The Company was formed in 1889 and the Wright family have been involved in the making of quality ladies hats for over 300 years, making Philip Wright one of the oldest “blood line” hat manufacturers in the world. What does your family business do? The Company was formed in 1889 by Walter and Minnie-Susan Wright in Albion Road, Luton and our family have been involved in the making of quality ladies hats for over 300 years, making us one of the oldest “blood line” hat manufacturers in the world. In 1982, I joined the family business. As a result of the combination of the long experience of previous generations and his training under Madame Marie O’ Regan, at the London College of fashion, I have been able to bring the family’ firm into the 21st Century. How did you get involved? I was invited to learn about the value of pocket money by my Father, bless him, by working in the factory during the school holidays from the age of about 7 but my love and appreciation for the theatre of hats really started in a cafe in Greenwich when I was about 19. How I actually ended up in the business is quite an interesting story too – I was working in London and was pretty bored with my job and I used to play ‘chicken’ with lorries on my motorbike and one day I lost and was involved in an accident. After discharging myself from Hackney Hospital I had to return to my family to mend as I was unable to walk much, and whilst mending I pottered around the factory designing and making a hat for a National Young Designers Competition. My entry did rather well and I really enjoyed the creativity so I left my job in London and started as a junior blocker at the factory in 1982. I learnt Model Millinery at the London College of Fashion and eventually bought out my father in 1999. What did you want to be when you grew up? You could say that I am still growing up today!! When I was at school I did not know what I wanted to do. I liked acting and entertaining so I guess I’ve landed the perfect job! What pressure does a 120+ year old family business place on you? Now, none! It did take me ages to break the pattern of my predecessor, my Father, the way things were done and the attitude which hindered my ability to fully embrace my talents and evolve into a very different market. I also associated the factory as a place of work and not of fun and creativity so again that hindered my real enjoyment and development. In hindsight, what I did was right at the time and I am still here… How do you embrace the heritage of the business and move into the modern era? BIG TIME!! I am proud of what we do and embrace the importance of that by not trying to change but to evolve. The past of selling vast quantities of quality hats to the High Street for me is over – if the department stores want to turn themselves into warehouses without any sales advisers then we do not want to be part of it – hats are not the same as socks and sell far more effectively with a knowledgeable member of staff to advise them on what hat to choose and how to wear it. As the big stores cut staff, and cut the hat departments too, there is an opportunity for us and I am ‘taking the hat direct to the people!’ What marketing activities do you do and how do you engage with new markets? These are important activities so I meet lots of people, I give lectures to various organisations such as the Womens Institute and we hold Open Studio sessions for past clients and their friends to help them ‘discover our world.’ We have also created numerous YouTube videos to demonstrate the diversity and range of what we do an I have even given a five minute cabaret act too!! Our business is all about profile, word of mouth and recommendations rather than expensive advertising campaigns that are forgotten the moment they stop running. Is there a next generation waiting in the wings? Maybe! When I arrived on the scene I made my contribution as the next generation so who knows… My daughter is learning the skills and maybe if and when she is ready she will join me, if the time is right and that is really what she wants to do too. Do you enjoy what you do? Yes, I love it! Words of wisdom – If you could change one thing what would it be? Not a great deal because everything that has happened in the past has brought me to this point today, which I am truly happy about. Nothing radical to change but maybe I should have hung around more fashionable bars and clubs in my earlier days, the extravagance and creativity would have been great inspiration and I may have influenced a celebrity or two to wear one of my hats and helped with my public awareness too. I do not beat myself up with hindsight although I’d love to meet Mary Portas! Today my heart is full and my suitcase is light!!

Oxfords Bakery was established by Frank Oxford in 1911 at Alweston, near Sherborne in Dorset. Today, fourth generation Steven is at the helm, a far cry from the DJ lifestyle in Ibiza he did before! What does your family business do? Oxfords Bakery is a 4th generation bakers, still making Traditional English bread and cakes using the same methods (and ovens) as Great Grandfather Frank Oxford in 1911. How did you get involved? I was always expected to join the family business, not by my family, but by all of our customers, suppliers and friends! Naturally this deterred me even more. I turned from music loving teenager in to a professional Nightclub and event DJ and, by my early 20’s had even established a name as an agent for other music acts. During a tour of New Zealand and, actually, right in the middle of a set I was playing during a street festival for Red Bull at the ‘Americas Cup’ yacht race in Auckland, I made up my mind that I wanted to not just work for the family business, but to develop it and make it in to what I believe it should be – the most popular bakery in our county, Dorset. So next time you see a ‘DJ’ at work, wondering what’s on his or her mind, it may not be quite what you’d expect!! What did you want to be when you grew up? An exact replica of my father! What are your first memories of the family business? The first memory of the family business for me was being allowed behind ‘the table’ to mould cottage rolls with my Dad at the Royal Bath and West Show when I was about 5 years old, and then while he was pre-occupied, one of the bakers lifting me up and out of the way to sit on the flour sacks as I was probably slowing up the works. This was the first feeling of burning desire to show what I could do for the business. Needless to say, next year as a great big six year old I was very visibly shadowing my father and helping bake whilst wearing a rather fetching t shirt my mum had provided saying :Get fresh with your local baker’ on it! The other memory that my brother and sister share with me though is the smell and clatter of the tins as we walked into the bake house when we would stay there with our grandparents. Its still the same sounds sights and smells today, but you don’t appreciate them until you’ve been away from baking for a couple of weeks. Good excuse for a holiday I suppose!! What values are important in your family/family business? Our motto has always been ‘quality and tradition’ I think if we maintain these two things then the actual boring business side of things are much the same as most other businesses. It is those two things that keep us unique. There are a few good bakeries I can think of that only have one of these attributes, and no matter how hard our competition try, it is impossible to emulate what we do. (Unless you also have an original Victorian/Edwardian bakery to work from!) What is the best thing about being a family business? The support framework when things get , inevitably, tight or don’t go as planned. We don’t set ourselves many targets for success as a family business, we do , however, know how to celebrate our achievements though. An invite to ‘Oxfest’ would prove that to anyone!! And the worst? Imagine putting in the best financial year in 100 years, exceeding all expectations, growing and developing at a faster rate than you could ever have expected… and then find a post it note with a complaint from your own Mum because you’ve lost a petrol receipt or because your office looks a bit messy! For me, that is about as bad as it gets though – I’m afraid, there are no horror stories here! What is the best thing about your working day? Seeing somebody walking down the street clearly enjoying a product from an ‘Oxford bag’. Also, hearing a tale from a customer who says that one of your products is their ‘favourite food’. I only need to hear that once a year to get me out of bed in the mornings. A real pleasure. What is your proudest family business achievement? Our centenary year has to be up there. Shared by all of us proudly, as you can imagine. My father decide that he wanted to take the business to 100 years, come hell or high water. This doesn’t sound like a great ambition until you realise he decided that 51 years ago!! I had the good fortune to meet Richard Branson last year and even he said: “ now that is a real achievement” You can’t argue with that really! Is there a next generation waiting in the wings to take over? Ha Ha, there is now but only just as they have only just been born but there is absolutely no way on earth that I would ever pressure or even suggest my children be involved in the business though. Look forward to teaching the values of hard work, finance and reward, but they are way down the list after things like messing about, laughing, running around with your arms out like an aeroplane for 3 hours solid etc as life is there to be enjoyed first and foremost. What do you see as the biggest challenge facing family businesses? Copy cat businesses is a real threat to our sector as there isn’t much legislation as to what real bread actually is. Despite the Real Bread Campaign doing a good job of promoting small and honest bakery businesses, they are dwindling. In fact, there were approximately 20,000 small bakeries in the UK 25 years ago and there are now only about 3,000 left. Supermarkets can use words like ‘fresh,’ ‘craft’ and ‘wholesome’ at will! We have some local competition that even has a sign in the window saying ‘traditional artisan breads’ yet they are made on a plant/production line!! It does grate a bit when you have given up nearly every Friday night of your life to actually do it properly! Rant over! What words do you associate with family businesses? Passion. Values. Ethics. Tradition. Words Of wisdom – What piece of advice would you pass on to someone thinking about joining the family business? DADS ARE ALWAYS RIGHT!!! Knowing when they are not, and being able to make subtle changes, is the key to success.

Kinloch Anderson, an Edinburgh family company since 1868 are renowned experts in kilts, tartans and all aspects of Highland Dress. Deirdre Kinloch Anderson married into the family firm and shares her thoughts. What does your family business do? Scottish Clothing and textiles, renowned for kilts and Highland Dress, also wholesale and skirt production, tartan design and Brand Development in Japan, Korea, Taiwan and China. How did you get involved? Married into the 5th generation What did you want to be when you grew up? Initially the first ever lady mounted Policewoman! Then social worker. Then working with publication of Children’s school books in foreign languages. What are your first memories of the family business? My husband was dedicated to making it ever more successful and wanted me to be interested and involved when appropriate. What values are important in your family/family business? To be a role model for Scotland, upholding the highest principles of integrity and service. What is the best thing about being a family business? For us, personally, the lifestyle that goes with it, the places we go to and the people we meet. Commercially, when we have made a decision we can go ahead and do it. And the worst? The demands and pressure of the ultimate responsibility. What is the best thing about your working day? Working with a great team of people in our Company. There’s always a new challenge. What is your proudest family business achievement? There have been so many over the 145 years: Queen’s Award for Export in 1979, Douglas Kinloch Anderson OBE in 1983, Award for Business Excellence Scotland 1999, Deirdre Kinloch Anderson OBE 2010, but most important is always thinking ahead. Is there a next generation waiting in the wings to take over? 2 sons: 6th generation in the Company in their early 40’s. One is Chief Executive and the other is Director of Brand Development. What do you see as the biggest challenge facing family businesses? Same as for other companies, the challenge and competition of the workplace. What words do you associate with family businesses? For us: Scottish, Authentic, Creative, Experienced, Enterprising, Discerning, Dependable, Global Words of wisdom – What piece of advice would you pass on to someone thinking about joining the family business? First take time to learn as much as you can about our Company. Then always look for new opportunities, new developments so that we can remain world leaders in our niche market.

An interesting and thought-provoking insight into Asian family business owner thoughts about succession and the next generation. I was having breakfast recently with an accountant from the UK and with an old friend from the trust industry in Hong Kong. The trustee commented that she had a client who ran a family business in Asia who had just done the thing that many Asian father’s seem to do and called his son back from studies in the UK to come and start working in the family business. The English accountant automatically said: “What a bad decision – he should let his son make his mistakes somewhere else before he comes to work in the family business!”. From an English or American perspective there are many good reasons why the next gen should go and get outside work experience before coming and working in the family business. However when discussing this issue with business men and women in Asia I do get a lot of resistance to this “Western perspective”. Some of the explanations that I have heard from different families around Asia include: “I need my sons there because who else can I pass on the work to.” “I need to make sure that my sons enter the business because if they decide not to join then how can the business continue?” “The best person the children can learn from is their own father or mother.” “They should learn their family values directly from the source – from their own parents.” “You need to bring them in early so that they can bond with the non family executives that in the future they are going to lead.” “If I don’t bring my son into the business now his cousins are going to be there and get established before he will have any chance”. Other friends that I have discussed this issue with have basically responded saying that they have observed many successful second generation business leaders from Asian families who went to work straight after finishing their university and who have been successful in business and in their personal life. This leads to the most difficult Asian response to argue with: “This is what my father did with me – are you saying I have not been successful!?” I think that at the heart of the American thinking on this topic are the concepts of: adult developmental stages as articulated by Daniel J. Levinson in The Seasons of a Man’s Life (and later also The Seasons of a Woman’s Life); and the need to differentiate from your family. (The term “differentiation” comes from family systems theory. It should be compared to the term “individuation” which is the term used by Carl Jung in his discussion of the adult life cycle.) Under Levinson’s framework for men, the ages of 22 – 28 is the stage of “entering the adult world” and if you can be independent of your family during this key period it is very valuable in becoming emotionally distinct from your family. American culture is well understood to being an individualistic culture and Asian culture a collective culture. However is the concept of differentiation relevant for Asian families? The answer to this question seems to be a clear “yes”, but perhaps with some modification. One Asian academic has written that she has found that “a healthy family system correlates with a healthy family business”. Is it important for business owning families in Asia to give their next gen the best chance to differentiate? While this does not appear to be intuitively accepted in Asia I believe there are some sound arguments why this is very important. First, many Asian families do believe in the concept of human capital and intellectual capital as being important components of the family wealth. To give your next generation the chance to become mature adults is an investment in human capital. An Asian father (or mother) thinking about whether to pull their young adult back from school and into the family business should ask themselves the question of which is more important to you? The good of your business or the good of your son or daughter? If you value the well-being of the next gen, give them a chance to find maturity away from the family. Second, while you hear of many Asian families where the next generation successor came back straight from school and started working in the business and all went successfully, you also hear of cases in Asia where the successor later drops out and leaves the business – or they wait until the father has died and then they sell the business! Giving them that time away from the business so that they come back in as mature adults will likely mean the decision to join is a mature decision that they will not lightly go back on. I have to admit that my first two reasons are still very American in logic. This leads to my third reason which I think is very specific to the Asian context. The third reason then is that in many traditional Asian families, in families with a strong family hierarchy (“Confucian families”) the siblings often do not find it easy to work together collaboratively once ‘Dad” has gone. The siblings carry over their birth order and family role ways of relating to each other into their adult working lives. The more differentiate one of the siblings the better their ability to define a new adult self, and a new adult working relationship with their siblings. In short, the more maturity they will have in their interaction with their sibling partners. So if you send your next gen away to get outside work experience first, and to give them a chance to differentiate away from the family business, when they come back they are going to be much better business partners with their siblings and it will give the family business greater immunity against family conflicts. 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.

Dr. Joseph H. Astrachan, Executive Director of the Cox Family Enterprise Center at Kennesaw State University, speaks on on the topic of Building a Family Business That Lasts and provides viewers with four key points to walk away with. Video published courtesy of Business Families Foundation.

Fracino is the UK’s only manufacturer of cappuccino and espresso machines and associated equipment and was 50 years old in 2013. Managing Director Adrian Maxwell shared his thoughts with Paul Andrews. What does your family business do? Fracino is the UK’s only manufacturer of cappuccino and espresso machines and associated equipment. We are celebrating our 50th anniversary in 2013 and are very proud to have been awarded the title of the UK’s top manufacturer and the UK’s Outstanding Export award from the manufacturer’s association the EEF. How did you get involved? I’ve been involved with the business ever since I was a baby when my dad, Fracino founder Frank Maxwell, took me in a carry cot to our customers in Leicester and Birmingham in the heady 60s before we’d started manufacturing and were repairing machines. After leaving school at 16 I went to Rolls-Royce for four years and completed my technical apprenticeship and HND. I next took on a couple of jobs which included manufacturing and selling agricultural gates and fittings before joining Fracino full time aged 23 as a service engineer. At that time dad could not complete the volume of work on his own and there were just the two of us compared to the 40-strong team we employ today. What did you want to be when you grew up? I always wanted to be an engineer from a toddler. Our house, garden and workshop were always heaving with cars and machines being repaired which would drive my mum to distraction. I loved learning how to take things apart and reassemble them. We must have been the neighbours from hell with all incessant hammering and banging at all hours of the night! What are your first memories of the family business? My first really clear memories are going with dad when I was about five years old to see long standing customer Geoff Rossa at Cafe Bocca in Leicester in our new – well new to us – Morris J4 van. Geoff has been a valued customer and friend for 50 years (as long as we’ve been in business) and I would happily sit on top of his counter changing the steam valve washers. What values are important in your family/family business? Trust, respect, transparency – and openness. My respect for my dad Frank is enormous – and he is my business hero. As a family we value our hard work ethos and quality driven culture – always striving to do everything to the best of our ability. What is the best thing about being a family business? Being united in a common goal and supporting each other while sharing our business experiences as a close knit family unit which is always travelling in the same direction. And the worst? The fact that we never escape from our work and find it nigh on impossible to switch off when we’re at home. I’m the biggest culprit by far! What is the best thing about your working day? Getting up for work – every day I’m excited about what the day will bring even though many of them are hijacked before they get off the ground. No one day is the same and I relish the opportunities and challenges each one brings. What is your proudest family business achievement? Being awarded the EEF’s UK’s Winner of Winners Award this January this year. It’s the highest honour the EEF can bestow on a British manufacturer and reflects how, in four years, we built a global export business which now exports to over 50 countries. Is there a next generation waiting in the wings to take over? Definitely – outside of Frank our founder and Marion my wife who is our credit controller, our daughters Rebecca and Katrina work as service coordinator and purchase ledger respectively. Our son David is currently training to be an engineer at Leeds University and works with us during his holidays. What do you see as the biggest challenge facing family businesses? Succession planning is critical – as is keeping things on an even keel and identifying and managing any potential sibling rivalry. We wholeheartedly believe in the adage that ‘the whole is greater than the sum of its parts’. What words do you associate with family businesses? Unity, trust, hard work, stability, reliability, tenacity, transparency and quality driven for starters. We’re all in this together which has proved a powerful formula for our success. Words of wisdom – What piece of advice would you pass on to someone thinking about joining the family business? Join it for the right reasons, not because you feel obligated – the worst possible reason. Also, if you do believe its right and it does not work out then bow out gracefully and move on as opposed to being miserable. We only have one life so it’s vital to be fulfilled by what we do for a living.

At Cropwell Bishop they believe in keeping things in the family. That is why, from their creamery in the beautiful Vale of Belvoir, they have made mouth-wateringly delicious Stilton for more than three generations. Today, cousins Robin and Ben Skailes oversee the day-to-day running of the cheese dairy along with their fathers, David and Ian. Using traditional methods passed down by their grandfather, they continue to produce award-winning Stilton of the very finest quality. Robin spoke to Paul Andrews and shared his thoughts on the family firm and his passion for their product. What does your family business do? Makes handmade Stilton cheese and other handmade blue cheeses from our family farm. How did you get involved? I always loved the cheese so it was easy for me. What did you want to be when you grew up? A Racing Driver What are your first memories of the family business? Being forced feed Stilton at 4 years old! What values are important in your family/family business? Responsibility towards the local community and protecting traditional cheesemaking. Our creamery plays a big part in Cropwell Bishop village life. Most of our employees live locally, and some of them have been with us for more than 25 years. Some have even worked under Robin and Ben’s grandfather. That is why we trust them to maintain the highest standards of cheese craft; and why we regard them as part of the family. Our strong family values extend to our suppliers, too. We have hand picked some of the best milk suppliers in the region: small, family-run farms whose expertise, like our own, has been passed down through generations. And in return for the exceptional milk they supply, we make sure our farmers are paid a price that they deserve. After all, we’re likely to need their milk for several generations to come. What is the best thing about being a family business? To plan for the future and the long term. And the worst? Having my father as my boss! What is the best thing about your working day? Tasting Stilton! It is something that I will never tire of either! What is your proudest family business achievement? Being shortlisted for the Midland Family Business Awards and winning the 2013 Family Business of the Year Award. Is there a next generation waiting in the wings to take over? Yes, I have 2 young sons who already love Daddy’s cheese. What do you see as the biggest challenge facing family firms? Competing with much bigger companies as more consolidation takes place. What words do you associate with family businesses? Passion, fun, long term. Words Of wisdom – What piece of advice would you pass on to someone thinking about joining the family business? Work for someone else before joining the family firm.

Fracino is the UK’s only manufacturer of cappuccino and espresso machines and associated equipment and was 50 years old in 2013. Managing Director Adrian Maxwell shared his thoughts with Paul Andrews. What does your family business do? Fracino is the UK’s only manufacturer of cappuccino and espresso machines and associated equipment. We are celebrating our 50th anniversary in 2013 and are very proud to have been awarded the title of the UK’s top manufacturer and the UK’s Outstanding Export award from the manufacturer’s association the EEF. How did you get involved? I’ve been involved with the business ever since I was a baby when my dad, Fracino founder Frank Maxwell, took me in a carry cot to our customers in Leicester and Birmingham in the heady 60s before we’d started manufacturing and were repairing machines. After leaving school at 16 I went to Rolls-Royce for four years and completed my technical apprenticeship and HND. I next took on a couple of jobs which included manufacturing and selling agricultural gates and fittings before joining Fracino full time aged 23 as a service engineer. At that time dad could not complete the volume of work on his own and there were just the two of us compared to the 40-strong team we employ today. What did you want to be when you grew up? I always wanted to be an engineer from a toddler. Our house, garden and workshop were always heaving with cars and machines being repaired which would drive my mum to distraction. I loved learning how to take things apart and reassemble them. We must have been the neighbours from hell with all incessant hammering and banging at all hours of the night! What are your first memories of the family business? My first really clear memories are going with dad when I was about five years old to see long standing customer Geoff Rossa at Cafe Bocca in Leicester in our new – well new to us – Morris J4 van. Geoff has been a valued customer and friend for 50 years (as long as we’ve been in business) and I would happily sit on top of his counter changing the steam valve washers. What values are important in your family/family business? Trust, respect, transparency – and openness. My respect for my dad Frank is enormous – and he is my business hero. As a family we value our hard work ethos and quality driven culture – always striving to do everything to the best of our ability. What is the best thing about being a family business? Being united in a common goal and supporting each other while sharing our business experiences as a close knit family unit which is always travelling in the same direction. And the worst? The fact that we never escape from our work and find it nigh on impossible to switch off when we’re at home. I’m the biggest culprit by far! What is the best thing about your working day? Getting up for work – every day I’m excited about what the day will bring even though many of them are hijacked before they get off the ground. No one day is the same and I relish the opportunities and challenges each one brings. What is your proudest family business achievement? Being awarded the EEF’s UK’s Winner of Winners Award this January this year. It’s the highest honour the EEF can bestow on a British manufacturer and reflects how, in four years, we built a global export business which now exports to over 50 countries. Is there a next generation waiting in the wings to take over? Definitely – outside of Frank our founder and Marion my wife who is our credit controller, our daughters Rebecca and Katrina work as service coordinator and purchase ledger respectively. Our son David is currently training to be an engineer at Leeds University and works with us during his holidays. What do you see as the biggest challenge facing family businesses? Succession planning is critical – as is keeping things on an even keel and identifying and managing any potential sibling rivalry. We wholeheartedly believe in the adage that ‘the whole is greater than the sum of its parts’. What words do you associate with family businesses? Unity, trust, hard work, stability, reliability, tenacity, transparency and quality driven for starters. We’re all in this together which has proved a powerful formula for our success. Words of wisdom – What piece of advice would you pass on to someone thinking about joining the family business? Join it for the right reasons, not because you feel obligated – the worst possible reason. Also, if you do believe its right and it does not work out then bow out gracefully and move on as opposed to being miserable. We only have one life so it’s vital to be fulfilled by what we do for a living.

Recent research reveals the aspects of family business that provides competitive advantage in the marketplace. The recent report, Family Businesses: Competitive Strengths and Qualities published by Coutts and Co examines the strengths and qualities that characterise a family business, drawing upon the experiences and insights of over 300 of Britain’s most successful family businesses. The report explores the challenges currently facing family firms. The top five strengths cited by family businesses are: Exceptional Human Resources Practice Nuances that differentiate them from other businesses include good staff retention based on a strategy of working hard to find the right level for everyone. Middle ranking positions might be held by individuals moving at a steady pace through the organisation, or not moving at all. This contrasts with an ‘up-or-out’ approach used in other organisations involving key staff progressing along defined career paths within pre-defined timescales. Loyalty amongst family members extends into the relationship with non-family staff members, in addition to customers and suppliers. Agility And Flexibility In Decision Making The structure of family businesses tends to enable flexibility, speed of decision-making and pragmatism. Flexibility is critical in these changing times which result in changing attitudes from customers, supply chains, staff and regulators. Those that can react quickly stand the best chance of survival. Agility is balanced with their ability to take the long-term view and not be thrown off course by the immediate economic environment. Personal Approach To Doing Business Family businesses have a particularly ‘personal’ approach to doing business and have strong relationships with clients, customers and key suppliers, enabling deep, embedded knowledge about them. This enables businesses to respond to their needs and foster long-term relationships. Family businesses are also more likely to have a well established position in the local community than a corporate whose connections are less personal and more remote. The personal approach to doing business is also linked to low staff turnover, particularly at senior level. Honesty And Integrity In Business Affairs Family businesses are more likely to have values such as honesty, integrity and straightforwardness more deeply embedded within both the family and the business. Family businesses tend to be held together as much by soft issues as hard, economic ones. They are higher on the business agenda than in non-family businesses and are often deeply embedded in the culture of the business over generations. The Family Is A Source Of Commercial Strength Many family businesses see the fact that they are a family business as a source of competitive advantage and a major contributor to brand image. The family reinforces the sense of passion and commitment, with key family stakeholders being committed to the business, to each other, to customers and clients. Many family businesses also like to do business with other family businesses, which creates other exciting opportunities Juliette Johnson, Head of Family Business at Coutts says: “These findings reinforce our experience of what makes family business so special and what gives some the ability to survive over many generations, qualities which many non-family businesses could emulate. Family Businesses do not tend to celebrate and promote their successes often enough. We hope that by making these findings available for the benefit of other family businesses, it will encourage others, to consider what gives them a competitive edge.” “Many organisations actively promote the fact that they are a family business and others see it as something that underpins the whole way they do business. Having values such as honesty and integrity helps family businesses maintain long term, stable relationships, both internally and externally, which is a core strength.” However these strengths are also viewed by others as weaknesses. Examples include hanging on to staff out of loyalty rather than because they are right for the business or the role at that time. As a result they may find it more difficult than other businesses to introduce and assimilate new talent. With personal relationships being key to many family businesses, many acknowledge they are too dependent on too few key members of staff. Others are too dependent on too few key client and customers too.

According to recent research from Barclays Wealth, 40% of the UK’s high net worth individuals do not trust the next generation to protect their inheritance. Key Findings include: 37% of wealthy Britons have experienced family conflict as a result of family wealth Earned, as opposed to inherited, wealth is key to financial happiness 40% of the UK’s high net worth individuals do not trust their children and stepchildren to protect their inheritance The report, The Transfer of Trust: Wealth and Succession in a Changing World, is based on a global survey of more than 2,000 high net worth individuals. It provides an in-depth examination of wealthy individuals’ attitudes towards wealth transfer and succession planning, as well as offering insight into what the future holds for the next generation. Interestingly, it reveals how wealth in many cases can act as a double-edged sword, leading to distrust and conflict. Globally, developed countries display higher levels of uncertainty when it comes to trusting their children and stepchildren to look after their wealth. Respondents in Australia (59%), North America (61%) and Europe (62%) show lower levels of trust in their children and stepchildren when it comes to money management and protecting their inheritance, in comparison to the Middle East (78%), Africa (77%) and Latin America (75%). Experts featured in the report have partly attributed this lack of trust in the future generation to the changing structure of many UK families. As second and third marriages become more common, this is thought to lead to more complex relationships with both children and stepchildren in relation to wealth and inheritance planning. David Semaya, Head of UK and Ireland Private Bank, Barclays Wealth, said: “This report provides an in-depth study into the attitudes of high net worth individuals towards succession planning. It is clear that with wealth comes an increasing complexity of choice, and in some cases this can result in concerns about trust and conflict when considering the inter-generational transfer of wealth. Understanding options for succession planning in advance, and seeking professional advice can help address these fears and provide confidence that your wealth will be wisely managed in the future.” Wealth, Happiness And Family Dynamics Parents want to pass on their material wealth to their children, as well as a roadmap for a happy life, but the report reveals some interesting paradoxes about inheritance and succession. Source of wealth is seen as a key determinant of financial happiness, with earned wealth much more likely to result in happiness than inherited wealth. However, wealthy respondents in the UK remain committed to passing on their wealth, with 94% of respondents intending to do so. However, an unfortunate drawback of wealth is its ability to cause conflict – and in the context of succession – family conflict. The report reveals that 37% of wealthy individuals in the UK have had direct experience of family wealth leading to disputes. Accentuating this conflict, the report reveals that the risk of disinheritance increases in line with wealth for high net worth individuals in the UK. Whilst five per cent of those with wealth levels of between £1m and £2m have disinherited someone or cut a family member out of their wills, this rises to 13% among those with more than £10m. Catherine Grum, Director, Wealth Advisory, Barclays Wealth, commented: “In the case of wealth that has been inherited, tensions around entitlement may lead to disputes. However, it is surprising just how many wealthy respondents report experiencing such conflict and the impact that source of wealth can have on this, with wealthier respondents more likely to have encountered such conflict.” Despite all the potential tensions associated with succession and wealth, the report shows that the UK’s high net worth individuals remain committed to passing on their assets to the next generation, with only six per cent of UK respondents believing that this should not be the case. Globally, 60% of respondents say that they require a significant level of professional advice when deciding on an inheritance plan for their children and stepchildren, emphasising the need for expert advice to guide them through this decision-making process.

The family constitution is a written document that lists the mission, vision, and purpose of the firm. It also spells out the family commitment to business continuity. For example, does the family intend to pass the business on to future generations or sell off at a profit? The family constitution lists responsibilities of ownership, conflict resolution procedures, as well as company policies and procedures on such important issues as family member employment, hiring, retirement, and terminations. The constitution includes items that can often be disruptive or loaded with the potential for conflict such as the role of spouses in the business and what should happen with shares in the case of a divorce. In addition, the document is where policies and procedures are created for when a family member develops a drug or alcohol problem or becomes disabled. The critical function of the constitution is to foster family discussion and agreement, and to create guidelines on key issues before being forced to make a difficult decision on a moment’s notice when emotions are likely running high. Interestingly, the vast majority of family businesses do not have this important document. In addition to the previously mentioned items, the family should discuss the following for possible inclusion in a family constitution (not an inclusive list): 1. Why is the family in business together? Should the business stay in the family? 2. What is the process for succession (choosing the next leader)? 3. A share liquidity policy, including buybacks from family members and dividends. 4. A family compensation/remuneration policy. 5. A procedure for making decisions (e.g., consensus, or vote), who will make the decisions? 6. Corporate officer roles and responsibilities. 7. A family member entry policy. Is a university education required? Should entering family members be required to work elsewhere and find success on their own first? 8. A family member exit policy. 9. What is the process for terminating a family member? 10. The role of non-family employees. 11. Establishment of a board of advisers or directors and their roles, and the number of times they will meet annually. 12. Establishment of an annual family retreat. 13. Number and role of family members on the boards. 14. Establishment of a family council and its responsibilities and roles. 15. Educational reimbursement policy. 16. A policy for settling disputes or conflict among family members specifying who will settle the dispute, such as the outside board of advisers or the family council. 17. Reporting structure for family members. Should family members report to family or to non-family members only? 18. Charitable giving goals. 19. Investment policies and procedures. Should the firm support younger family members in startup businesses of their own? 20. Procedures for developing and training the next generation of leadership. It will take several meetings to create a document the family can agree with. Many families agree it is time well spent and important to discuss before serious issues arise. The constitution is commonly an agenda item at the annual family retreat. The document should be considered a living document that can be reviewed annually and updated as necessary. Reproduced with permission from Keanon Alderson and The Press-Enterprise (www.pe.com) Keanon Alderson Ph.D. is an associate professor in the Robert K Jabs School of Business, at California Baptist University in Riverside CA. He can be reached at kalderson@calbaptist.edu

Make sure you plan so your estate ends up in the right hands. Penny Lovell shares her thoughts. Have you prepared a will? Have you made sure to plan your assets so that your estate will end up in the hands of the right people should anything happen to you? These may be personal questions but they are important ones that more of us need to ask our loved ones. Talking about death is uncomfortable, particularly with those we care about. However, making sure that your estate is in order could save a lot of money and heartache in the long run. New research from Foresters Friendly Society and ICM has revealed that almost two thirds (61 per cent) of us don’t have a will. On top of this one in ten of those who do have a will have told no-one else where it is. If you’re in either of these groups, and there’s a good chance that you are, you may find your money and possessions may not end up in the right hands after your death. All too often there are headlines about people who have died without a will, and sadly, while in many cases they would have preferred to have left their affairs in order, the result is far from ideal. A very good example of this is Stieg Larsson, author of the Millennium Trilogy books, who died intestate. As a result, his entire estate went to his father instead of his long term partner, who in turn has not benefitted at all from the worldwide success of his books and the subsequent films. Without a will or effective estate planning you don’t get to control where your assets go. Your estate will be divided amongst your relatives in accordance with government regulation and could even end up with the Crown. You may be under the impression that wills don’t matter if you are married with children and plan to leave everything to your spouse. However, your husband or wife will only receive the first £250,000 of your estate. After that they have a right to an income, but not the capital, from the remaining estate. This is the default position and one very few people would actively choose. If you fail to update a will post a break-up, despite being in a subsequent relationship, your estate might end up going to the wrong person entirely and cause great upheaval amongst your loved ones. Bob Marley died in 1981 without a will and, 30 years later, disputes are still raging with new claimants still appearing out of the woodwork. In addition, if you leave dependent children under 18 behind when you die then you may not have control of who looks after them. Instead, the courts may decide who is appointed as their guardians. This alone should be enough to encourage anyone to make a will. Worryingly the Foresters report also showed that more than three-quarters (77 per cent) of parents with children under the age of five have not made a will with nearly half those who have (46 per cent) not reviewing it in the last five years. This means that they have not appointed guardians or ensured their children’s inheritance is secured. Again, a famous example of this is what happened to Heath Ledger, whose will was not updated to include his daughter Matilda. Of course the older we get the more important a will is. Despite this nearly half (46 per cent) of those aged between 55 and 64 have not made a will with more than a fifth (22 per cent) having never thought about making one. One in eight (13 per cent) rely on self-written wills, the validity of which is more likely to be challenged upon death. March is ‘free wills month’, an initiative that brings together a group of well-respected charities to offer members of the public aged 55 and over the opportunity to have their wills written or updated free of charge. This is done using participating solicitors in selected locations around England and Wales. Whatever your background or situation it is important to have effective estate planning and a current will in place. This will ensure that you have control over your assets and make sure that your wishes are carried out if you aren’t here to control the situation. Making a will can also provide an opportunity for you to think through whether your beneficiaries require financial education. There are so many stories about people who inherit wealth without any financial training and therefore struggle to protect the assets for their own lifetime and for future generations. Financial training can help prevent this potentially challenging and unhappy outcome. Finally, there are many of us who wish to leave assets to charity and making a will is a great opportunity to explore the best way of structuring your gift.