A career spent in Hawaii working with rare and precious gems to make beautiful jewelry might sound like paradise to many people. For brothers Gale and Flint Carpenter of Big Island Jewelers in Kailua Kona, Hawaii, it’s been a way of life since the business was founded in 1983.
Now both brothers are approaching retirement—Gale is 59 and Flint is 66—and they’ve begun turning over the business to Gale’s son Chance Carpenter, 28, in what is planned as a multi-year process.
The Carpenters are lucky that Chance is eager to learn and take over. Independent jewelry stores are a shrinking category in the United States. The business is there—U.S. fine jewelry sales are increasing every year and topped $68 billion in 2015—but distribution channels are changing. Not only is fine jewelry available in more and more non-jewelry-store outlets, but also a high percentage of the country’s approximately 20,000 independent jewelers are close in age to Gale and Flint Carpenter. While many jewelry stores are run by the third, fourth and even fifth (or higher) generation, for an increasing number without a family member ready or willing to take over, this is the end of the line.
Chance Carpenter didn’t plan on being a jeweler. But, quoting George A. Moore, he says, “A man travels the world over in search of what he needs and returns home to find it.” For about three years Chance owned Silhouette, a boutique creative advertising and marketing agency. He later co-founded trim, a surf culture publication. In fact, unlike most jewelers’ children, he didn’t work in the store at all growing up, not even as a summer job.
“I had peripheral exposure at the dinner table,” Chance says. “Most family business [owners] talk about their day at dinner, but I didn’t have any interest in it at all.” In fact, when he went to college, it was to study architecture, though after an internship he realized that field was not where he wanted to remain.
Chance is Gale’s only child. Flint’s children, Taimane, 26, and Cache, 24, had no interest in taking over the store. Other, older cousins—the offspring of Gale and Flint’s other siblings—live in the continental United States and never were part of the jewelry store.
Big Island Jewelers is known for its craftsmanship and handmade, custom, one-of-a-kind fine jewelry. Most of its merchandise is designed and made on the premises by Flint Carpenter, a self-taught goldsmith with almost four decades of experience that he’s now working to impart to his nephew. Chance’s father, Gale, runs the business side. It’s a common arrangement in many jewelry families: One sibling or spouse is the creative talent, and the other is the business talent. Flint has a master’s degree in fine arts, while Gale has a business degree.
Neither Chance’s mother, Julie, nor Flint’s wife, Cassie, works in the business. Both women were involved in the early years—especially Cassie—but as both had children, they decreased their involvement with the store.
A golden opportunity
Chance co-founded trim magazine with a partner, Matt Luttrell, who serves as the publication’s editor. Chance was trim‘s creative director. The offer to take over Big Island after only two-and-a-half years at trim was a surprise, Chance says.
“The opportunity came out of nowhere,” he says.
Gale and Flint Carpenter had been approached by an individual who wanted to buy the store and leverage its name and reputation to create a larger business along the lines of well-known Hawaiian jewelers like Na Hoku or Maui Divers. The offer gave the brothers pause, because they hadn’t really thought out the store’s future.
Discussing the proposal made them realize that “they were approaching retirement age with no transition plan,” says Chance. They knew they didn’t want their store to become one where all the merchandise was a brand or a commodity. It was their older brother, Ralph, who suggested they approach Chance.
Before he said yes, Chance talked at length with his father, Gale, about legacy and craftsmanship, as well as his feelings about continuing the business.
Chance says he was able to give only a month’s notice of his departure to Luttrell and trim‘s staff. To be fair to Luttrell and to maintain their friendship, Chance relinquished all equity to make up for his sudden departure.
Chance feels his prior experience with both the agency and the magazine has put him ahead of the curve in taking over the store. He might have to learn how to make jewelry, but he already has a handle on how to run a successful business. “Owning a small business, being fortunate to experience the world, earning regional and national accolades, and meeting fascinating and inspiring people has allowed me to join the family business with a valued and meaningful perspective and insight, vs. simply transitioning from college,” he says.
It’s also helped tremendously in avoiding some of the most common intergenerational conflicts that arise when a business is transitioning. Because Chance has real-world experience running his own small business, both Gale and Flint Carpenter respect his knowledge.
“It’s super-easy to work with my dad and uncle,” says Chance. “Some family businesses work, and some don’t. Some have passive-aggressive things going on; we don’t.”
For example, Chance has applied much of his prior experience to Big Island Jewelers; he handles all the branding, photography, graphic design and other marketing matters for the store. He wanted to do a brand evaluation, which could have become a bone of contention, but he approached it as he would have for any other client of his former agency: He created a brand-assessment book complete with an analysis of the competitive landscape, suggested visual imagery and so forth, and presented it to his father and uncle as if they were clients of Silhouette.
A gradual transition
Chance is learning the goldsmith aspect of the trade very slowly and deliberately, through an old-fashioned apprenticeship that’s expected to last five years. He estimates that 90% of the time, he’s at the bench with his uncle; the other 10%, he’s with his father learning the finance and business aspects of the store.
Chance’s wife, Tammie—currently the public relations manager for the Sheraton Kiahuna hotel—plans eventually to join Big Island Jewelers to focus on business, while Chance will create bespoke pieces for the store’s international clientele.
Chance is now learning goldsmithing literally at his uncle’s elbow. He says Flint is incredibly patient and willing to stop his own work at any time to answer questions or show him a technique.
“It’s important to me to see Big Island Jewelers continue on for generations to come—just to see other families benefit from all the great work we have accomplished over the years,” says Flint.
To transition the business, the family is using a gradual equity exchange. “We have always surrounded ourselves with people smarter than us. So we asked our financial adviser, attorney and CPA to meet with us to discuss the buyout,” says Gale. “After a few meetings, we all decided that a stock reduction plan would work the best.”
“The stock buyback option was recommended by our financial adviser, allowing for a smooth exchange of equity, and it was the best option when considering taxes for all parties,” Flint says.
First, Flint is gradually reducing his equity, while Gale is increasing his. That transition will occur over five years, one of which has already passed. “The initial transition was decided by age: Flint will be 70 years old when the five years are up,” Gale says.
Next, Gale will in turn decrease his equity as Chance increases his, until Chance assumes full ownership. “That period of time will be at least five years, and it could be up to ten years,” Gale says.
Gale plans to stay at Big Island for at least two years after the transition has been completed. “I will train the person that will take over my job,” Gale says. “After the initial two years are completed, I will have to take a look to see if I can be of value to the business.”
Both brothers say they’re very satisfied with the plan they developed and how it’s been progressing.
“Chance is humble, artistic with mind-changing ideas; an overachiever, very eager to learn, appreciative and compassionate with people and jewelry,” his father, Gale, says proudly. “He also brings to the table being a graphic artist, photographer, entrepreneur and soon to be goldsmith.”
Chance, for his part, says he’s thrilled to be taking the business into the future. “Although equity will change over time, I hope my father and Flint will always be a part of the business,” Chance says. The store has three non-family employees: Jose Delgado, also a trained goldsmith, is the master fabricator; Tarah Klarc and Lauren Pfaff handle sales.
Big Island Jewelers serves as the official jeweler of the Timex Ironman World Championship, which takes place steps away from the store’s front door. Big Island makes all the official jewelry merchandise for the event, as well as the championship rings. The Carpenter brothers signed on as the event’s second sponsor 20 years ago, just months after Timex.
Chance says his decision to take over the store stemmed from a desire to be part of something lasting and permanent.
“Jewelry is a part of our human story, evoking passion throughout time and inspired by generations of thoughtful craftsmen from every corner of the earth,” he says. He notes that graphic design, by contrast, is becoming highly automated and commoditized.
“The significance, craft, journey and culture of jewelry is fascinating and profound,” Chance says. “We are honored to be part of people’s weddings and special moments. The pieces we create today will be here longer than you will, so it’s not a responsibility to be taken lightly.”
Hedda T. Schupak is an editor and analyst specializing in fine jewelry and luxury retailing.
Copyright 2016 by Family Business Magazine. This article may not be posted online or reproduced in any form, including photocopy, without permission from the publisher. For reprint information, contact bwenger@familybusinessmagazine.com.