Having spent just one year working in the family business in sales, the last thing on David Dunlap’s mind was heading the company.
But in October 1993, his father, Ken Dunlap, suffered a stroke that took him out of the daily operation of Sports Imports Inc., the business he had founded in 1976.
“It forced a transition a lot sooner than anybody had wished or hoped,” the younger Dunlap says. “I was 23 at the time and two years out of school.”
Within about six months, it became apparent Ken Dunlap would be unable to return to the company as president. The stroke he suffered was mild and he still had full mental capacity, however, he lost the ability to do such things as travel independently, read and dial phone numbers.
“For me it was an awkward situation, because it left a vacuum of, ‘What do we do now?’ in the company,” David Dunlap says.
Fortunately, the company had a very capable finance manager and employees who had been with it for years. In addition, Ken Dunlap had, two years prior to his stroke, written an estate plan. The family followed its guidelines that the company would fall to David, then his brother, and then his brother-in-law if anything happened to Ken.
“I kind of took his role and tried to figure out what was really important to the company,” David Dunlap says of his first steps as company president.
Ken Dunlap says his son will maintain that role even though his health is now “excellent” except for lingering vision and reading difficulties.
“Even though he was, I think, the youngest person in the business at the time, that direction that we had in our will was followed and he did take over the leadership of the business and made difficult decisions on his own,” the elder Dunlap says. “With advice from other people, he did a marvelous job of reorganizing things.”
David Dunlap says the immediate situation was one more of “battening down the hatches” to be sure the company stayed on track without his father’s leadership.
“We were fortunate in that we had a profitable company at that time. There weren’t a lot of changes that had to be done,” he says.
However, the company’s growth had stagnated, yielding between zero and 10 percent revenue increases a year since 1990, and the younger Dunlap saw room for improvement, such as a reduction in overhead.
First, however, he had to gain the support of the employees.
“I tried to use veterans to build consensus as far as what direction to go,” he says. “It helped by doing that rather than — they viewed me as a young kid anyway — coming in and making waves. That would have been disastrous.”
David’s father helped by explaining to him the personalities of various employees, and the younger Dunlap made sure more employees were involved in decisions that impacted the future of the company.
In addition, Ken Dunlap says, his son gave authority to long-term employees nearing retirement to help in the management process.
The family background also aided in relations with a Japanese supplier upon which Sports Imports is extremely reliant for the volleyball equipment it imports and distributes.
“Fortunately I had grown up in the company, and the people knew my family and had watched me grow up,” David Dunlap says. “There still were a lot of questions about what’s going to happen with the company.”
His father played a key role there, meeting with the supplier when its representatives visited Sports Imports shortly after his stroke.
The father and son also discussed various ways to continue to run the company after Ken Dunlap’s stroke and came up with the idea of forming an advisory board. David Dunlap declines to release the members’ names, saying he wants to respect their privacy, but he explains that he and his father hand-picked the advisers. They include a fellow business owner who ran a family business that had grown into a large corporation; the company attorney; someone who had handled the company’s finances in the mid-’70s; and a Sports Imports retiree who, in addition to working in the company for three years, also had years of managerial experience of his own. Ken Dunlap serves as chairman of the board.
With that backing, David Dunlap was able to make necessary changes. A previously unprofitable acquisition of a basketball backstop manufacturer in North Carolina was sold off. The Sports Imports staff of 17 was pared to 13, and a commission pay plan was established for employees of the sales organization. The board also encouraged the younger Dunlap to travel to Japan to reassure the supplier there.
“We also took steps to try to consolidate all the stock within our family,” Dunlap says, explaining that two nonfamily partners were bought out of the subchapter S corporation. “With Dad being disabled, they still had to have money to live on, so it enabled us to better address that — and also not to have to answer to anybody but ourselves.”
Between 1993 and 1998, David grew the company’s revenues by about 50 percent.
“Sales are better than they’ve ever been, and the health of the company is much better,” Ken Dunlap says.
The only thing he’d change about what happened, he says, is communication efforts.
“I suppose I would have been a little more knowledgeable or careful about making sure everybody understood who the control would reside in after such a happening as I had with my stroke, but I never thought of that,” he says.
That, David Dunlap adds, resulted in uncertainty among employees until decisions were made.
Now, the elder Dunlap owns a controlling interest of the company and his son owns a minority share.
The responsibility for determining the continuing operation of the company stays with Ken Dunlap as majority owner; if the company ownership passes to David Dunlap, he will establish his own succession plan.
“I think it’s made me tougher, thicker skinned, by having to go through that baptism by fire,” the younger Dunlap says of taking the reigns so early, “learning by taking your lumps and getting beat around a little bit.”
Joan Slattery Wall ([email protected]) is a reporter for SBN.
