Leicestershire’s Family Businesses – a proud tradition, a modern challenge

David Williams was MD of a family-owned business in the food and drink sector for 20 years, supplying Asda and other well-known brands.  Here he discusses the pros and cons of family businesses with the Business Gateway’s Peter Allen.

Small but valuable

I find a lot of people talk down to family businesses, particularly people from large corporates.  But there are 5m of them in the UK and that accounts for two thirds of all businesses.  They create a third of GDP in this country.

There are so many good things about family run businesses.  The good is the passion and the values with which they’re run.  They tend to be better at long-term planning because they’re thinking in terms of decades rather than years and often have decades of experience running the business.  Family businesses don’t have such a focus on the short-term that investors and venture capitalists do and are often better at succession planning than differently structured, corporate companies.

The Challenges of Getting Bigger   

On the other side, I think the challenge with family businesses is that they start with someone being a real expert in something but then, as they grow, the issues can start.   So mum or dad who started the business are just really good at what they do – whether that’s making cheese or brewing or producing samosas – but they don’t understand all the management issues that emerge as the business grows and you take on more staff and more customers.  Something I hear quite a lot is “I don’t want to sit in that chair.  I never wanted to but I’ve ended up in it because it’s the only way I can keep the company going.”

Preparing the Next Generation

The job of running a larger business in the 21^st Century – with global customers, digital channels, the rise of veganism and environmental concerns – means that the second generation need to be better and leadership and management and formal business processes.  So you may have a daughter or son from the next generation down, needing to step up.  But there’s often a gap in their abilities or skills if they haven’t had formal training.  It’s not really about the technical side of food production anymore, it’s about people and management and that’s the gap we try to plug on our Peer Network.

We might think about saying to mum and dad “here’s what you need to do to step back, because if you don’t step back, nobody’s ever going to step up” and we’ll fill in the gap by building up the confidence of the daughter or son, to help them run the business in a professional way and grow it.

A different approach

The other thing which is a classic feature of any family is that the next generation coming into the business often want to do it a different way and mum and dad might say ‘no, this is the way we’ve always done it’.  But I’d encourage this discussion because sometimes that new way can be a better way.  A lot of the tension in family businesses is that – it’s about the how not the what.

It’s a question of approach.  When companies started, decades ago, there were different attitudes to staff, for example.  If an employee didn’t fit, they would simply have been fired.  This generation have a much keener sense of values – they tend to be looking for places they can work that aren’t just about money.  Our generation were quite possession orientated.  This generation excite me because they’re passionate about the cause of the business.  So often, mum or dad’s view of the world won’t attract younger people into the business but the up and coming family members can represent that new vision.  It’s more about purpose for younger people and flexibility.

Communication Issues

The other challenge I’m familiar with in family businesses (because I worked in one for 20 years), is communication.  In an office when it’s just family members, you don’t have to have niceties; if you’re my brother, I can shout something across to you and I forget all the formalities.  However, that’s bewildering for a non-family member because it can seem rude or disrespectful. That dynamic is one of the challenges of a family business – you’ve got to understand that as you get more and more non-family members into your business, you’ve got to adapt your behaviour or at least be aware of the impact it can have on others.

The future

I’m a fan of family businesses so I want to see them thrive in the future.  In food and drink, as I’ve said, provenance is a great selling point, as is tradition and heritage.  So it’s important not to lose those elements of your business.  At the same time, however, there is a real need to introduce professional staff into these businesses, to focus on innovation, processes, cost control, HR and legislation.  The next generation can still represent the family’s original passion and pride in the product – perhaps developing new products in the range that reflect customers’ changing needs.  And they will always represent the family tradition, of course, while allowing professionals to support them in running the core business.

If you’d like to find out more about our Peer Networks scheme for the Food and Drink sector, just click here.