Interview with Steve and Matt Fleissner of Model Graphics.
When 30-year-old Steve Fleissner opened the doors of Model Graphics in the Cincinnati-area he was the fledgling label company’s only employee. That first year he generated $80,000 in sales. In the subsequent years, Model Graphics achieved enviable milestones such as “TLMI: Best Managed Company Award – doing $800,000 in sales.” (1989), investing in digital technology (2004) and hitting the $10 Million mark in sales (2013). Today Model Graphics employees 36 people in a 37,000 square foot facility with five presses.
His son, Matt literally grew up with the company and today is growing his skills as VP, Sales and Marketing. With that comes new questions and solutions needed to ensure the growth of the company and the legacy that will be left to Matt. The questions that Steve and his wife, Barbara, now face are common to many family-run businesses as the second and third generations are preparing to take the reins. Steve notes that “Every owner thinks about their options when considering the long-term plan for the business. The few things that get first consideration are, what am I going to do personally. Each option is usually thought of in terms of getting out or getting closer to getting out.” Options such as:
- To Sell or to Hold: “When things are going well we think less of walking away. Unfortunately, most of us will say, we wish we knew then what we know now and we would have sold at a higher point ”notes Steve.
- What about our loyal coworkers who have helped to build our success?
- If I sell, will I be able to work for another 1 to 2 years? Or will I be sent packing?
- Is the stock market telling me it’s a good time to take the money and run?
- If I sell – will it be to an investment group or a private owner or competitor?
- And if I pass on the company to my son or daughter – how do I ensure fairness with their siblings?
Steve was no stranger to the label industry when he started his business – having worked at National Label, a local Cincinnati label printer, since 1973 – doing just about everything except sales. However, when the privately-run business was purchased by a large company out of Wisconsin, things began to change. When ethical questions were raised, and not dealt with appropriately, Steve resigned from the company.
He learned a lot of important business and life lessons from this experience with the larger company – including how to stand on your own two feet when provided reporting, p&l and balance sheet responsibilities and how to demonstrate continuously what you were doing to grow the business. And most importantly he learned about the need for honesty, transparency and action in any business – small or large.
Steve’s initial boss had once suggested that he would make a good business owner, thus creating the first spark of interest. Around 1980 Steve sought out advice and counsel from SCORE and SBA, and the spark became a flame. In 1982 he began talking to vendors and people that he trusted, put together a business proforma and found an investment partner. His new partner, Stan Birer, was a former boss and friend of Steve’s father, Ed Fleissner, and capped the deal in 1984 by making Ed a 10% partner so that he could be the third vote if ever needed.
Almost six years later, Ed Fleissner died suddenly of a heart attack. Steve recalls that his dad was never called on to be a tie-breaker in a vote but was very helpful in giving advice and “keeping an eye on me. I still reflect on those times and wish that every man could have the opportunity to work with his father. It was an enriching experience in my life. I think it was for him too. He was just 59 when he passed.”
From that point until 2004 when Steve bought out his partner and retained 100% of the business, Steve and Barb’s family and Model Graphics continued to grow and prosper
Meanwhile, his youngest child, Matt, was far more focused on baseball than the family business. Matt recalls that “Some of my first memories were roller-blading in the plant while Dad worked on Saturdays. I helped out every now and then, boxing labels.” That changed after he hit 17, and like most kids of label printers, Matt would work summers doing clerical or lead generation work.
Steve made it clear to all three of his children that if they ever wanted to join Model Graphics they would need to first earn a four year degree, work four consecutive years with a company demonstrating promotability and only then could they submit a resume to the company. He wanted to avoid any perception that his kids were born with a “silver spoon in their mouth.”
Matt graduated from Indiana Wesleyan University in 2009 with a degree in Sports Management and chased his dream of a career revolving around baseball – logging 48,000 miles in five months. Looking for a more stable industry, he moved over to managing the business for one of Model Graphic’s vendors – which gave him experience with overlams, specialty and splice tapes. He would run the materials in the morning, deliver them in the afternoon and then come over to Model Graphics in the afternoons to help second shift rewinding and packing.
In the spring of 2015, after a loss of a major piece of business, Matt left the overlam and tape provider and came on board full-time at Model Graphics as a sales rep. Steve explains that “Even though he had never sold, I explained to him the heart of every business is understanding the customer, so sales is where he had to start.” But first he donned blue jeans and a tee-shirt to build trust with management and co-workers as he learned each facet of the converter business.
Incorporating the Next Generation
As Matt’s experience and responsibilities grew at Model Graphics, Steve recognized the need for formalizing the relationship and clarifying the next steps.
In June of 2017 he looked outside and hired a seasoned, temporary GM who had been managing in the industry for many years. His primary role was to assess the existing talent at Model Graphics, including Matt, and make recommendations. Steve recalls that “If we did not have talent to carry the business forward without me, then he would lead the charge to find talent who could.” The GM uncovered the perception that the company saw only Steve as the leader and didn’t believe he would ever leave. He suggested that if Matt were to be viewed as “heir apparent” two things had to happen. Matt needed an executive title and Steve had to declare a specific time when he would begin pulling back. Shortly thereafter, Steve announced that Matt would be the VP of Sales and Marketing and that December 2019 would be Steve’s last full-time week although he would stay on in some capacity.
In the last four years since Matt joined the company, Steve and Barb have:
- Drafted a Founding Family Agreement to formalize the next steps
- Created a platform for semi-annual executive leadership discussions and
- Hired a talented, full-time General Manager – Shane Roberts
With the business growing, and Matt now making valuable contributions, what are the challenges and pain points Model Graphics faces in realizing a smooth transition plan?
- Although a draft agreement has been created with an ultimate outcome, no formal plan has been put in place.
- Having now hired an experienced and talented general manager, how will Matt’s role become more defined? What is the most effective leadership model for their customers, employees and the family?
- There’s never enough time to work on the plan.
- A question of trust – both with other employees who watched Matt grow up and with Steve trusting that Matt is ready.
- Need to better define responsibilities and compensation structure.
- What will “retirement” look like? Steve and Barb are not yet on the same page for scaling back – a common family dynamic!
Matt sums it up by stating, “Model Graphics was like my older brother – born just a year before me. A lot of time and investment has gone into it – I know that I have to build Dad’s confidence slowly.”
Although their original executive leadership meetings just didn’t get enough traction and eventually fell to the side – today they are back on track. “Everyone was consumed with today – we tended to think that what happens tomorrow, we will take care of tomorrow.” acknowledges Steve. “Now we look at the big picture more frequently.”
At a recent FLAG peer group meeting, the topic of family transitions was discussed at great length. A helpful idea was to bring in someone to evaluate the company, and determine a fair purchase price rather than assuming that Matt will simply inherit the company. The Fleissners are currently examining this option.
Matt notes that his sports management days provided great business lessons that he uses daily at Model Graphics. “Sometimes on the drive home, or when I’m sitting on the porch, I think about our employees like a team roster – who are our all-stars, how can we map the current talent, and where aren’t we blocking or tackling well?”
And he has already gained a great deal from FLAG and in particular its peer group meetings. He concludes, “I know now that this is not an easy industry to keep your sanity. Somedays you want to walk away – but then you get a good order and everything’s great for the moment!”
Steve Fleissner (left) and son Matt Fleissner (right)