A five-minute read by Jane Sunley, business author and Founder, Purple Cubed.
In between a corporate operational career and setting up Purple Cubed, for a number of years, I was MD of a family business. For the majority of that time I was the only non-family member on a board consisting of a Chairman (Dad), sibling CEO and non-executive directors, and me. Most days I loved it, some days not so much. However, I did learn a lot about the discipline of doing what it takes to make things work, about authenticity, about building trust and the importance of caring deeply about the people you work alongside and those you do business with. I also became adept at juggling the family dynamic with growing a successful and evolving business.
A family business is defined as one owned and / or managed by more than one member of the same family. Many people think of them as SMEs, yet some of the largest household names are family owned and / or managed – think Ikea, Ford, JCB, Dyson, Pentland. Although 70% of family businesses fail or are sold off and only 12% make it to third generation, almost 90% of private companies are family owned. Family businesses contribute £520bn to UK GDP, create 60 million jobs in Europe and, in family business loving Germany, represent 90% of all companies.
Investors love them. The government loves them. We love them. This is because a family business tends to have such a grounded sense of purpose and a, perhaps not always defined though inherent, culture and sense of identity. People (generally) know ‘how things are done around here’ because there’s a stability of approach. Longer-term thinking is the norm, without the revolving-door board director syndrome so many non-family businesses experience. Perhaps this reflects on why we see the sad demise of so many owner-managed businesses when their founders relinquish control?
In family businesses, things get done, clear decisions are taken, the ‘non-negotiables’ are clear, there’s deep commitment to the legacy; towards preserving all that is good and building on it. People are in it for the long haul. Well-run family businesses tend to engender loyalty and long service from the people they employ. Yet they also understand change and the need for big-picture thinking and, with a well-reasoned business case, investment in the future.
From a brand perspective, family businesses have the advantage of the heritage factor. They are seen as authentic, trustworthy, more stable, caring and reliable. They understand that talent is crucial and therefore value and take care of their people. They understand that if you want to make the top work, you have to look to the bottom. Here’s a great video example from Vestey Holdings, a fourth-generation family food distribution business started in Liverpool by two brothers in the 1890s. Having courageously and impressively evolved over the years, today they turn over in excess of £500m+ – and counting… It’s no coincidence that Vestey are highly people centric and make significant investment in developing their next generation of colleagues.
In a family business you can’t hide indifference; this means there are more opportunities to make a difference. Take Charles Wells, a fifth-generation family brewery and pub company. They have a non-family CEO and FD alongside two family members on their board, one as non-exec chairman. They too have taken some brave strategic decisions such as selling off their existing brewery (built by founder Charles Wells also back in the late 1800s) to Marston’s and building a state of the art new one. In addition they’ve been expanding their pub estate organically and through partnerships and acquisitions; bold investments to ensure the future stability and growth of the business in this ever-changing world. Perhaps not coincidentally, they also place a high value on their people. Alongside a shortly to be announced rebrand, they’ve invested in redefining their purpose and values and, through a cohesive people plan, ensure that every single colleague across every brand has worked out exactly how they’ll deliver on this and have full support to do so.
It seems there’s a theme emerging; so, to summarise, here are the Top 10 things we’ve learned from successful family businesses over the years:
- Culture: Purpose and values should be simple and clear, and it takes hard work every day to ensure people deliver on them.
- Recruit strategically and well, be very clear about roles, accountabilities and boundaries; then stand back and trust people to deliver.
- Communication and consultation: two-way, open and on going to avoid ‘dinner table discussions’ disrupting the business.
- People lie at the heart of success so invest properly in their futures. Expose family and long-term colleagues to new experiences – outside the organisation.
- Equality: no pulling rank – everyone has an equal voice and a right to be heard and respected.
- Professionalism, organisation and discipline are required.
- Conflict: a reasonable amount is healthy if well managed and resolved fast because it helps challenge the norms, creating better ways of doing things.
- Take time out for longer-term thinking: strategy, succession planning, innovation and creativity.
- Change: recognise and pre-empt it, embrace it and be bold and brave enough to take calculated risks.
- Expertise: recognise when the right advisors need to be brought in and listen to them.
We’ve developed something of a niche working with family and owner managed businesses though it’s clear that any business can learn from them – be more family…
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