Two in every three private firms are family owned, so it’s high time we understand the challenges they face
“Family businesses are dysfunctional by nature,” says Dani Saveker, founder and chief executive of Families in Business (FIB), alluding to the fact that all families have their quirks. “But when they get it right, they can innovate and wipe the floor with their non-family counterparts.”
The trouble is, she continues, is that too many family businesses go it alone, feel that the challenges they face are unique to them, and don’t find the support they need.
Saveker, a panellist at this year’s CBI MSB Summit, speaks from experience. She was in charge of her 106-year-old family business, manufacturer Savekers, when it collapsed into administration in 2009. This was precipitated by the global downturn but, as Saveker says, a business failing doesn’t happen overnight.
“Failure takes decades and so it’s important to ask for help and support when everything is going reasonably well,” she explains.
“If you imagine that a family business is very often like a spine, the minute one of the vertebrae starts to become dislodged, you have a little bit of pain. But you carry on. And if you don’t get help soon enough, that becomes crippling.”
Yet survey after survey conducted by FIB show that family businesses don’t think the right support is available – either from local government or professional advisers. And one of the biggest reasons for this, according to Saveker, is a lack of understanding. Business decisions generally perceived as logical are often not logical in a family environment, she explains.
“Knowing that 95 per cent of the decisions and emotions that we use in business every day, as in life, come from the unconsciousness and formed from our early experience, shows the importance of looking beyond business into the people, the family dynamics and the history of it all. There is never a right and wrong. Removing judgements and blame is so important.
“Having a peer group to share my experience and challenges at the time would have meant the world to me and to my family members,” she adds.
But Saveker is also clear she doesn’t view what happened to her own family business as a failure – just as entrepreneurs in the US tend not to do.
“It frustrates me that in the UK we love to put people down and examine failure, and be very negative about it,” she says. “But I see it as a gift that has allowed me to go on and create an organisation that uses that knowledge and experience, not just of my generation, but generations before me, to help others.”
And with two in every three private businesses family owned, Saveker is quick to dismiss the argument that many of them don’t aspire to grow. Instead, she calls them the backbone of the British economy.
Many can be defined as medium-sized businesses, and Saveker draws parallels in the opportunities available to them with big family businesses elsewhere in the world, listing Bacardi, Ferrari, Estee Lauder, Wal-Mart, and even Donald Trump.
“The environment is there to succeed. The opportunities are there to succeed. But we need to look at the whole picture and understand the importance of the whole range of these businesses and the challenges they are facing.”
And the challenges themselves are changing – above and beyond the trends affecting all firms, says Saveker.
Now, for example, 25 per cent of family businesses have experience of blended families, where step-children or step-parents are involved. Increasingly, family members have struggled to balance work, life and family, so have had children later, which has led to a generation gap. And other firms are finding they have to deal with their families spreading out to live and work across the country, or even internationally – or the impact of younger generations wanting to pursue multiple careers in the lifetime.
“That leads to further opportunities, of course, but many continue to work with family businesses based on books written on family business back in the 1960s and 70s. They are out-of-date,” says Saveker.
And when it comes to overarching business issues, such as productivity, Saveker says many family businesses remain confused about their strategies after the recession.
“We’ve seen people that have delayed a lot of decision making following 2008. The baby boom generation has delayed potential retirement or passing their businesses on to their family or employees or selling up, because they have just been so uncertain about what’s going to happen around them,” she explains.
“But they’re now fed up of not taking action. They want to invest and grow. The question now is what next?”
The CBI’s MSB Summit will be held in London on 7 July.
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