs longer and postponing retirement.

Trying to Succeed in Succession

For Boyles and Crystal River Spas, the retirement handoff was easy: Despite his previous ambivalence, Boyles wound up falling into the hot tub industry and is set to take over the business from his mother, Joan, who is expected to retire in four years. The two are co-owners; Boyles says the business roughly breaks to a 60/40 split in her favor.

“I can’t imagine myself doing anything else,” he says. “And my taking it over allows my parents to retire and still draw a paycheck.”

But things often don’t work out that neatly. Many pool and spa professionals don’t have family to rely on to take over the business, or have family uninterested in joining the industry.

The latter was the case for George LaPorte, owner of The Pool Store in Bullhead City, Ariz. With 50 years in the industry, 22 of which were spent at The Pool Store, LaPorte has been eyeing retirement for years. However, his son took a job in another field and his college-age grandchildren also have other plans.

“As long as they’re doing well, it doesn’t bother me,” he says.

LaPorte says he saw the signs early on that his family didn’t care to take over his business, which led him and his business partner to consider selling The Pool Store. They had the company appraised, brought in a broker and even had an interested buyer.

There was just one problem: this happened in 2005. Shortly thereafter, the economy plunged and forced LaPorte to change his plans.

“I probably had enough put away in my retirement fund to walk away from it, but we still owed money on the property,” he says. “It wouldn’t have been easy to do, so that’s why I made the decision to keep going.”

LaPorte’s solution at the time was to sell off the construction side of the business to a landscaping company. He used the money from the sale to buy out his partner, leaving him to focus his attention on the retail and service sections that remained. While that took care of part of the problem, it still wasn’t a way out of the business.

“At that point, I thought if worse comes to worst, I could always sell off the pool routes and just close the doors,” he says.

That’s when he took a good look at his employees and realized a solution was right in front of him. On his payroll, LaPorte had a woman in her mid-twenties who he describes as having a “head for business,” her husband, who does service work, and her father, who had been with the company for about eight years doing construction and repair.

The conversation about the trio taking over the business started with a plan. LaPorte told them, “We’re going to take a few years and we’re going to get this thing back to profitable, and then you guys are going to take it over. We’ll set up some kind of payment plan and it’ll be yours.”

But finally knowing who would assume ownership of the business was only the first step.

“I had to make sure that they had the credit ratings to be able to take over accounts and things like that,” he says. “I couldn’t just walk away and say, ‘Here, it’s yours, just keep it going!’”

LaPorte expects the training process to take a couple years before he can retire, and even then, he still expects to have one foot in the door as a consultant. “I had been hoping to be out of here when I was 70, but that didn’t happen. Two more years is fine with me — as long as I stay healthy,” he says.

Hard to Let Go

Both these stories beg a question: How did this happen? How is it that an entire industry is seeking to retire almost unanimously and, in many cases, struggling to do so?

From what Boyles has witnessed with his mom, small business owners tend to be fiercely loyal to their businesses, making it hard to delegate tasks and phase themselves out.

“This is her life. I always laugh because she introduces herself as ‘Joan from Crystal River Spas.’ That’s her last name. And you have to tread lightly when you realize that this isn’t just her business, it’s not her obligation — this is her identity. So you have to wait for her to give it away, you can’t take it away,” he says.

But what would have happened if Boyles weren’t there to take over the business?

“I think my mom would work forever. I think she’d be 75, 80 years old and still here seven days a week,” he says. “That’s what she does.

“The frustrations and trials and tribulations that roll through the day are almost what she comes to work for. If it was all easy, then I don’t know if it would be so enticing, but the gratification she gets from having 25 happy customers at the end of a day that started out with 25 angry customers or challenged employees or whatever the day’s predicament was, I think that’s what lets her go to bed feeling satisfied. And that’s a hard thing to give up,” he adds.

But that total dedication also means pool and spa business owners find their time stretched thin, meaning planning for the future takes a back seat to what’s going on today.

“I think retirement was always looming in the distance — it was never something we were facing today,” Boyles says. “So there was always going to be an opportunity: Somebody would just walk through the door and offer $2 million for your store and you would just say ‘yup’ and walk out the door. I think that’s what everybody thinks; your business is always worth a lot of money to you.”

LaPorte shares the same idea.

“There’s a lot of companies out there that are thinking about now, not the future. Especially in the last six years or so, everyone’s been thinking, ‘How am I going to make it? I have to do this or that just to stay above water,’ rather than thinking, ‘How am I going to get out of it?’” he says.

In addition to all of the above, there’s one more facet to the retirement issue: In the event that a mom-and-pop store owner can’t pass off the business to relatives, it’s challenging for them to sell their businesses because they simply don’t know how.

“None of the dealers I know have had a path laid out in front of them. No one says, ‘When your business is this old, you start to make these changes to make your business more enticing to be sold or purchased,’” Boyles says.

A Way Out

Boyles is 32 years old; very young for the hot tub industry. While he has an entire career ahead of him, he says the experience of taking over Crystal River Spas has prompted to consider his own exit strategy in the future.

“My strategy is to try to bring in younger staff, the people I think have the right mindset that I can leave to steer the ship when I’m ready,” he says. “I want to try and recruit key players who are young and aggressive and will operate the day-to-day side of the business with the same passion and integrity that Joan would want. Crystal River Spas, too.”

Now that he’s on his way to retirement, LaPorte also has some advice for those in the same boat: start planning.

“You’ve got to have your one-year plan, your-five year plan, and you should even be planning something for 10 years from now. It doesn’t have to be very much, just something to look forward to,” he says.

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