Previous owners ease in new leadership with unique succession plan

September 29, 2014 By    
Johnson Oil & LP Co.

Johnson Oil responded to last winter’s propane shortage by doubling its onsite storage.

Michelle Richardson’s first day as Johnson Oil & LP Co.’s co-owner was Jan. 27, a date that normally qualifies as just another winter’s day for propane retailers.

But this past Jan. 27 came in the midst of the regional propane shortage, a period many longtime retailers say was the most trying stretch of their careers.

Imagine how Richardson felt day one at her Osage, Iowa, business.

“Jan. 27 was when propane was over $5 [per gallon],” says Richardson, who owns Johnson Oil with Carl Brumm. “Carl called it our boot camp. I called it our baptism by fire. It was very interesting taking over during that time.”

Fortunately for the couple, they were able to lean on the previous owners, Denny and Randi Johnson, for guidance through the shortage. The Johnsons agreed to remain on staff through the end of this year to ease Richardson and Brumm into their new business.

“They’re very community minded and wanted to keep the business privately and locally owned in order to continue to service their clientele in the manner that a small town needs,” Richardson says.

The Johnsons’ continued presence has been vital, Richardson and Brumm say, because this is their first experience working in a propane business. Richardson has a business and finance background, and Brumm has a crop-dusting business.

“We looked at the opportunity and given our skillsets it was a good match for us,” Richardson says, adding that she and Brumm were attracted to Johnson Oil because the company is a fixture in the county in which they grew up.

One way the Johnsons have guided the new owners is to advise them about the importance of having plentiful storage. The Johnsons added storage in 2009, Brumm says, after the industry experienced challenges like the ones retailers faced this past winter.

Taking their advice, Richardson and Brumm added more storage this summer to combat future issues. Ultimately, the new owners decided to double their onsite storage from 150,000 gallons to 300,000 gallons. Ten 30,000-gallon tanks are now on site at Johnson Oil. The company also has another two 30,000s off site.

“I wouldn’t have thought having storage would be a competitive advantage coming into the business,” Richardson says. “Hearing their story, being here for six months and given the loss of the Cochin Pipeline, it just makes sense.”

In addition to the Johnsons, Richardson and Brumm are leaning on many of the company’s longtime employees through the transition.

“Their employees have been here a very long time – 10, 15 years or more,” Brumm says. “They don’t really have any turnover. Their employees are very loyal, and they’ve been with us a long time. They’re older guys, but that’s one of the great things about taking over the business. We have very senior-level employees who help us out, too. I’m happy to take advice from someone who’s done the job for 20 years.”

COMPANY: Johnson Oil & LP Co.

LOCATION: Osage, Iowa

FOUNDED: 1982

EMPLOYEES:10

CUSTOMERS:1,600

PROPANE SALES: 3 million annual gallons

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