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Family fortunes: the secret to a successful family business

Written by Ryan McChrystal on Friday, 03 October 2014. Posted in People

Many family businesses fail to land in the hands of the third generation, while others seem to do it with ease. So what is the secret to a happy handover?

Family fortunes: the secret to a successful family business

What do JCB, Associated British Foods and Stemcor have in common? You’d be correct to say they are all British companies but they have also been run by the same families for a long time. In the UK around two thirds of businesses are family-owned and the biggest issue many will face is deciding who will take over when the current owners retire, pop their clogs or disappear. Only a small proportion of family firms remain within the bloodline but there are many great examples of survivors out there that date back generations.

While no two cases are the same, it’s safe to say certain themes such as planning, communication and adapting to change prevail in successful successions.

Donkey work

Williams Automobiles has come a long way since its humble beginnings in 1911 when it was a one man and his donkey operation, weeding cemeteries. It is now a luxury car dealership specialising in British performance cars. It gives customers the five-star treatment and will even roll out the helipad if you are in a rush. Four generations and more than a century after its inception the company is still in family hands, with Harry’s great grandson, Henry at the reins, selling flash cars.

Richard Williams, Henry’s father who ran the Bristol-based company before him, explains the success of the handover a few years ago. “You have to plan for it for some time and ensure you get every detail right.” Williams says that in order to succeed, a family business must make the competency and training of the up-and-coming generation a priority. Since heading up Williams Automobiles, he has proven himself to be more than capable, taking his floundering family business from a loss of £266,000 in 2011 to a profit of £370,162 last year – with higher returns still expected this year.

Still in fashion

For the survival of a family business, it is vital that the next generation really wants it. With no desire to work in the City following their studies at the Manchester School of Management, brothers Richard and Jack Benson went to work for Guide London, the fashion business their father had started in 1973 with a £70 loan from his aunt. “We had grown up seeing our parents working for themselves and that very much appealed to our sense of free spirit,” says Richard Benson.

Guide London offers everything from shirts, trousers, knitwear and coats to socks and underwear. The brothers got involved in 2004 and together they reformed the brand, focused more on in-house fashion design and increased business with UK-based independent retailers and those in Ireland and Scandinavia.

The process of handing the business down, however, was gradual. “Initially, when we joined the business, it was very much a case of look, listen, learn,” says Benson. Over time as their experience has grown, they have grown into the business and taken it forward.

Respect your elders

One of the most crucial points of handing your business down is maintaining a good relationship between the different generations. For Benson, it comes down to having some common ground. “There needs to be a central vision that everything is built around in any business unit. There needs to be a core principle that allows a business to take its intellectual capital and profit from it.”

James Wyatt, one of the partners of Barton Wyatt, the estate agent, which has been around under one guise or another since 1869, believes you can’t put a price on the wisdom and common sense of older generations. He runs the company with his brother, Rupert, and they both have a very close relationship with their father. “My father retired at 55 due to ill health but then he got better. So we employed him as a consultant until he was 65, as he did with his grandfather, and even now, although he is 71, I still call him from time to time to pick his brains.”

Wyatt also believes it is important to draw the distinction between old and new. “Once you retire, you are gone and aren’t the boss anymore.” To tell someone to butt out may seem harsh but that’s the beauty of a family – you often get away with saying things you wouldn’t normally say to someone you’re less familiar with.

Sometimes tensions within a family can become overwhelming but Wyatt has a solution for that. “Within our family, conflict is very easy to resolve. If one of us has a very strong viewpoint, the other one always backs down. It’s a simple as that. But it’s fortunate we see eye-to-eye on pretty much everything and have very similar approaches.”

Moving up

For any professional, separating your working and personal life can be difficult. So can you imagine how much more difficult it is within a family firm?

Peter Bishop, ICT director at Bishop’s Move, the largest family-owned removal business in the UK, explains: “Growing up in the family, we made a rule: as soon as I started properly working for the firm, discussions about the business took place at work, not at home.”

Bishop’s Move was established in 1854 by JJ Bishop and 2014 is a defining year as, after 160 years, the fifth generation of the family has handed the reins over to the sixth generation.

The ‘L’ word is a must in any family business. No, the other ‘L’ word. Loyalty is essential but often lost as soon as an external proprietor is brought into the equation. Bishop’s is the exception to this rule, deciding to take on a managing director who does not share the DNA. However, only family members can become shareholders, so overall control remains with the Bishops.

“This generation of the family has taken the brave step of getting outside help in, rather than saying it is our business and we need to run it, which could prove fatal when you reach a certain size,” says Bishop.

It is plain to see that while there is no such thing as a concrete plan for success, there are certain constants. Knowing when to deviate from a plan and not being afraid of stepping outside the box may be the greatest strength of all. 

About the Author

Ryan McChrystal

Ryan McChrystal

In a previous life McChrystal wrote about asset management in the Middle East. A history and politics graduate from the north of Ireland, he now focuses his efforts a little closer to home. 

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