When a business changes hands, the new owners can steer the enterprise in whatever direction they choose – for family companies a deeply entrenched set of values can make that much harder to do.
This isn’t necessarily a problem, of course. A solid vision and set of values can act as a kind of moral compass to guide a business through different generations. But if you’re setting up a family business or thinking of handing over the reins to a younger relative, it’s worth considering the potential challenges ahead.
As the Institute for Family Business puts it, family-owned firms are the backbone of the British economy. They pay more than £149bn in taxes every year. They avoid excessive debt, have lower staff turnover and take a long-term approach to investment. Family companies are also less likely to go under when the going gets tough.
So what gives family firms these bulletproof qualities?
Building on family experience
One of the reasons family companies succeed is that the people who work for the company tend to share the same ideals.
Niki Fuchs co-founded Office Space In Town with her brother, Giles. They started up in 2009, and much of the company was based on what they’d learned from their parents.
Almost 40 years ago, the elder Fuchs had spotted a gap in the market for people wanting serviced office space. They launched in that sector, and the business naturally permeated family life for the following decades.
By the time the two siblings got together to form Office Space In Town, they’d racked up considerable experience from jobs with their parents and elsewhere in the rentals industry.
“Our parents’ visions and strategies were different to ours, because a lot has changed,” Fuchs said. “But there’s definitely crossover between them. We’ve taken the idea and made it relevant to the here and now. And we hope that the next generation of our people, our successors – whoever they may be – will continue to adapt and change.”
This freedom to evolve Office Space In Town’s vision and values is vital to long-term success. Fuchs believes that whoever is in charge of the company needs to be able to innovate as much as the founders did.
“Businesses sometimes die because the next generation isn’t entrepreneurial, and they don’t have the skills or the drive to succeed.”
The legacy of family companies
One of the biggest complications with family companies is the pressure of family legacy. The idea that family members are responsible for preserving a family legacy and its vision and values can lead to unnecessary stress.
After all, no one wants to be the member of the clan who steered a 50 or 100-year-old business off a cliff.
Karen Davis runs Planned Lighting Maintenance, a family firm started by her father, Roy, back in 1968. The firm started out as a part-time operation and quickly expanded to a full-time business with a rapidly growing workforce.
Karen’s late mother, Ann, also worked for the firm. But, as Karen says, there was no real sense that it was a family business until she started there in 1995. Her parents’ legacy is something she’s keenly aware of – it’s not a hindrance, but it’s definitely there.
“I imagine people who own a business – and don’t have family within the organisation – don’t feel that as much,” Davis said.
Remembering your roots
The firm’s values are orientated around pride, care, and family. While they weren’t formally written down until recently, their roots go way back. When the firm first started up, there was an “all in this together” mentality that bonded the team.
“We realised that there were aunts and uncles, brothers and sisters, sons and daughters who worked at Planned Lighting Maintenance,” Davis said. “And when we asked our staff what was most important to them, the same thing kept cropping up in their answers – family.”
The company’s vision is to “make life lighter”. It’s partly a pun, and partly a reflection of the team’s desire to help each other.
Like Niki Fuchs, Davis emphasises that whoever is in charge of a family business should be respectful of the founders’ ambitions, but they also need freedom.
“I was always encouraged by my parents to implement different things. And while I want to keep the legacy alive, it’s also about making sure it doesn’t go stale,” she said.
“At the moment, there’s no guarantee that either of my children will want to take the reins in the future. Whatever happens, I see the vision and values evolving as the company works its way forward. In 20 years, they could be completely different to what they are now.”
Founding values continue to guide
Craig Spillard is the finance director of Spillard Safety Systems. He works alongside his brother Pete, who is MD. Together, they’re the second generation of Spillards to look after the business, which was started by their father, Vic, in 1992. The firm’s founding values, Spillard said, continue to guide them.
“Our values have always been the same and were defined from our first project,” he explained.
“We were approached by a blue chip aggregates company to look at installing full harness seat belts to their plant. Rather than just taking a harness belt and fixing it to their current seats, we took a more comprehensive approach. We looked at whether the seats were capable of taking the belts and whether they needed brackets to fix them correctly.”
In the end, the customer didn’t buy because the cost was too high. But this helped to establish one of their key values – namely that they wouldn’t just sell a customer a product because they were asking for it.
“Instead,” Spillard said, “we’d go back to the start. We’d find out what they were trying to achieve, and then investigate whether the product they wanted was actually the best product for them to get their desired results.”
This ethos helps to keep the brothers aligned. And, as Spillard pointed out, there’s another big plus of working in family companies.
“As the old saying goes, blood is thicker than water. Even if family members don’t totally agree with the vision or the values, when they’re talking to the wider audience, they will tend to stick together.”
Want to read more articles about family businesses? Check out our section on planning, productivity and leadership in family firms.