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The advantages - and pitfalls - of a family business

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Many small firms involve owners working with family, and in some cases businesses have been handed down over generations. But family firms can encounter unique challenges as well as shared successes.

Today there are around 4.7 million family-owned businesses in the UK, about 97 per cent of which are small firms. They contribute about £460 billion to UK GDP and employ around 12 million people. 

These businesses are a fundamental component of British society. While there may seem something a little old-fashioned about ownership and management being passed from one generation to the next, there is a lot of evidence that the family ownership model can be hugely successful. 


However, many of us argue more with our family than with anyone else. In a family business, interpersonal conflict in a boardroom gains an extra dimension.

Alan Wick, a business coach now in his early 60s and a current and former business owner, grew up surrounded by family businesses. Both sets of grandparents owned manufacturing companies. Both were badly damaged, while he was still a young man, by feuding between family members resulting in litigation. 

Mr Wick sums up the advice he gives to family businesses in one word: boundaries. He recommends writing a family constitution, outlining agreed principles for running the business. He also suggests families impose cut-off times after which business can no longer be discussed at night. “There may be times when you have to break the rule, but in general you need that cut-off,” he says. “Without it, there can be all sorts of tensions. This stuff can destroy families.”

Fiona Graham, communications director at the Institute for Family Business (IFB), also highlights the importance of setting out rules for governance and for matters such as employment policies for family members in writing. 

Succession planning can be particularly difficult. She suggests a plan should cover skills development for younger family members and a detailed exit route for older family members. If younger people want to join the business, they could be encouraged to gain experience working somewhere else first, to expand their perspectives.


“Running a family business can be fraught with danger, but also  a recipe for joy and success,” says Mr Wick. “I don’t see why this method of business ownership can’t carry on, as long as action is taken to minimise the risks.”

Case study: Woodhayes Farm, Blackdown Hills, Devon

‘The main motivation is that we can remain living in the countryside’

 

Greg Page-Turner’s parents Noel and Christy bought their 150-acre farm, near Honiton in Devon, in 1961. For 30 years they worked as dairy, beef and sheep farmers, but since the 1980s the family has gradually diversified the business, starting with Christy offering bed-and-breakfast accommodation in the farmhouse, which she still does today. 

The family has also spent much of the past 25 years converting farm buildings into offices, corporate meeting and training spaces for hire, a wedding venue, holiday accommodation and, since Greg brought his fine art business to the farm in 2009, art exhibitions. The business has four employees: Noel, Christy, Greg and his wife Fiona – a marketing specialist who manages the holiday lets. Developing the farm buildings has also created ancillary jobs. 

Greg thinks the factors crucial to businesses such as this are strong family relationships and a written constitution. In addition, he stresses that younger members of the family need to be listened to. “The main motivation from my point of view is that we can remain living in the countryside,” he says. “I want my children to enjoy it if they choose to stay here. But we will support them whatever they want to do.” 



Case study: Sharp & Enright, ship chandler, Dover, Kent

‘My dad suggested I came and worked here for a bit. I’ve been here ever since’

 

Sarah Sharp is a fifth-generation owner/manager of Sharp & Enright, a chandler and shipping supplies merchant founded in 1860 by Sarah’s great-great-grandfather 
John Sharp, in partnership with Jack Enright. Mr Enright died the following year, but his name has lived on. “My dad always says we’re a little bit slow in changing,” says Sarah.

Her father Michael started working in the business in the 1950s when Sarah’s great-grandfather, Sydney Sharp, was still in charge. Apart from 18 months of National Service, Michael has been working there ever since, although health problems mean his involvement is now much reduced. Sarah started working in the shop in 1990, after studying for a qualification in hotel management had left her disillusioned. “My dad suggested I came and worked here for a bit. I’ve been here ever since.”

The business has survived by adapting to changing times. Customers still include larger ships, but the business is now more focused on the leisure market. 

Sarah isn’t sure whether her daughter, now 12, will want to work in the business, or if she wants her to do so. “It is such a tie, 365 days a year,” she says. “But I do enjoy it – if I didn’t I wouldn’t have been doing it for so long.”



Case study: Derwas, ironmongery, heating, kitchen and farming machinery retailer, Welshpool, Powys

‘Work was all dad did. He’d take us for a holiday and come back the following week to bring us home’

 

Kaye Derwas grew up above the ironmongery and farming supplies shop in Welshpool that her grandfather had helped her father Keith to set up in 1961. As children, they used to help out in the shop, with jobs such as pouring paraffin out by the gallon for customers. 

“Work was all dad did,” she says. “He’d take us to the coast for a holiday, then come back the following week to bring us home.”

Kaye’s father, Keith, who is now 85, still comes to the shop every day, but is no longer very active in the business. She started working for the company during the early 1990s, after leaving another job where she had been unhappy. As the business grew, Kaye and Keith managed moves to larger, out-of-town premises in the 1990s, where she led a new side of the business, selling stoves, cookers, woodburners and fireplaces. 


She isn’t sure if she wants her two daughters, the eldest of whom is in her early 20s, to work in the business. “I’d want them to work for somebody else first and get some skills and confidence if they do,” she says. 

The company’s other full-time employees include Tony Jones, who has worked there for 50 years. He worked for Kaye’s grandfather and her father, and rocked her as a baby in her pram. “I don’t know what we’d do without him,” she says. “He knows everything.”

Case study: Tamar Couriers, Plymouth

‘We all want the same thing: for the business to be successful. There haven’t been many times when we’ve fallen out’

 

Tamar Couriers was founded by Martin Dawkins in 2001. It now runs a fleet of 30 vehicles offering services including same-day courier delivery, light haulage and warehousing. 

Martin’s daughter, Louise Winchurch, joined the company in 2004 after working in the tourism industry. She is now in charge of logistics and finance, and works alongside her sister Gemma, who joined the company in 2014.

Martin and his wife Karen are both also still involved in the business, although they plan to retire in 2020. Louise’s husband Philip is one of the company’s 15 drivers, as are two of her cousins, Matthew and Jake. 


“We’re lucky that we get on well,” says Louise. “We all want the same thing: for the business to be successful. There haven’t been many times when we’ve fallen out over work issues.

“Our ultimate plan is to pass it on to our children, if that’s what they want to do.” She has two children aged 15 and eight. Gemma has a two-year-old, with another child on the way.

“I’ve worked in places where there was constant stress,” says Louise. “With this, there’s not one day when I’ve got up and thought ‘Oh, I don’t want to go to work’. I hope that’s the way everyone else feels too.”

Case study: CPJ Field, funeral director, Burgess Hill, Sussex

‘We will need to transition from being an owner-managed business to an owner-governed business’

 

CPJ Field was founded by Robert Field, a coffin-maker, in late 17th-century London. By the end of the 19th century, his descendants had created a business whose reputation was strong enough for it to be entrusted with managing Queen Victoria’s funeral in 1901.

The company now runs 37 funeral homes across south-east England.

It has about 175 employees, but shareholding is restricted to the five family members on the board: Colin Field, the chairman who has worked there since 1970; his sons Jeremy, the Managing Director, and Charlie, the Deputy Chairman; and his daughter Emily, who runs the business’s talent and community engagement programmes. Colin’s wife Christine is a Non-Executive Director. 


The principles by which the business is run include treating employees well and helping clients to create unique, genuinely fitting funeral services for their loved ones.
Now a new generation of Fields are growing up – seven people in total, but the oldest is only nine years old, so if they join the business they will probably not be ready to take over when Charlie and his siblings retire. 

“We will need to transition from being an owner-managed business to an owner-governed business,” he says. How that transition will work in detail is still being planned.

But he says that a photograph taken recently of the family together with a large group of their colleagues serves to remind him that he and his siblings are working to build something that could continue to benefit and/or be run by their descendants for generations, perhaps even centuries, to come.