FAMILY BUSINESSES TELL IT LIKE IT IS

By Nicky Godding, Editor

Family businesses put people first, see values as an asset, have greater freedom to experiment and take risks, and put the interests of the next generation at the heart of their strategy.

So says the Institute of Family Business, and at this year’s Family Business Lunch, there was also a lot of discussion about digital improvement.

The Business Magazine’s fifth annual family business lunch welcomed family businesses from across Gloucestershire to share some of their business challenges over lunch.

Peter Bell, whose father established groundworks contractor KW Bell Group in the 1960s, said: “With all the labour shortages in the industry, we should be innovating and investing more.

“Our innovations over the last few years have been in methodology, finding ways to do things more safely for the sake of our staff. For instance, we’ve used drone technology and built 3D models of all our sites so that when our teams are working, we know what’s underneath the ground.

He was less sure about the immediate benefits of artificial intelligence in his business “If we use that, it’s likely going to be in our back office, because AI still can’t lay curbs, tarmac or bricks.”

Robotics helps sort waste

Grundon is the advanced stages of trialing robotic pickers to help sort waste. Neil said: “For years, this has been done by human pickers, but like many other sectors we are finding it difficult to recruit, so we’re investing in technology to help us with labour shortages.”

But technology is costly, and the return on investment must be clear. Nicola Bird, Peter Bell’s daughter, is the founder and managing director of AccXel, the Forest of Dean-based construction training centre. Opened last year, it is the UK’s first cofunded construction skills accelerator centre which she built with KW Bell. She runs it alongside Peter, her mother Yvonne and sister Natalie.

Nicola said: “New technology takes from a year to 18 months to become embedded in the business and we take that into account. We also have to ensure that the technology is understood and accepted by everyone, and that’s about culture change.”

Rebecca Pullin, director at Gloucester-based waste management and equipment hire firm Smiths Ltd, has also looked at robotics, and undertaken studies alongside universities.

“It’s the way the industry is heading, and we will invest. Innovation within every business is essential,” she said.

Nick Latimer, Partner at Crowe which sponsored the lunch, said: “Adopting new digital or technological processes has been essential to all businesses, not just family-owned, and enabled many to grow significantly in the last few years.

“But for any business, growth means more people coming into the business, which makes it more difficult to maintain the culture that helped them succeed in the first place.

“However, family businesses have a distinct advantage because their culture tends to have become embedded over time.”

How can we make the most of government support?

Family businesses often enjoy a quicker return on investment on research and development because they are able to adapt fast to changing trends. And the government want to support this.

Nick Latimer said: “Any investment in innovation is worth exploring to see if it would attract R&D tax credits.

Paul Cox, Corporate Tax Partner at Crowe, added: “R&D is an area of focus for HMRC at present so advice should be taken. However many businesses are still surprised how much can qualify for relief including unsuccessful qualifying R&D projects as well as projects replicating existing products and technology where that advancement isn’t known to a competent professional in the relevant Industry.”,

Max Hough, from Workplace Interiors, can see the benefits of recognising innovation, wherever it occurs: “We have a traditional construction business, but we do some of our own R&D. We have 40 years of experience and the things we’ve tried out on site are often really innovative and worth exploring further.”

R&D – Are you aware of the changes?

• For SMEs, benefit reduced from 130 per cent to 86 per cent uplift since 1 April.

• SME payable R&D credit reduced from 14.5 per cent to 10 per cent. Have you factored that into forecasts?

• The scope of R&D is changing – data licences and cloud costs in, overseas subcontracted and externally provided workers out (change delayed for one year).

• From August 1, the introduction of a new online form; does that change how you collate information to meet HMRC specific requirements?

• New rules include earlier notification when companies make first time claim so you need to act earlier.

Companies shouldn’t assume they don’t qualify, as R&D qualifying criteria remains wide but HMRC is focusing on this area, so check whether a claim is possible, or if an existing claimant – whether your filings are compliant.

Technology aside, family businesses are fundamentally about people, and that fact shouldn’t be overlooked said Henry Herbert, Head of Sales at his family business Hobbs House Bakery.

Hobbs House Bakery, based in Chipping Sodbury and with shops across the region, was established in 1920. The business is currently building a new bakery at its main site which will include some automation.

This won’t affect the traditional breadmaking process but will reduce the wear and tear on those working in the bakery, according to managing director George Herbert, Henry’s brother.

He said: “Some bakeries don’t touch anything with human hands and do everything with machines and robots. In our new bakery we have installed tippers.

Rather than a human lifting the heavy bowls, the tipper does the heavy work and leaves us to get on with the skilled side of baking.

Emily Crew of Longhope-based The Authentic Bread Company agrees with this approach. “Not enough people are choosing to go into baking, and that could limit our growth.

“In our new factory at Longhope, we have automated the work that isn’t skilled, such as the cutting. Like the Herberts at Hobbs House Bakery, we want to use the skilled people for things that need their skills.”

She goes on: “We accept the need for automation and even robots, but the reason our business was started was to counteract the Chorleywood process of bread making, which replaces the slow mixing and kneading process of traditional breadmaking with a much faster mix and a reduced first proving time.

“The Chorleywood process is full of chemicals so that it can be processed through machines.”

“Traditional breadmaking is a labourintensive industry that can’t do without humans.”

“Henry added: “It’s about having that overall view of what are you trying to do as a business. Can technology enhance that?”

Looking to the future

A big issue for all family businesses is succession, who will take over the business and do they want to?

Nick Latimer advises that it’s never too early to talk succession planning. Having some regularly reviewed parameters that are understood by the family and others in the business, can be really helpful.

Don Robins set up Print Waste with his brother Geof in 1983. The company now offers waste management collection. They have four children between them who are all passionate about the business.

Don said: “They all have different capabilities, and our challenge is to build a new team with them and draw in external skills to complete the team if necessary.

His son, Chris, added: “Don and Geof have established a great legacy. As a junior management team, we want to step up with a good plan for where to take the business next.”

For those at the top, running any business can be a lonely affair. For family businesses that is possibly less so because there are opportunities to chat about it at home with those who understand.

James Gardiner, of Gardiner Bros, the UK's leading distributor of global footwear and workwear brands, brought a mentor into the business early to ensure that all directors have someone outside the business, with no skin in the game, to talk to regularly.

“He supports us all individually and collectively,” said James.

This year the next generation of family businesses were at the lunch in force. Felix Elliott-Berry of Sibling Distillery,

Richard and James Markey of Markey Group, Gavin Carter of construction company E.G. Carter and Jonathan Groves, who has just taken on the role of Executive Chairman at Lane’s Health in Gloucester, which manufactures household brands such as Olbas Oil, Jakemans and Kalms.

While the guests came from many different family businesses and sectors, many of the challenges they faced were similar.

Hannah Herbert, of property care company Guardian Preservation Services, said:

“We found the lunch really beneficial, and it felt reassuring to be surrounded by other companies going through the same successes but equally the same headaches that come with running a family business.”

As the Institute of Family Business says: “Business done well is a force for good; underpinned by principles of good governance and in a supportive regulatory environment family businesses can have a positive impact on society, the economy, and the natural world.

For leaders and owners of family businesses that presents an unprecedented opportunity to offer a model of sustainable and responsible business for others to be part of, work with, even adopt, to help both navigate the difficult times we face now, and prepare for future growth and more prosperous times ahead.”

Nick Latimer added: “The conversations we had at the lunch, and the networking alongside them, are really important.

“All these families are different businesses but with shared issues which it’s great to discuss in a forum like thi .and give those who participated an opportunity to develop and take forward new relationships formed over lunch.”

Nick Latimer, Crowe UK

Chris Mould, Crowe UK

Paul Cox, Crowe UK

Sharon Smith, Crowe UK

Emily Crewe and Alex Davis, The Authentic Bread Company

Nicola Bird, AccXel

George Workman, Cotteswold Dairy

Gavin Carter, E.G. Carter & Co

Jonathan Groves, GR Lane Health Products

James Gardiner, Gardiner Bros & Co

Neil Grundon, Grundon Waste Management

Hannah Herbert and Amber Meek, Guardian Preservation Services

Peter Heming, Heming Group

George and Henry Herbert, Hobbs House Bakery

Peter Bell, KW Bell Group

Tom Lister, Lister Unified Communications

Richard and James Markey, Markey Group

Don and Chris Robins, Printwaste Recycling and Shredding

Felix Elliott-Berry, Sibling Distillery

Rebecca Pullin and Lisa Smith, Smith’s

Max Hough, Workplace Interiors