Family business

Watch out for key challenges, says Neville Stein.

Image: © Brain light/Alamy
Image: © Brain light/Alamy

One thing that typifies the horticultural industry is the predominance of "the family business" — the hotbed of history, commerce, drama and enterprise involving generations of bloodline and marriage-related horticulturists living and working together in mutual harmony.

A family business need not involve multiple generations or be that old. If you are a first-generation business owner, you may in years to come find yourself being toasted with a glass of sherry around the boardroom table as your descendants honour your vision and acumen in founding the family firm. Or you may find you are still working there in your mid 80s because you love it so much, you cannot afford not to do it or none of your children or grandchildren could ever do it quite how you do.

So what challenges and opportunities exist for modern family businesses in our sector today?

Firstly, I would like to point out their importance and influence in what is essentially a close and intimate industry. There is a fair chance that all of us will at one point have been employed by a family business, and that we will have developed and learnt our trade in its supportive "family" culture.

Our ability as a sector to network, communicate and relate to each other is also assisted by our predominance of family names and personalities involved over generations, and this also gives our industry credentials a stable beneficial influence on social and economic life. Generally people like family, people trust family and customers like to put a family name to the product or service they are buying to make it more personal and accountable. It is no surprise then that this form of business is the oldest and most common form of economic enterprise, but what are the three main challenges and pitfalls that should be avoided?

1. The brand Research has shown that consumers prefer to buy products and services from family-owned businesses, believing that these types of enterprises are more trustworthy and provide better products, services and value. As a family business your name is your brand, and this can be damaged should you fail to meet these higher customer expectations, or indeed if you succumb to a spectacular PR disaster like Gerard Ratner when he described his jewellery products as "total crap". All family members should be ambassadors for the business at all times — and although I have no data to support this, it has been suggested that customers are quicker to forgive an anomalous chain store than a family firm should something go wrong.

2. Change Many family businesses have been around for a long time and survived many economically difficult periods. Many have not. Although in theory it is much easier for a smaller family-based enterprise to change than it is for huge corporations, family businesses have other dynamics to consider that can make change difficult. How do you make a family member redundant, for example? Or reduce their hours or income? Family pride and personal feelings should of course be considered, but at times when change is needed all family members need to sign up to the premise that the firm has to come first. This should be a prerequisite to working in the business in the first place.

3. Skills Just because you are good at something it does not mean that your children will be or that it will develop naturally without proper training. My grandfather was a master baker but you will not be seeing me anytime soon with Mary Berry on The Great British Bake Off. Family members in a family firm should be there because they want to or because they have the skills or are being trained to acquire them. If necessary, employ other people with the skills the family lacks, and they will more than pay their way.

Family businesses can, of course, range in their complexity from those involving in-laws, out-laws, step kids, grandchildren and family pets to ones owned by a family but managed entirely by non-family members. Most enterprises are harmonious examples of co-operation and endeavour, but family differences in ideas, approaches and personalities can cause problems.

What should a small family business be aware of to avoid a boardroom bunfight?

• Make sure that the financial interests of the family are aligned with the business. If the family members want the business to fund their lifestyle, tensions will arise should the business underperform and be unable to meet the financial expectations of the family owners.
• Ensure that the interests of family members are aligned. For example, one family member might want to retire while a younger family member might perceive that they have a long-term career in the family business.
• Run the business as a business. Decisions need to be objective, not personal. This can be simpler if there are clear responsibilities and job descriptions for all family members. Have a clear chain of command and accountability — who is in charge and of what — and avoid a scenario where staff have numerous bosses.
• Keep the lines of communication open with all family members — it often helps to establish formal, structured management meetings.
• Consider using the services of a non-executive director or an external adviser to help your family members make decisions. It is often beneficial to use an impartial facilitator to help make decisions.
• Always adopt an objective and impartial manner. What is best for the business? Perhaps a family member could move to another department or branch, or establish their own enterprise.
• Deal with any family member
who fails to preform. They may need training or new direction. Use a non-family member to mentor or coach them.
• Deal with the future. A succession plan is vital if you want your business to continue after your retirement and this will have a greater chance of success if the next generation is educated in all aspects of the business and also understands the wider trade. • Encouraging them to take sabbaticals working for other companies inside and outside the industry can be a very helpful exercise. But what if the next generation are not interested? You need to decide what then will happen to the business. Should your family want to keep it going but is not interested in working in it, then the priority would be to develop the next generation of leaders who are currently working in your business, ensuring they share your family values, your vision and your culture.

If you are a family firm, make sure this fact is part of your marketing credentials no matter how old your business may be. The organisation Family Business United has actually now launched a Kitemark to help promote the message of a family business because this is such a powerful marketing tool.

Remember also that the family unit itself is the most successful and productive unit of all time, so whether you work for your own or for another family, be proud of the name on the door.

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