Nov 19, 2023

140: Exploring Ownership Succession and Legacy with Ken Rusk

Succession Stories host Laurie Barkman, The Business Transition Sherpa™, welcomes Ken Rusk, founder of Rusk Industries. 

Ken’s journey is a blueprint for blue-collar entrepreneurship. He’s on a mission to redefine the narrative around blue-collar jobs in his book, “Blue Collar Cash.” 


Laurie and Ken explore the topics of ownership succession, sale to an ESOP, and the legacy he hopes to leave on the company and beyond.

“We don’t live to work, we work so that we can live.”

Ken Rusk, Succession Stories

Stay tuned for an inspiring conversation that might just shift your perspective on work, success, and the journey to building your dream life. 

Find Ken Here: kenrusk.com


 

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TRANSCRIPT:

Laurie Barkman
Ken Rusk, welcome to Succession Stories. I’m excited to talk with you and your experience and give our audience a glimpse into your world. So welcome.

Ken Rusk
Thanks. Thanks for having me. I really appreciate it.

Laurie Barkman
Let’s start out with you. How did you get started in your business and tell us a little bit about Rusk Industries?

Ken Rusk
I won’t take real long but it goes back to when I was younger. When I was 12-13 years old, I had to be out working doing something paper routes. I worked at a bakery, worked at a bowling alley, and did all kinds of things. Simply because I had four brothers in a very small house, my father was, if you want to get things beyond what I’m providing for you, you have to go out and find a way to do it. For me, money meant gentleman earning some money which meant I could go have some of the independence that I wanted.

When I was 15, I started to get serious because I wanted to buy a used car and go out with my buddies or take my girlfriend out for pizza; the things that you did back then. My high school actually shared a fence with an industrial park and we cut through a hole in that fence after school and go hang out with the carryout, which is what people did back then. Because there weren’t like shopping malls and stuff like that to any big degree near us. We would do that and I always remember going through these industrial parks and there was always lots of activity. There’re people hustling and bustling around, and things that young guys like, dump trucks, and backhoes and all that kind of stuff. I remember going to this one place and saying, what do you guys do? I knew somebody who had worked there and they said, we basically dig ditches, we fix old, rotten, smelly basements. I said, I think I’m qualified to do that. I got on with them and I dug ditches in the summertime and then in the wintertime, when I was still in school, I would work at the front of the office and the marketing side.

What happened is quickly beyond that. I started to learn both sides of the business by doing that seasonally. When I came to be 18, it was like a crossroads. Do I go to college? Do I continue with what I’m doing? They came to me, and they said, “We want to open new franchises around the country and you’re very experienced, have been here for three to four years now and you know, the front and the back pretty well. Would you like to help us do that?” I literally lived out of a suitcase for the next three or four years, you know, traveling around the Midwest, opening these businesses from scratch. I got tired of the travel thing and moved to Toledo, Ohio, and started in 1986 with six people in my own company. I think now we have almost 200 so it’s been a heck of a ride.

Laurie Barkman
Wow, that’s incredible. You didn’t always know you wanted to be an entrepreneur, you got into the business just because of happenstance and then eventually found your way to being that person creating a business and now, it’s a significant enterprise.

Talk a little bit about that journey. What’s it been like to go from zero to 200 people? Is it you said 20+ years? Actually, 30+ years at this point? Amazing. Time flies. What do you do when you look back? What do you reflect on the most and that journey?

Ken Rusk
Well, it’s interesting because the word entrepreneur is a vague term. If I said, here’s a piece of paper and a crayon, draw entrepreneur, you can’t really draw anything. It’s kind of a means to another thing, an entrepreneur at what? For me, I always kind of knew what I wanted my life to look like. There were things in my life that I knew that I wanted to have, the way I wanted to live, the way I wanted to travel, the hobbies, I wanted to have the family, that whole thing. I kind of knew that the more I could work with an entrepreneurial mindset, which in my mind is just a collection of characteristics, and I write about them in my book. I think we all have entrepreneurial characteristics within us, I really do. I just think they’re, they’re crying for a reason to come out, they need a reason to come out of us.

I think if you have a real crystal clear vision of what you want your life to look like, those things come out of you and now you’re chasing your own version of nirvana. I call it comfort, peace, and freedom. When you know what that looks like, it’s a little easier because you see it so now you just have to walk towards it. Those other things that you surround yourself with like other team members and entrepreneurs that you need to surround yourself with to grow in goal setting, celebration, and accolades, all those things that you do. It kind of fuels that whole path towards getting to what you ultimately want. It’s been quite a learning lesson but again, I have no letters after my name, I never went to college, and I have no formal training. If I can do it, anyone can do it.

Laurie Barkman
Let’s talk about what it’s taken. You mentioned team: how do you how did you build a team around you? When you looked at your skills and the skills you needed in the company? Did you hire people that were like you?

Ken Rusk
As long as they had a reason to work here, that’s all I required. If I knew that they were chasing something, if I knew there was something that they really wanted, and I mean, crystal clearly wanted, then that was good enough for me. We could learn the skills. Again, we were ditch diggers, so it wasn’t like we were architecting 100-story buildings but it was a service that was needed because it’s an unhealthy way to live if you have an old, damp, moldy, smelly basement. As long as I could surround myself with people that were chasing something then I knew I would be okay. The people who are willing to tell you what their goals are and prove to you that they have a crystal clear path to getting them, commit to them, and then share them. Those are the types of people that end up becoming the entrepreneurs that you want to surround yourself with, or I should say the intrapreneurs.

I have 42 vehicles right now, that’s a big risk, it’s a lot of financial risk. It’s a lot of sleepless nights, I hope everything comes home safe every night and all that some people don’t want to go that far. They still want to feel like they want to run their own show. That’s where the word intrapreneur comes from and to me, that’s a very powerful mechanism because if you can surround yourself with a bunch of people who all want something for themselves first, and for your business second, that’s a pretty good force to be reckoned with.

Laurie Barkman
As far as growth patterns go, it’s hard to find people who think like an owner. A lot of people just want the paycheck, they want to just be told what to do. Others want to figure it out, they want to be problem solvers, and they want to be intrapreneurial. They want to innovate, they want to figure out new opportunities, and they want to grow this idea of growth, I want to stay on that for a second, as you said, you started from scratch, and now 200 employees. I can only guess the millions of dollars in revenue that you’re bringing in as a business, which is providing not only for your family, but for your your stakeholders, your employees, and third livelihoods in your community, which is really meaningful.

As you think about the growth path, what were some of the things that unlocked the growth? Was it all about ditch digging and being a subcontractor to larger providers, where he kind of went all in on ditch digging? Or was there another thing as you look back on your growth pattern that enabled a step change?

Ken Rusk
I think I had always shared with them the same premise that I do today. I can’t get what I want nor can my company get what it wants or needs until all of you get what you want and need first and it’s absolutely true. It’s any business, there’s an input, there’s work, and then there’s an output, right? And then it starts all over again. I was never one that if I line all 200 people up in my parking lot and you looked at that group of people, I would not want anyone to pick me out as the boss person. I always believed that it was kind of a team thing.

In my case, I said, we’re doing X amount of revenue right now with who we are and I’m going to ask you, what do you think the company could do beyond that? If we do that, I’m going to share some of that with you. In other words, you’re going to be in control of your own income going forward from this point forward. I would only insist that you have several things that you’re after you’re going to fund your 401k, you’re going to work on your future plans for what your life looks like, in three, four or five different things that you’re chasing six months, 60 months, 10 years, 20 years, whatever. Multiple things that you’re doing at the same time. If you can set yourself up where you’re in control of your life path, which is what I’m trying to do, then let’s all get together and do that.

When those numbers happen, I’m going to share some of that newfound revenue which doesn’t cost me anything because it’s newfound revenue. The really cool thing was the number I had in my head was lower than what they came up with and that was an eye-opener and guess what? They went out did it first year. To all the business owners out there, the first thing I would tell you is, and this is controversial, but try to become as relevant as you can, to the to the day-to-day business, okay? If you’re going to be a visionary, you’re going to be a driver, you can’t have your hands on any specific things during the day that take you away from that offload those things to other people, they’re probably better at it than you anyway. Allow them to work their departments, work their financials, work their effectiveness, and their results. Because together, they’re going to drive the company way further than you can drive it yourself.

Laurie Barkman
That’s such an important statement. I just want to pause on it and let it sink in for the audience. We talk about that theme a lot on this show, that if you are a business owner, or you are owning a business, whichever way you’d like to say it, but a business owner who’s very involved day to day and has a business that really needs them for problem-solving for service or product delivery, for anything, firefighting, that company may be less transferable, less desirable, attractive to an outside buyer, or third party who’s interested in acquiring it one day. If we want to harness the value of everything we’ve been building, it is one of the first things that we look at when we’re talking with business owners.

You’ve brought it up, it’s super important and I wanted to ask you, because there’s a lot of causes that you care about, and you are spending time doing those things–I read about some Make-a-wish, if you’re still involved in Make-a-wish. I thought we could talk about that and how over time, you’ve been able to follow your own words as you’ve talked about goal setting. Looking forward, you’re spending your time outside of the business and in some ways benefiting–I’m sure benefiting the business, but you’ve been spending time outside of the business with your book promoting calm? Did you set a course for that?

Ken Rusk
I looked at it this way, I told the staff, I said this company is a finite mechanism. It’s one company so we all need to live off of this company. We either have a choice to grow this company as big as we can and in some ways we were, it’s a franchise so we’re landlocked by territory. In some ways that restricted us a little bit, not a lot, because it’s still a big company. To get beyond that, I said to them, if you allow me to go out and find new opportunities that are line extensions of our current company, other construction companies, other construction investments, investments in the distribution of products, or whatever that that are in line with what we do, and to go outside the box. We kind of stay in our lane a little bit then the less money I need to take from this place, the more is available for all of you. You really want to kick me out of here and have me go prospecting for other opportunities then I can grow the whole picture, and we can grow the whole picture together. I think that’s really important. This whole thing with ownership and ego, it drives me crazy.

If you’re one of those owners that goes home and says, well, honey, whether it’s your wife or your husband, and you say, I fixed this, I repaired that, I yelled at this, I changed that, I designed this and I set this in motion, I had a great day. I’m saying, No, you didn’t have a great day, because without you, none of those things would have happened. It’s tough. You got to really let go of that whole thing about, I’m the owner, I’m the boss, I’m the whatever and some people can’t do that because they derive their personal value from those actions that they take.

I look at it like this. I would much rather talk about the opportunities that we made the vision that we have the things that we were able to grow, and have everybody grow along with it because it’s just too hard to do it on your own. What are you going to do, you’re going to work 80-hours a week and pat yourself on the back and just stay where you’re at. There’s so much opportunity out there, especially in today’s environment and the people behind you, if you allow them to be open, honest, and transparent, they should kick you out into the world and say go find more opportunities so we can all make this thing bigger.

Laurie Barkman
You’ve done some acquisitions, it sounds like.

Ken Rusk
We went into fire retardant chemicals for construction, we did some home development, some land development, some office building, and some investments and other things that are kind of construction related. It was just extensions of what we kind of knew. I wouldn’t go out and try to open a restaurant or something I know nothing about. I found opportunities that were close to what we do and we opened one more office of the type that we have about an hour and a half away from here. It really worked out kind of good because we didn’t go too far out into the ocean without being able to get back, you know what I mean? It was a little risky but without risk, there’s no reward, obviously, but we all wanted to do it. We all wanted to grow the make the pie bigger than it was. So far, so good.

Laurie Barkman
How did you go about the process? Did you work with a broker and an intermediary? Did you do the outreach yourself with your team?

Ken Rusk
I just kept my eyes open for opportunities. You were in a small town in Toledo, Ohio. This was 10 years in. so I kind of had my ear to what was going on and around the city. I just always kept my eyes open for opportunities because I believe that if you want something you think about it hard enough, you visioned it in your mind, even if you put it on a poster, draw it out, and put it on the wall, your mind is going to attract itself to that.

I was talking to Derek Robbins the other day, who is the son of Tony Robbins, and one of the things that he told me was that there was science behind what I’ve been saying for years now which is, that the more that you stare at something, the more that you see it, the faster those little neurotransmitters work in your brain to the point where your mind convinces itself that it already owns that thing. Then your body just takes over and creates a path to getting it. Really cool science.

I just thought this is what I really want bad. I really want other opportunities to expand and they just started showing themselves because I was open to it. I’m not a special person, I’m no Acquisition Specialist by any means but I knew that we could do that, we could get involved in that or we could help him finance that and they worked out pretty well.

Laurie Barkman
That’s great. I think from both sides of the table, this shows we cover both side by side and sell side. For owners who are hearing this and thinking maybe one day I could be could be a fit for someone else’s larger entity? What were some of the criteria that you looked at? It was it, hey, let me look at their financials. First, let me look at strategic fit, the product services team. What were some of the main drivers of value that you saw?

Ken Rusk
In the chemical company, y I heard a really successful investor tell me a long time ago, it’s never the idea you invest in, it’s the person and because a great idea run by the wrong person is just going to stagnate–you’re not going to get anywhere. If you find a great idea and a great person, then you got something there. When it came to the construction and chemical business, things were happening in the codes that were forcing builders to do these really burdensome things, crazy things that nobody wanted to do.

When this fire return chemical company came along, I knew that could eliminate this headache for all these people. They say if you can eliminate aggravation, you’re going to become a wealthy person. That was one step. The guy that I was partnering with I knew was a really solid individual, he was really knowledgeable, and he was really aggressive. He wanted to go make this business big and he did so when it came to the development though. That was a little easier because I just relied upon good old-fashioned supply and demand.

You’re talking about land that was near; it was adjacent to a lake and it had the opportunity for not only houses but boat docks. There weren’t hardly any boat docks for sale anywhere and the supply was low. We hit the ground running there. I think we put up 10 houses in one year sold them off and we’re finishing that development out now. I think supply and demand is a huge thing. I’ve always said that, especially when it comes to working in the trades, if you’re willing to do what everybody else isn’t willing to do, you’re gonna do really well. For us, even in the business, our core business to stand knee-deep and sludge and water and dirt and jet cameras and busted concrete. Not everyone’s willing to do that but it’s a necessary thing and, you know, so far so good.

Laurie Barkman
Yeah, absolutely. I want to talk about succession planning. I want to talk about a topic that on this show, in particular, and most times, we’re looking in the rearview mirror. It’s owners who’ve come on and they tell me about the story of how they built the company and then maybe how they sold it or they’ve transferred to their children, etc. You’re not at that point yet, you’re still in the business. Correct? You’re still running the company and I’m certainly not trying to make you uncomfortable, but I want to have this conversation because what I find is that it’s a taboo topic. My question is why is it? And it shouldn’t be, you know, just like you do strategic planning for your business, maybe you’re doing strategic transition planning, and certainly, that’s what I advocate for. In the areas that you’re comfortable talking about, tell me a little bit about where you’ve spent some time with your team talking about succession, succession management, and word succession of ownership.

Ken Rusk
First of all, that’s a great question. I’ve been on a lot of podcasts, we’re closing in on 200 of them. I’ve never been asked that question. That’s a great question, I’m glad you asked it actually. What I’m about to tell you is the fact that I have seen and I know personally three or four people that are 60, 62, 63, 65 years old that have contracting companies, where one’s a stonemason, one is a floor tile guy, one does landscaping, and these are awesome businesses, Laurie, I mean, awesome. These guys are making 200-300 grand a year and they have no one to leave their companies to. They tell me all the time, I’m retiring but yet, I have this, this golden goose right here and nobody wants it and it just drives me crazy. Because if I was 30 or 40, I’d be all over these companies, right? These guys have very valuable things and all you need is one young guy or one young gal to say, you know what, I’m going to take a stab at being that guy’s or that gal’s apprentice for the next three or four years, and I’m going to take that thing over. I’m going to hit the ground running.

These people have customers and a customer base, and they have real ups and demands. It’s crazy that nobody wants these companies. I see these guys suffering through these things and I also have several friends that have done ESOP employee stock option plans. We are in the process of actually looking at an ESOP now, where the people that helped me drive this thing for all these years can benefit greatly from it. I think that’s a really solid option. I have other friends that have just outright sold their companies. They’re there when interest rates were super low and money was flowing like crazy. You couldn’t make any money in the stock market, you couldn’t make any money in your bank account, because they weren’t paying any interest. But boy, I tell you, what if you could find a company that was knocking down 15 or 20 points, that was a valuable thing. They were getting multiples that were unheard of to sell their company. I’m thinking for me, it’s going to be an ESOP scenario because I would still like to remain in some limited way and help the people behind me to realize even more of the dreams that they have.

Laurie Barkman
That’s great. I’m so glad to hear that you’ve given it consideration and thinking about different options, because we never know if this option A is going to work out; we need to have an option B and Option C. We have covered the topic of ESOPs on this show, in particular, with an ESOP Attorney Christie Bridge. If anyone listening wants to go back and find that in our show archives on my website. It’s a great episode and we’ve had others come on the show and talk about ESOP and there’s resources out there if anyone listening wants to understand if that’s a good fit for their business.

Your business is large enough, with 200 employees where the demographics work out that not everybody is going to retire at the same time. That’s really important. Another criteria for ESOP is EBITDA. There’s kind of a minimum because there’s an administrative cost and time and effort and is the proverbial juice worth the squeeze. Certainly in the transaction costs but in general and I know this is a big generalization. What I understand is that an ESOP is sale to an ESOP. We’re looking for breakeven on that transaction within two, three years is that about what you’ve seen from your feasibility study?

Ken Rusk
It’s all over the place. I have friends that are in ESOPs that are gonna get paid out over five, some vesting schedules, most of the vesting schedules I’ve heard are five years for the employees themselves but you’re correct in what you say. This is what I like about it because I get to now look downline, and see all of the people that are going to be coming up to take over different positions, and they can see their future now 5, 10, 15 years down the road, and they can build value for themselves on that share price by increasing the value of the company. Now you have people that again, even though we have a 401k program already, this is like a double shot, because now they can work hard to increase the stock value, almost like, stock price in GM would go up or down. That’s a pretty exciting thing for us and if I think our plan is going to be over five years, but for me, we have such a great time, we have such a great culture, we have such a great family feel around here that I’m in no hurry to run out, certainly, but it’d be nice to see those folks increase their net worth a little bit as they move along

Laurie Barkman
That sounds like a great option for your company and I’m so glad to hear you’re exploring it. When it comes to your business legacy and your personal legacy, what are some of the main things that you want to see continue forward?

Ken Rusk
Personally, we do a lot of charity work. I mean, we’ve done things with Make-a-wish, we do things with Boys and Girls Clubs, and Junior Achievement and all that. We do most of the charity work that we do, we do a lot of local stuff, too, that isn’t nationally known. Most of the charity work that we do is work where you’re not just writing a check to someone and sending it off to Africa and wondering where the hell your money went and how it’s being used.

We’re doing things where we can see where the money goes, we can get involved in the processes, we can meet the people that are the receivers of this and encourage them and help them get their lives in a place where they want them to be. We like to back fighters, we’re on our 13th Make-a-Wish child I think right now and they’re all fighters, and they’re all still hanging in there, and they’re living great lives. It’s really great to see those things happen because it gives you a sense, and it gives the staff a sense of greater purpose. We work hard, we play hard, we make this money, but then what can we do to turn around and give back and help others. Personally, I would want people to say, that guy was willing to share everything he had. He was willing to share his business with his employees, he was willing to share his money with the community, and I would want them to look at it from that perspective. I think from a business perspective, I would think I would want people to say, the guy worked hard. I mean, hopefully, everything that he touched turned to gold and he was able to share that with a lot of people and change a lot of lives. It doesn’t always work out that way but, again, I’ve said it three times now, so far, so good.

Laurie Barkman
Well, he also you talked about visualizing, it’s something can really visualize and the more you can crystallize that goal and make it happen. You’re making it happen, which is amazing. Ken, this is a mic-drop question: when owners think about the success factors for an exit without regret. What are three recommendations that you have for them?

Ken Rusk
I would say this without regret: Did you live the life that you wanted to live? Did you live your life in a way that you’re not waiting till “Oh my gosh, I’m retired now. I can start taking up golf.” Did you live a balanced life the whole time? That’s the most important thing I would say.

Number two, I would say, were you able to turn around and say, I walked up to the top of that mountain but I had some people that I took along with me. Now, I get to see them standing at the top of the mountain. I think I think that’s just unbelievable to create wealth for people that have been with you the entire time and create success for them.

Finally, I would just say, were you a good person with your money? Did you help others? Can you point to a success where you changed even one life and made it better from someone who maybe you didn’t even know their name? Or maybe you never even met them? But for sure they’re a better person because of you?

Laurie Barkman
That’s fantastic. You wrote a book, I’m sure there are many amazing quotes that you have that inspiring you can but is there one in particular that jumps out that you’d like to share?

Ken Rusk
Yeah, it would be this one. We don’t live to work, we work so that we can live and I’m more interested in what the live part looks like. So let’s get let’s get busy on that.

Laurie Barkman
Awesome. If people want to get in touch, learn more about your book. What’s a great way to do that?

Ken Rusk
You can go to kenrusk.com and you can see the book and the course that I built there. You can also go @KenRuskOfficial and you can see me on all the all the socials. I have to admit I have people helped me do that because that’s not my forte, but it’s pretty cool. We’ve had a lot of fun with that.

Laurie Barkman
That’s awesome. Ken, thank you so much for joining me on Succession Stories. I really appreciate you coming on.

Ken Rusk
You’re welcome. Have a great day. Appreciate it.

Laurie Barkman
Listeners, be sure to follow Succession Stories on your favorite podcast player and on YouTube and leave us a review. To learn more about maximizing the value of your business and planning for transition, sign up for our newsletter and book a complimentary call with me at thebusinesstransitionsherpa.com. Join us next time on Succession Stories for more insights from transition to transaction

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