Families in business are unique. While similar to any public corporation competing in the market place, they are fundamentally different in one important and vital regard…their family. Dean Fowler looks at some of the challenges and how a family council might help. As owners and managers, family members – a passionate group – have the power to shape the future success of their family enterprise. The power and cohesive unity of a family provides a distinct strategic advantage to family enterprises – so much so that they outperform the Fortune 500 – with higher profitability, deeper personal passion in their products and services, and more “patient capital” provided by continued family investment in the business. A recent study of successful multi-generational businesses conducted by JPMorgan Private Bank, concluded that the cornerstone for preserving a family legacy across the generations was effective family governance – a process to balance the passions and ideals of the family with the goals and objectives of the corporation. I call this governance process The Family Council . The purpose of The Family Council is to nurture and sustain healthy family relationships while promoting responsible, committed and active stewardship of all the family’s assets including its legacy of values. For successful multi-generational family enterprises, The Family Council is the crucible in which the hard realities of business and the soft complexities of the family are blended into a coherent vision for the future. This ongoing process of creating cohesion and unity involves four major facets (ingredients) which are outlined below: Powerful vision — To maintain continuity across the generations, the family must develop and communicate the central values and purposes that empower the family legacy. The shared vision becomes the cornerstone for enhancing effective communication among family members to build strong relationships through trust and respect. For example, just prior to his recent death, Sam Johnson produced an extremely powerful movie that captured the core values of the business and the dynamics between himself and his father. One of my clients wrote a history of the family showing how the values of the founders have been embodied in the fabric of the family and the corporate culture of the business. Educational development — Future generations must be prepared for their roles and responsibilities as family members and responsible shareholders in the business. In addition, the competencies and strengths of family members must be nurtured through both formal and informal educational opportunities. For continuity, the spirit of stewardship of the family legacy and the family assets must be nurtured in the next generation. Beyond college or graduate school, successful families involve the next generation in the critical issues facing the business, or the family foundation, as a learning opportunity. Balancing family and business — The Family Council provides strategic level guidance to the Board of Directors and/or the management team on issues that impact the direction of the business or the family foundation. For example, how will the core values of the family determine the types of business ventures that should be pursued? During times of inter-generational transition, in particular, the family must lay the basic criteria for the succession process. Should a family member lead the company? The Family Council also establishes the basic rules and frameworks for managing the employment of family members in the business. Responsible ownership — As shareholders, family members must work together to create the necessary legal structures defining their mutual relationships as owners, as well as their appropriate roles in controlling the family business, foundation or other family assets. In addition to designing the primary frameworks for their legal shareholder agreements, including liquidity strategies, formal governance of the corporation, and commitments regarding future investment risk must be addressed for long-term success across the generations. The initial work of The Family Council involves the creation of a comprehensive Family Constitution in order to reinforce the family’s commitment to function as a family, to foster the growth of the business and to assure the ongoing investment in the future of their enterprise together. The family constitution addresses such topics as policies on employment, retirement, and compensation of family members; the purpose, vision and mission of the family; the core values of the family that are the ethical compass for the business; guidelines and procedures for decision making, and finally issues concerning stock ownership, liquidity, and family philanthropy. The ongoing work of The Family Council uses the framework of the family constitution to deal with the complex issues that emerge both within the family, and particularly, the dynamics between the family and its ongoing ownership in the family enterprise.

Over time a Family Constitution can gain such moral weight that contradiction becomes unthinkable. Bryony Cove and Sonal Shah of Farrer & Co explain more. Family businesses are as old as civilisation itself. But family and business are not necessarily natural bedfellows. They operate under different cultural systems; family is safe and protective and business can be hostile and competitive which can create tensions between the two, particularly as a business expands. Wealthy families with businesses are beginning to recognise this tension and are fighting back, often through the use of a Family Constitution. Just as the constitution of a country tries to balance the different needs and visions of its people, so too does a Family Constitution in the family context. It can be named many things – family contracts, family charters, codes of conduct, mission statement, etc. Essentially they are all trying to achieve the same aims: To set out the family’s shared vision and ethos which underpins the conduct of the family business: To articulate the relationship between the family and the business including setting out how decisions affecting both will be made; To set out the mechanisms for the succession of the business and shared expectations of how family members should behave towards each other in the context of both the business and the family. Family Constitutions can be long or short, simple or complex and drafted either by family members themselves or professionals. They are personal documents and as such are not normally legally binding. However, over time a Family Constitution can gain such moral weight that contradiction becomes unthinkable. We find that families who run large businesses are often too busy to deal with what are often seen as “softer” issues such as communication and management of the family as part of the business. The idea of a Family Constitution is often dismissed as far less important than the everyday running of the business itself. However, the impact of having a Family Constitution can be significant. The process of creating one in itself addresses questions which may not have been considered before: Who should be involved in preparing the document? What issues should it cover? Should non-family members (such as key employees or managers) be involved? These questions can then lead to a dialogue which many families simply do not get around to having, often until it is simply too late. Without the pretext of a Family Constitution, important questions can go unanswered, for example: How important is the continuation of the business? Should it be sold in the future or retained for future generations? •How should the business be managed, both now and in the future? •Should there be regular family meetings? •Who is expected to do what, both within the business and within the family? Often, by the time families consider a Constitution, it can be too late. The catalyst can be the retirement or death of the founder of the business (usually the head of the family) or when serious disagreements occur such as over a child’s divorce or even prospective marriage. Passions can often run high and factions may have already appeared. The best time to embark on a Family Constitution is precisely when the need for one is not obvious – during a period of stability and harmony and when there is little or no conflict. That way decisions can be taken objectively and calmly and ensure that the procedures are in place and ready to be used before the unexpected event or disagreement occurs. Just as each family has its own individual dynamic, challenges and taboos, so each Family Constitution will be unique. Often the finished result is not the most important thing; it is the thought and effort that goes into creating it and the discussion this requires. However, Family Constitutions should be treated as living documents and families should be ready and willing to update and adapt it as circumstances change. Family Constitutions cannot prevent conflict; however the successful development of one often results in better communication and greater harmony within the family. Commercially, a Family Constitution can help ensure the success of the business and ensure its survival for future generations.

Here, we examine the ownership role in a family owned business in Asia – not the management or leadership role but the impact of ownership highlighting some of the ownership issues to consider, with the underlying assumption that there is a family objective of wanting to continue the business as a family business; and of keeping the business in the family across generations. When Does Ownership Start To Matter? If there is a full overlap between ownership and management, for example because you have a sibling partnership and all siblings work and own shares, then does it make sense in practice to think about a separate ownership role? It will probably make sense to think separately about the ownership role once you have future potential family member shareholders (e.g. the next gen) who are old enough to start participating in family meetings. The Patriarch Does Not Think About Ownership In overseas Chinese families there is a tendency for the first generation founder (“the patriarch”) not to think about the question of ownership. However at the same time there is a tendency to divide up ownership equally among the next generation. The first generation patriarch has never experienced a split between the ownership role and the management role, so the impact of such a split in roles may not be an issue that the patriarch is aware of. The patriarch may assume that the child who is going to succeed him in running the business (the future business leader) will enjoy the same degree of control that the patriarch has had. That the future business leader will have the support of the other family member shareholders is often something that is taken for granted. It may be assumed that if, for example, the eldest child is appointed as the next business leader, they can simply rule over their younger siblings because of family hierarchy. However in practice, after the death of the patriarch, younger siblings sometimes revolt! The next generation business leader will not enjoy the same degree of control and authority as his father had. Leadership Succession & Voting Control When you are thinking about who is going to succeed in the second generation as the business leader, one common question would be whether that future business leader needs to be given a bigger share in the company if not a majority vote. Another option to think through is whether to use voting and non-voting shares, apparently a common practice in the US. But You Can’t Ignore Relationship Issues However, these legal mechanisms do not rule out the need to think about the relationship issues. Even if you have a minority shareholder or a shareholder holding only non-voting shares, you can still have relationship problems that upset the ability of the business leader to lead the business. Just think of the example of Sally Bingham. In addition, research shows that (i) emotional commitment from shareholders matters in a Chinese family firm and (ii) shareholders who do not participate in management will have a different perspective than those that do. Maintaining the emotional commitment of the outside shareholders is an important concept here. If the goal is long term family business continuity it is clear you cannot afford to ignore the minority or the non voting shareholders. Stewards Or Inheritors In The Next Generation? Family governance expert James E. Hughes Jr., author of Family Wealth: Keeping it in the Family (Bloomberg Press), says that there is a threshold question in a Chinese family firm of whether the second generation shareholders see themselves as Stewards or as Inheritors. Stewards are happy to work together. Inheritors do not want to. Hughes says that you cannot convince an Inheritor to become a Steward. These two different archetypes just cannot work together. Can The Shareholders Work Together As Partners? The other way of expressing this is there is the important question that needs to be address of “Can the shareholders work together?” “Do they want to work together?” If they cannot – or if some of them cannot, is there an exit plan so that people can sell out without having a dispute? Redefining The Sibling Relationship After the transition from first generation to second generation, the siblings will need to learn a new way of working together as shareholders. There is a process of redefining the sibling relationship. To be able to work together successfully after the transition to the second generation, the siblings need to find a more participative, collaborative, decision making process. In an Asian family you will likely need the eldest sibling to lead this change in family culture. Relationships With Family Shareholders Matter Every family is different but at the very minimum, the family members who are running the business (in particular the successor business leader) need to make an effort to maintain good relationships and good communication with their family member shareholders. You might call this “family investor relations”. If you keep it at that level, with there being an objective of managing relationships well, this might lead you to think about doing work as a family shareholders group on communication and relationship skills. You could think of bringing in an outsider facilitator for training sessions. Family businesses after all are relationship businesses and relationships need to be maintained. You may think that the current relationships are on a good footing and need no maintenance work; but wait until there is a time of crisis and then see what happens to those relationships. Good Fences Make Good Neighbours If you want to have good relationships with the family member shareholders, how can you do this without having clarity around the rules of those relationships? How can you have a good relationship with a shareholder unless the role of the shareholder is clearly understood. There must be role clarity. Institutionalizing Roles To Meet The Long Term Goals If the goal is a longer term family business continuity, then this again points to the need to institutionalize the roles – which is what family governance is about in the context of a family owned business. If you have a long term goal, how are you going to address that goal just by thinking of it in terms of your current relationships? Accordingly a key question is: “Do you think it is just about managing the relationships – or should you be thinking about governance structures and processes so you can institutionalize family control?” If you have the goal of long term family business continuity, the conclusion is clear; you need proper family governance for your family business. Creating A Family Council The starting point for family governance would be to create a forum for owners to talk about ownership issues and to exercise their ultimate control. In practice this could be called the family council. One of the goals of the family council is to build family commitment for the business and to have the family members “speak with one voice.” In addition to the reasons given above concerning the need to have clarity around the role of the shareholder, the need to institutionalize that role, and the need to ensure that family shareholders remain emotionally committed, there is another good reason for establishing a family council. If the owners do not have a proper forum where their interests and concerns can be raised, the result is normally that the interests and concerns of the owners will be voiced in the wrong forum (e.g. the Board room) and can lead to family conflict. What Does The Family Council Do? One of the first tasks for the family council is to prepare a shareholders’ agreement, so that there is a clear exit plan. Alternatively the key details of the exit plan can be documented in the family constitution or a family policy. Another primary task for the family council will be to ensure that emotional commitment for the family business is maintained. How do you ensure emotionally committed shareholders? By involving them and educating and developing them – and by giving them a real voice. If they are essentially powerless, they will not participate. Family Policies To Address Predictable Problems In family business, here in Asia and elsewhere in the world, there are predictable problems. It is predictable that there will be differences of opinions between “inside” and “outside” family shareholders. (An inside shareholder is one who plays a management role. An outside shareholder is one who does not.) The simplest example of this is that inside shareholders may want to accumulate more profits for reinvestment while outside shareholders may want to maximize the dividend payout. Outside shareholders often complain they lack clear information about what is going on inside the business. Part of the ongoing role of the family council is talk about how you are going to deal with these predictable problems, and to find solutions (and document them in family policies or a family constitution) before they ever become actual problems. This is the planning and policy making process of a family council. How important is this planning and policy making? A study of some 50 South East Asian family firms concluded that the majority of Asian family businesses fail because of internal family feuds and conflicts (and not as a result of external factors). And most family business conflicts are role conflicts and are therefore predictable. What Is Involved In Forming A Family Council? When you form a family council you have to think about what roles it will carry out – what is its purpose – what processes it will engage in and what policies it needs. It involves a process of forming a group. Often the formation of a family council can mean the need to change the way the family shareholders make decisions and communicate among each other. It might also need to a need to change certain old practices. In short, often you are talking about making a change in the family dynamics. Accordingly the critical thing will be the implementation. About the Author - Christian Stewart helps enterprising families around Asia work together, by facilitating family meetings and as a process consultant, helping the family to develop their own family governance structures.

The story of Munchy Seeds dates back two generations in New Zealand to the days when a toasted two seed blend was the way for granny to get the kids nibbling on something nutritious. Now, settled in East Anglia with her husband, Paul Andrews spoke to Lucinda and Crispin about the evolution of their family business. As Lucinda explains, “Munchy Seeds began over 25 years ago in New Zealand actually, by my lovely mummy and sort of me! I had been demonstrating stainless steel Swiss potato peelers at exhibitions around the world for 8 years and came home when the family farm was sold. I had seen many different products being sold at various exhibitions and I knew we could come up with a product of our own that we could put our own personal, friendly, happy stamp on and bring it successfully to the market. Of all the lovely recipes we have in our family, Granny’s roasted two seed mix was to prove to be the most perfect of all.” “To begin with we roasted Granny’s seed mix in the kitchen at home and took them to the local Saturday Flea Market in Nelson NZ, encouraging folk to try the seeds sprinkled on bread & butter (because honestly who can resist white bread & butter!) And it just kind of took off! As the seeds became more and more popular, my parents started taking them off to shows and exhibitions around New Zealand. Never did it occur to us that they would become so popular and that 10 years later my husband, Crispin (boyfriend at the time) and I would have the same level of success here in England.” Munchy Seeds is a business built around the concept of healthy snacking together with a healthy way to revitalise meal times, with a range of products to suit a variety of tastes and uses. Lucinda has fond memories of her Granny’s concoctions and it is these mixes that fuel the essence of the business today. “Like all granny’s, my grandmother’s cooking was wholesome and honest; her fridge was laden with cold meats from the farm, salads and fresh veggies, homemade mayo, jams and sauces; the pantry was filled with cakes, slices, nuts, fruits and seeds. Granny had to learn to cook super-fast as a young wife on her husband’s family sheep farm. She cooked for the whole workforce including the Maori shearers (a ‘gang’ of 6 to 8 men and women who came in each year to shear the 2,000 odd sheep). The shearers delighted in setting nets in the lake on the farm, catching whopping great big eels for her to boil up for them (yikes)! Some of the eels they pulled from the lake were over 6ft long! In truth, they never ate the big old ‘grand-daddy’ eels (as we kids referred to them), because they were the breeding stock for the future and could live to be over 80 years old.” “Another odd ‘delight’ Granny used to boil up for the men, was the incredibly fatty, native Mutton Bird, that nested in holes in the muddy banks of the lake. (If you want to try this rather rich, fatty delicacy today, you would have to travel to the bottom of New Zealand – jump on a little boat and brave one of the roughest stretches of waters to get to Stewart Island where the local hotel still serves them up!)” “As small kids we spent the hot summers roaming across hills and flats (fields) in bare feet, catching insects, lizards, rabbits and little cocker-bullies (small fish) from the streams. We went everywhere with our glass jars with screw-top lids, turning and lifting stones and logs seeking out creepy-crawlies to bring home to show Mum, Dad & Granny, and any unsuspecting poor visitor who happened to pop in! Granny’s roasted seeds were just a part of our normal everyday diet, nothing very special at the time – but then again neither was smocked eel, mutton bird, homemade mayonnaise made with mint and condensed milk – it was just a part of a very happy, healthy lifestyle that my siblings and I were lucky enough to share,” continues Lucinda. Munchy Seeds were eaten like fresh cherries, grapes or sweets – “we would just have them as a treat or ‘when Granny had remembered to roast up some more, so they were quite special I guess,” continues Lucinda. “When we were sent off to boarding school we kept them in big biscuit tins for our tuck. They were brilliant because they lasted for ages and massively filled us up, except all our friends used to nick handfuls of them!” Both Lucinda and Crispin have embraced their business and encouraged others to try and taste their mixes. “Both our children grew up munching seeds,” adds Crispin. “In fact Claudia used to practically live in the factory when she was a baby, at 6 months old we would plonk her (position her carefully) on the work bench in her little bouncy seat beside us, as we hand-filled the tubs. She would help herself to fistfuls of seeds and loved them. I might add – she’s 16 now and won’t touch them for love nor money! Let’s wait until she’s a student with little cash!! She and her friends will be very grateful to receive her parents’ free Munchy Seeds!” “Oscar, being a 12 year old boy, will eat almost anything (within reason – as long as it’s not broccoli!) He is forever ‘fuelling up’ – especially now he’s started playing rugby. Refreshing orange segments served at half time with Honey Seeds aren’t a bad combination for a lad burning up energy in the mud and rain!” explains Lucinda. After the sale of the family farm in New Zealand, the business was born. “My parents have been roasting their Munchy Seeds in NZ for over 30 years now,” adds Lucinda, “and Crispin and I have been flat out roasting seeds in the UK for the last 19 years – it’s been a fun, full-on ride. One of the most exciting things for me is when young mothers come up to me at a show, with a child on their hip, and exclaim how their own mothers had given them Munchy Seeds when they were growing up. They’ll usually be grinning from ear-to-ear watching their own little ones stuffing seeds into their mouths flat-out – just as they used to! It is great to see the full circle with the next generation being introduced to seeds at a young age.” As a business, Munchy Seeds is all about the product which as Lucinda explains is essentially “something that between us, we produce as a fun, quirky little product that was given to us when we were carefree children by our special Granny and now we have the good fortune to be able to share that little bit of fun and wholesomeness with others! Munchy Seeds are for all ages and stages and shouldn’t be taken too seriously, but just enjoyed anyway, anyhow and with whomever you like!” Both Lucinda and Crispin have a positive work ethic and continue to invest in the business, building the brand, seeking new outlets for their products and creating new flavours too. It is also a business that is balanced as much as a ‘new’ business can be. As Crispin confirms, “a lot of our friends undertake the long commute daily into London whereas we have a short commute into the office, where we are in control of our own destiny though our business.” This business sets its sights high, having already made it on to the main in-flight service on Emirates Airlines and recently selling 1.6 million snack packs in a year but has a set of core values, many aligned to the family themselves that have evolved over time too. Values that are important to the business are Excellence, Efficiency, Team Work, Earnt not Owed, Communication and above all ensuring that Munchy Seeds is a ‘great place to work.’ With a growing team, now 18, the business continues to push the boundaries but as a family firm, personality is important, not just in the way they operate but in the brand too. “The brand really does represent our values, who we are and how we want to be seen,” continues Lucinda. “We are serious about what we do but want to make sure that we enjoy it too. Customer service is key and we are all about producing a great tasting product and making healthy eating fun!” The toasted seed sector is growing and every seed is crammed with natural goodness such as protein, fibre, iron and zinc and they are versatile not just as snacks but in the kitchen too – sprinkled over breakfast cereal, stirred in to soups, added to home made breads to name a few. Munchy Seeds, a family business that continues to create tasty little toasted treats!! For more information please visit www.munchyseeds.co.uk

Francis Kirk originated back in 1868 so this year sees them celebrate a major milestone for any family business, 150 years as a family firm that is now in the hands of the fifth generation. This business has continued to develop and grow over time – in terms of scale, turnover and profitability and has come a long way since the founding Francis Kirk launched the business as a tool shop 150 years ago with the simple aim of manufacturing a quality tool for workmen to use. The business was born in Denton in a small shed and although the business has moved, it has not gone far and Denton is very much at the heart of the business today. Each subsequent generation added their own developments helping the business move with the times, remain relevant at the time and to continue to grow. Thomas Kirk was the second generation to take the business on and he developed the company’s offering to include the stocking of tools and not just their manufacture, increasing the efficiency of the business and the speed of fulfilment of customer orders. Following the conclusion of World War II James Kirk came back from the war having signed up with his brother who sadly never returned. James returned with the bad news for the then girlfriend of his brother and vowed to provide for her as though she were family. In fact, the relationship bloomed and they eventually wed and became the next generation to run the business, the grandparents of the current Managing Director. The business took advantage of grants that were made available after the war for companies involved with projects to help rebuild the nation and the journey continued. The innovative and entrepreneurial spirit of the Kirk family came to the fore because already known for making tools, James committed them to giving fasteners a go too which continues to be a major component of the business to this very day. Innovation continued and the fourth generation, Francis Kirk, the current chairman, recognised that the world was changing with the introduction of the metric system and driven by his foresight, the business was the first in the UK to manufacture both Imperial and Metric socket screws. Recognising the world was continuing to change, fifth generation leader Tom Kirk has not shied away from making tough decisions either, decisions that came hard but were necessary to enable the company to achieve the next stage of growth. New products were introduced, strengthening the supply chain and service to customers; new products included clothing, PPE and abrasives enabling Francis Kirk to become the one-stop-shop for customers. Further change followed and in 2004, after 136 years of trading from the original Saxon Street Warehouse, Francis Kirk relocated to Denton Hall Farm Road where they are today. The acquisition of Pontefract based Philidas’ manufacturing plant in order to maintain full control of a specialist metal locking nut product followed. These products are sold into safety critical areas and as a result has enabled Tom to develop new international markets for the business. Since beginning over 150 years ago Francis Kirk has grown into a business with operations in the UK and overseas with a great reputation for what they do, operating from a purpose-built warehouse complex in Denton. As Tom explains, “Customer service is everything to us and when it is your family name above the door it means so much more. Each generation of the family has added a new dimension to our business that has helped us to grow, maintaining our core values at the same time.” Tom is also realistic about the way the business has developed, adding that “I am the first generation that has had to face the fact that the original core business of tooling is nowhere near as important to us as a firm as it was to my predecessors and it is the fastening business that is now our core trade.” Growth has been steady too and this is important to the family who pride themselves on financing their growth and development out of cashflow. Tom is also aware of the benefits of diversification and admits that the “move into PPE, abrasives and clothing has added new revenue streams and enhanced our service offering too.” As a family business leader Tom is unusual, young, in a very senior position and with an experienced head on his shoulders, one that to a degree belies his age. He is also incredibly respectful of his father and the part that he has played in the business, and the development of Tom as an individual too. As Tom explains, “Growing up we had a great life and a good education and in hindsight a really early induction into the business too. From the age of six or seven months I was placed in a box and brought into the office by my father and went home at the end of the day in a box too! Pre-school years were great fun too as I came to the factory and scooted freely amongst the boxes, something my young son now does himself although health and safety comes first much more than it did then!” Over the years, little known to Tom at the time his knowledge of the business continued to grow. By the ages of seven and eight he was coming to work with his father for a few hours when he could and then as he got older he had roles at weekends and in the holidays, much like other next generation family members gaining experience and earning money in the family firm. Knowledge was being acquired all the time, from products to the needs of customers and more besides. Education continued until an important day for Tom and the evolution of Francis Kirk. As Tom explains, “I was seventeen and sitting with Dad in the back of a car being driven to London to watch the FA Cup Final and was excited about the day ahead. Dad had a pile of files with him and it was strange as I was in the back when clearly I would rather have been driving. I now know that Dad had something on his mind.” As Tom continues, “I was a captive audience as we were driven down the M1. The question that followed was whether or not I wanted to come on board and work in the family firm. I said that I did and that was that! I asked what the files were and Dad said that they were an offer from someone to buy the business, something that he had been evaluating, but my decision changed that and we moved forward with our plans for the future.” “I spent three years at University which I now appreciate was to learn about the ways of the world – cooking, cleaning, washing – and this stood me in good stead when I returned to Denton. I had the respect of the staff for getting on with things and starting in the goods in yard I spent around three to four months earning each and every aspect of the business.” “One day, following the conclusion of what I had felt had been a good day at a national conference, I was talking to Laurence, the Sales Director and a key man in the firm then, and to this day, and he told me in no uncertain terms that I needed to grow up. At the age of 25 if I was serious about the business then I needed to step up and make it easier for my father to hand it over to me in due course, when the time is right for him.” Tom clearly took this firmly on the chin and has grown into his role and made some big decisions too. The business has won some global distribution rights, has acquired manufacturing operations in India and is securing significant orders from firms in the Middle East. As Tom is the first to admit, “Now it is all about repaying the faith that the family have placed in me and moving things forward. As a custodian of the business for future generations I have to explore all the opportunities as they arise. We have 26 employees and their families that depend on me to make the right decisions and they are my responsibility and I have my own family too, a son Raphael and a daughter on the way.” Tom appreciates all that his father has done and continues to do for the business as he remains Chairman and is a great ambassador for the brand too. As Tom concludes, “He can take a step back and enjoy life now and when the time is right there will be a transition of ownership. He leaves me to run the business on a day-to-day basis and given I am still young, it is up to me to steer the ship, something that I am relishing each and every day too.” There is a next generation but they are very young so the future is to be determined but this is an innovative family business that has been going for over 150 years, each generation has added their own mark and helped the firm to evolve, adapt and grow and it is now the turn of Tom to continue to develop this family firm as they set out on the next phase in their journey. Here’s to the next 150 years!

The Wates Group is over a century old, and one of the country’s most prominent family firms and has evolved over time as it continues to build for the future. Over that time, it’s evolved to match the evolution of the construction industry, moving from building suburban terraced homes in the 1930s, to developing construction services in the ‘50s, to volume house building in the 70s and 80s, to the business model it has today, which spans construction, property investment, and housing maintenance. All of which sit alongside a renewed interest in housebuilding. As Tim Wates says, “Over the years we’ve had to reinvent ourselves more than once. What’s always held us together is the ‘family factor’ – that’s what’s given us continuity, which is especially important in an industry that’s as cyclical as this is.” The stability of the family ownership structure helped the Wates business weather the downturns – even the severe recession of the 1990s – and learn the lessons of those challenges. “We realised that we’d been too highly geared, in an effort to achieve more aggressive growth. These days we aim to grow more sustainably and keep the gearing at more manageable levels. The overall objective is to be ‘cycle resistant’. No-one can be cycle proof, that’s impossible, but you can have strategies and be structured in such a way as to make you more resilient. That’s what we’re aiming for. We want to be a top-notch business in the built environment – substantial, ambitious, and sustainable. That’s the bottom line.” ‘Keeping it in the family’ remains important too. “We’re looking 15 or 20 years ahead, at the sort of business we want to hand over to our children. We need an outlook and a corporate structure that’s flexible enough to adapt to new trends, and could allow us to change direction if that’s what we decide to do. We’re also looking at how to manage the family wealth, but also to support our children, whether that’s into a career in Wates, or not.” “We don’t expect any of the next generation to come into Wates and be Wates their whole life, without exploring what else might be out there. We wish to create opportunities for the whole of the next generation, so they can determine their own path, and become entrepreneurs, if that’s where their talents lie.” “We’ve looked at what other families do, and we’re clear that this has to be the right thing to do. It’s all part of developing a ‘professional ownership’ mentality, rather than a ‘running a business’ mentality, which I think all family firms need when they get to this size and stage of maturity. Values are a key component of that – we have values that we consider are the values of family ownership, which relate to but aren’t the same as, the corporate values of the group.” Wates also has a family council, and the younger generation will be encouraged to participate in that. “Though that, in itself, creates challenges. Sitting in a council meeting alongside the very experienced older generation can be daunting if you’re only 20 or 21, so we’re exploring ways to introduce them to it gradually, and build their confidence. The council is really important to us as governance mechanism, so getting this right is key.” “Looking ahead, setting the right corporate strategy for the long term is a big challenge for us, and in a family firm you also have to be mindful of the day-to-day challenges of working together. We do work together well, but you can’t allow yourself to get complacent, and as time goes on and the number of shareholders grows, it gets harder. That’s why regular, respectful communication is absolutely critical.” Tim’s advice to other family firms? “Don’t rely on friendship and love to get you through – if issues arise get stuck in and address them properly. And if it helps, bring in professional facilitation.” This piece was featured as part of the PwC Family Business Survey and has been reproduced with their permission. Find out more about the survey here .

Leisurewear International is the business behind the Minoti children’s clothing brand, which is rapidly becoming a major international success story. The parent company has been in existence since 1998 and grew its business by making a range of adult and children’s clothing for retailers like TKMaxx and Next, under those labels. But in early 2015, the decision was made to focus on Minoti and its babywear extension Babaluno, and grow these brands both in the UK and overseas. Yamin Ibgui, the Finance Director, explains: “For many years we designed and developed brands and ranges for retailers. But we want more than that now. We are focused and driven to develop our own brands and that’s where we are now. From 2015 we have mainly designed and developed our brands, so we can be more independent. We aim to have a full Minoti range by the end of 2017 – everything from clothes to shoes and accessories. Our mission is for Minoti to be a one stop shop. We’re starting to implement that up to age eight, but in time the ambition is to go up to age 13.” Growing the Minoti business isn’t just about building the brand, it’s about becoming a fully-fledged retail operation, from stores, to stock, to distribution. One way the company is doing this is by expanding its franchise operations: “As well as five Minoti shops in the UK there are now five franchise outlets in China, and four in Venezuela. Two will be opening soon in Pakistan, and we think the Middle East will be really big for us. We’ve also had enquiries from as far afield as Azerbaijan, Colombia, Dubai, Iran, and Libya.” Leisurewear’s export strategy is reflected by two thirds of family businesses in the UK, currently exporting their goods or services (up from 61% in 2014 and higher than the global average). When choosing new export markets, economic and political stability followed by the size and growth potential of the country are the key considerations for Leisurewear. This mirrors 71% of UK family businesses who ranked economic and political stability as the main factor in deciding which existing countries and/or new countries they will sell their goods and services to in the next 5 years, followed by size/growth potential (51%). Yamin Ibgui, continues: “managing the financial aspects of doing business in some of those countries is very challenging.” Leisurewear is also making use of agents in some markets: Damian Curran, the UK and European Sales Executive believes that this approach “is a good route for Leisurewear – they’re representing us in the Netherlands and in Spain, which has started growing again now that the economy is picking up, and we’re looking at how we replicate that model elsewhere in Europe – Denmark, Switzerland, Germany, France. Also in the US, eventually. Over the next year I’d like to see our overseas sales via the agents to grow to around £1m and after that, who knows?” Digital is another growing area, as Damian explains: “We’ve started selling through Amazon. That has its own challenges but when it works, it works really well. It’s a massive marketplace and I’d like to get to the stage where they’re doing all the fulfilment for us – in other words, they store, pack, pick, and deliver. We want to grow our own online shopping too, but at the moment the site is more about building the brand, if I’m honest. But that’s really important, and we’re backing it up by doing a lot more with the specialist bloggers, who are real trendsetters when it comes to teen clothing. In this game, you absolutely have to keep up with trends.” About the piece - this piece was featured as part of the PwC Family Business Survey. It has been reproduced with their permission. Visit their site here to find out more

A fantastic family business that started from a single barrow in an East End fruit market just after the Second World War, and that very same barrow is still there in Reynolds’ reception! Reynolds’ strapline is ‘more than just a greengrocer’. These days it’s one of the UK’s biggest suppliers of fruit, vegetables, and dairy products to restaurants, hotels, schools and caterers, though the business started from a single barrow in an East End fruit market just after the Second World War (and that very same barrow is still there in Reynolds’ reception). Tony Reynolds, the third-generation MD, started working weekends at the firm in 1988, while he still had a fulltime job at a bank. “It was right at the beginning of the move towards themed restaurants – the first one we supplied was TGI Friday’s in the West End. And at the same time the big supermarket chains were just starting to make inroads on the traditional High Street greengrocery shops. So between those two trends, I spotted an opportunity. That’s how we’ve ended up in the sector we’re in.” And very few firms are as good at it as they are: the key to success in fresh food is fast, efficient distribution. “When you’re delivering fresh produce, you have to be able to deliver it seven days a week, because the product life is so short. Especially when your customers are at the premium end – quality is absolutely vital. That’s why we’ve invested so much in our infrastructure and our technology, and that’s why we took out our first-ever loan to increase our warehouse space – and that was a really scary moment. But it’s all geared to meeting really, really high levels of service on a very consistent basis across the whole of the UK. My mantra has always been that I never want to lose a customer on a quality or service issue. It sounds so simple, but it is all about your logistics.” The demand for fresh and nutritious food is rising: it’s the growth segment of the market and Reynolds has the business model to make the most of it. “We’ve been supplying quinoa for years, for example, so superfoods are not a new thing for us. And we also work alongside our customers to help them capitalise on new ideas and keep their menus fresh – we’ve got our own chefs and our own food development team too, which helps us keep ahead of trends in the eating out market. And in the last years we’ve been through a big exercise looking at what new products could complement our existing range. You have to keep it fresh.” New ideas are important in other ways too: “We talk a lot now about millennials as a key consumer group for the restaurant sector. They’re adventurous, and they’re very demanding, and all the trends of healthy eating, freshness, and provenance are bang on for them. You also have to use different channels to reach them – especially social media, – and that’s why it’s great to have young people in the business. That’s where my son Tom really brings something different – he can add so much more through his network and how his generation are thinking and shopping and eating.” Tom worked in Wagamama for two years before joining the family firm, which gave him an invaluable insight into how customers in Reynolds’ sector operate. He’s now being mentored by one of the other senior Reynolds team – Paul Pegg, the operations director, who used to be CEO of the McDonalds supply chain for the UK and Europe. “I think it would be a lot harder for Tom to report directly into me,” says Tony, “but he’s learning a fantastic amount from Paul, as well as giving us that extra bit of dynamism that comes from the younger generation. Every business needs agitators – you always need disrupters, you need people who are going to make you think differently. And you need some humility too – just because my name is Reynolds doesn’t mean I have a divine right to sit in this chair.” The biggest challenge right now? “Realising our potential,” says Tony. “We’ve made huge strides in the last few years in areas like brand positioning, infrastructure and customer satisfaction. The challenge now is to make sure the benefits of all that hard work flow through to the bottom line.” “As for the future – who knows? We’re making sure we stay flexible, and agile, and open to new ideas. You never know, we could end up being bought by an overseas investor – not because of what we sell, but the incredible platform we’ve built to sell it from. That’s a bit like being more interested in the barrow than the fruit. That would have made my Grandad smile.” This piece was featured as part of the PwC Family Business Survey and has been reproduced with their permission. Find out more about the survey here.

The Scottish family firm with a history dating back to 1840 begins a new chapter. Laings has a vibrant history spanning 177 years and they’ve recently celebrated another landmark moment with the acquisition of Laing stores in Edinburgh, Cardiff and Southampton. Over the past few weeks they’ve been exploring the journey of Laings leading up to 2017 and the start of a new chapter of Laings. Founded in 1840 Laings has had an exciting history and over the years many changes have taken place. The family-run business is now in the hands of the sixth generation and the Laing family has retained its reputation for sparkling diamonds and luxurious timepieces, but above all else, excellent customer service. The recent acquisition sees the family business coming back together. The business which split in 2005 has a shared history of 165 years and it is a heritage that they are extremely proud of. Before they begin the next chapter as one company let’s explore the Laings journey, #Laings1840to2017, highlighting the growth of the business and how the company adapted with changing times. So here’s the story of Laings from 1840 to 2017. 1840 It was in 1840 that Laings was born. Brothers James and William Laing established a business supplying the revered Clydebuilt vessels, which traversed all corners of the globe, with Glasgow-made crockery, silverware and precision instruments. This is also where their expertise in timepieces began and they were appointed by the Admiralty and the Clyde Port Authority as official clockmakers. They soon expanded into retail and became the jeweller of choice amongst the Victorian gentry. Their sparkling history had begun! 1914 As the business flourishes, James’ son, Robert, moves the original Merchant City, Glasgow workshop to a new location beside Glasgow Central Station. Several showrooms are acquired, and Robert works on growing the retail side of the business. 1938 James’ grandson William joins the family business in 1938, and Laings opens as a retailer for the first time. As World War II takes hold, the demand for jewellery hits rock bottom, and Laings begins to sell antique furniture and crockery from their new art deco premises on St. Vincent Street, Glasgow. 1960 As Laings grew in the 1960’s Robert Laing took on the challenge of re-inventing the family business. He devised a fresh motif for the family business with a contemporary image change and a trailblazing approach to retail environments, establishing Laings as the destination for unique jewellery by leading designers. He also set new standards of customer experience, drawing crowds four deep for a glimpse of a stunning display of Rolex watches sharing a tank with real fish! Laings was the store to shop in. 1970 Stuart Laing joined his father in the early, 1970’s. Now the emphasis was very much on galvanising the Laings signature style of presenting jewellery and watches in a captivating atmosphere. Laings stores exuded luxury, taking design themes from high-end jewellery retailers in Switzerland and other European trend-setters. By 1991, they introduced the first ever Watch Gallery and, at the time, the only Ring Room in Glasgow. 1971 – 2005 Stuart went on to open a new showroom in 1971 in the Argyll Arcade, Glasgow, known as ‘Stuart Laing Jewellers’. The name changed when his brother Michael joined the business and another store in Edinburgh opened. They continued to grow the company, buying another family jewellers in Southampton and later opening a new store in Cardiff. In 2005 the family business was split between Michael and Stuart. 2011 Stuart’s daughter Wendy and her husband Joe Walsh joined the business in Glasgow in 2011. With them they brought a wealth of new and exciting brands including Chanel, Breitling, Officine Panerai and Jaeger LeCoultre. Wendy and Joe also launched laingsuk.com bringing the luxury of the Glasgow stores to the online domain. A huge achievement for Laings, the website continues to build on its success in online retailing today. Laing stores in Edinburgh, Cardiff and Southampton also continued to grow with luxurious make-overs and indulgent jewellery and watch brands joining their portfolio. 2015 Both Edinburgh and Glasgow drew on their years of diamond jewellery expertise and introduced their own unique collections. In Glasgow there was the Botanic Collection. Created by their own in-house designer, the collection takes inspiration from the beautiful parks and green spaces in the city with intricate floral designs. The Edinburgh store released a stunning collection of pieces inspired by the ladies of the Laing family. The different designs are infused with the individual character and personality of the family members they represent. 2017 Wendy and Joe bought Laing, Michael’s business (Wendy’s uncle), and in doing so brought in Michael’s son and Wendy’s cousin Richard Laing within the board of directors. The acquisition reunites the two family businesses to become one and Laings as one of the largest independent jewellery businesses operating seven stores across the UK under one brand ‘Laings’. There are three stores in Glasgow’s Argyll Arcade, two in Edinburgh, one in Cardiff and one in Southampton. Commenting on the re-merger, Joe Walsh, CEO, Laings said: “We’re delighted to have this unique opportunity to ultimately bring the companies back together. Michael and his team have built a very successful business and it’s an honour to build on his legacy and help to take the family business to the next stage of its evolution.”

Latest research highlights that there is a willingness by family firms to consider alternative sources of finance for their business. Family businesses tend to take a cautious approach to financing in their business, as they do with many other business areas, focusing on long-term stewardship of the family business and protecting the ‘family assets’ for future generations. Latest research from the team at Family Business United (‘FBU’) highlights that there is a willingness by family businesses to also consider alternative sources of finance. Highlights: 72.5% finance their business through bank loans and overdrafts 42.5% felt access to finance is an issue for family firms 35% would consider investment from a family business or a family office 5% currently finance their business with investment from non-family shareholders This latest research reflects an element of tradition in how firms are financed. As Paul Andrews, Founder and Managing Director of FBU explains “We undertook this piece of research to explore not only the sources of finance currently used by family businesses across the UK but also to gauge whether these businesses have access to the funds they need." "With 42.5% of family firms stating that access to finance is an issue, and a further 22.5% saying they are unsure, there is evidence to suggest that access to finance may indeed be constrained and may be holding back the growth of these businesses.” As Paul continues, “The sources of finance available and used by family firms is not surprising as many would have started out historically with funds from the founders themselves or family and friends before being in a position to take out a bank loan or overdraft. As businesses become more established with more professional governance, reporting and management structures in place they have a greater availability of sources of finance to choose from, one of them being investment from third parties.” The key sources of finance for family firms in the UK Bank loans and overdrafts (75%) Hire purchase and leasing (42.5%) Asset finance (40%) Investment from family shareholders (22.5%) Government grants (22.5%) Factoring and invoice discounting (20%) Mortgages (20%) Investment from non-family shareholders (5%) Business angels (2.5%) “A really interesting take-away from the results is that whilst only 5% of respondents have received investments from non-family shareholders, 35% would consider investments from a fellow family or family office,” added Paul. Eli Bronfman from the Bronfman Family Office, sponsors of this research added, “We are trying to provide a much-needed solution for family and entrepreneur owned companies – funding shareholder liquidity or growth, whilst allowing them to maintain control. In doing so, we see ourselves as one of the few groups acting as respectful, long-duration, value-added minority partners.” “It’s unfortunate that the investment banking and advisory infrastructure is not accustomed to properly servicing these family and entrepreneur-owned firms. We hope that more family offices will come to market in due course, allowing families and entrepreneurs more options in helping them do what they do best: run and grow their businesses – businesses that provide jobs and support both local communities and the national economy." "As a business that makes long-term, minority investments in family owned firms and not having a predetermined fund life and exit strategy gives us the flexibility to make long-term decisions in the interests of the family businesses, and we are delighted to see the willingness of the sector to consider family offices as a source of investment in a positive light.” As Eli concludes, “In 15 years’ time, we want to be able to say that we created many meaningful partnerships with other families in Europe – partnerships that can proudly continue the family legacy for generations to come.” Download and read the report below:

It’s relatively rare for Russian businesses to be genuinely international, and even more so for a private business. But Avgust is an exception. The first Russian pesticide producer to operate across the world, Avgust has a joint-venture company in China, a subsidiary in Brazil, sales in Eastern Europe and Latin America, and plans to expand in Asia and North Africa. The ambition, says Boris Tarasov, one of the founders and CFO of Avgust, a pesticide producer in Russia, is to “be one of the top twenty companies in the sector in the world. And we think we can do it. Five years ago, we predicted that Russia would be the world’s biggest grain exporter, and no-one believed us. But we were right. During that time, our own business has grown dramatically, and we’re competing successfully with global brands like Syngenta and Bayer.” Globalisation is clearly opening up significant opportunities for Avgust and it has made the successful transition from selling in adjacent markets, to those with very different languages and business practices: “Our business has its historical base in Russia, Belarus, Ukraine, and Kazakhstan, and the ‘mindset affinity’ between those countries has made it easy for us to trade between them. But now we’re looking much further away, and we have to find new ways to build relationships. We do this by hiring experts who understand those markets, and as a result we’ve discovered some important common ground with farmers in Colombia.” Another megatrend that Avgust is exploiting is digitisation. “There comes a time when you realise the world is never going to be the same. People are ordering taxis via their smart phones – they have everything they need on their tablets. Clearly, agriculture will never be entirely digital, because farmers will always have to go out in the field and see what’s going on. But there’s a lot happening in this sector all the same. Remote monitoring of crops, using temperature and precipitation data to help improve yields – that sort of thing. We are always open to new ideas. When we started, 26 years ago, no-one could have predicted the world we have today, but we’ve survived and grown by being flexible – by being able to adapt.” One thing that certainly can be predicted over the next 26 years is the impact of demographic change. More people will become middle class, and have the spending power to buy better goods, and eat better food. “That’s an opportunity for us too. The long term trend for our sector can only be positive, as the world’s population keeps growing, and people eat more and more meat. That’s why we’re positioning our business for growth. As well as selling into new markets, we’re also constructing a new plant in Russia, one of the biggest in Eastern Europe.” “We’re lucky in that we are generating enough cash to fund our expansion – we have a great credit rating so we could raise money from outside if we wanted to, but we don’t. That said, I think we will go for an IPO in the next five years or so. Not so much to raise funds, but more as part of our work to professionalise the company. Having a listing forces you to be more transparent, to comply with accounting and other regulations. That’s a good thing.” This feature forms part of the PwC Global Family Business Survey 2016. It has been reproduced with their permission. Find out more about the survey here .

Fratelli Cosulich is a family-owned shipping group founded in 1857. Now run by the family’s fifth and sixth generations, Fratelli Cosulich retains its customer focus while obtaining rapid development and geographical expansion. The company operates in several sectors, including ship management, liner agency, tramp agency, yacht and cruise agency, ship owning and insurance broking amongst others. Today Fratelli Cosulich is a diversified group operating in 15 different countries, including Italy, Hong Kong, Singapore, China, Turkey, United Kingdom, Brazil and USA. We spoke to family CEO Timothy Cosulich to hear his journey in the family business. What Does Your Family Business Do? We are a diversified Shipping Group dating back to 1857. How Did You Get Involved? After spending 6 years in consulting working for PwC and 3 years working for Maersk – another large shipping group – I was asked to join the family business and after a bit of ‘negotiation’ I decided to embark in this new adventure. What Did You Want To Be When You Grew Up? A tennis player! What Are Your First Memories Of The Family Business? I clearly remember, as a 5 years old boy, going to the office with my father and spending hours playing with telex machines, stamps, and bothering the employees asking them if they wanted to play with me! What Values Are Important In Your Family/Family Business? Integrity, first of all. We identify ourselves a lot with our name and we make sure that our brand remains a synonymous of outstanding service. The other aspect we particularly look after is our people: I am aware that it is a fairly common thing to say… “our main asset is our people”… nothing new. What I realise more and more is that, over the years, a special relationship has developed between the Company and its people. We take care of each other and we don’t let each other down. What Is The Best Thing About Being A Family Business? The legacy and the attachment to the Company are something truly special, but what I like the most is the entrepreneurial spirit. And The Worst? The lack of pure meritocracy that sometimes affects many family businesses, including ours. What Is The Best Thing About Your Working Day? There are two moments I particularly enjoy: the morning when I come into the office and I get started with meetings – this usually comes after a hard training session and I am still energised by it. The other moment I like is the evening, when most people have left the office and I can focus on my to-do list. What Is Your Proudest Family Business Achievement? The turn-around of the Singapore office that had been under-performing for 8 years before I took over the management and that in 3 years has increased its volumes by 430% and turned back to profitability. More importantly, I was able – with my colleagues – to build a very solid team that I am confident will continue to perform strongly. Is There A Next Generation Waiting In The Wings To Take Over? The sixth generation – my two cousins and myself – are the ‘young generation’ and we already manage a relatively large chunk of the business. Fortunately the senior generation is still there though as we still have a lot to learn from them. What Do You See As The Biggest Challenge Facing Family Businesses? Implementing full meritocracy in their management structure while – at the same time – maintain the special attachment that people have in a family business. Striking the right balance between being a fully professionalised company and preserving the legacy will be the key to success for most family businesses going forward. To face a difficult challenge such a this one, the support of an organisation like YPO can be vital: I personally find it extremely useful and enriching to be able to discuss very sensitive and complex issues with like-minded peers who – most of the times – understand my situation very well. What Words Do You Associate With Family Businesses? Legacy, tradition, entrepreneurship, integrity. Words Of Wisdom – What Piece Of Advice Would You Pass On To Someone Thinking About Joining The Family Business? If it’s a young family member thinking about joining his/her own family business my advice is twofold: 1) Get significant and relevant outside work experience first – this will give you great confidence and credibility within the company; 2) Once in, don’t get tempted by trying to change things for the sake of changing them. Spend time understanding why things work in a certain way and only then suggested the changes that – in your opinion – are necessary. In addition to this, I cannot but recommend joining YPO for the value it adds both on the professional as well as on the personal side.