When it comes to business...keep it in the family (From The Northern Echo)

When it comes to business...keep it in the family

2:52pm Tuesday 15th February 2011 in North-East Business Features By Owen McAteer

Family-owned businesses play a vital role in the British economy and the communities in which they are based, as Business Editor Owen McAteer discovered.

WHEN people talk about family-run businesses they may often think of the corner shop with a couple and their children grafting away behind the counter.

In fact, family-owned firms employ 9.5 million people, one in three jobs in the UK, as well as 65 per cent of private sector enterprises.

There are three million family-owned businesses of different shapes and sizes in this country, generating £75bn in tax.

One of the defining aspects of family firms is that, having often started off small, they grow and develop in the community in which they were founded.

This means that the owners often feel a personal commitment to the community that they grew up in and in which their family are well-known.

North-East-based business growth expert and national chairwoman of the CBI’s small and medium enterprises (SMEs) council, Lucy Armstrong, also believes running a business that was important to a parent and grandparents before them, creates an emotional attachment for an owner that shareholders of public liability companies (plcs) may not have with business they invest in.

Ms Armstrong, who chaired a recent international Family Business Conference in London, specialises in going into such companies and advising on everything from drawing up a constitution to running the business.

She points out that some of the North- East’s most successful firms, including Benfield, Vertu, Peacocks Medical Group and Ringtons, are family-run firms, with close links to the communities in which they are based.

She said: “The business itself is a member of the family they think of it not as an it, but as a person.

“That is a helpful concept because it means it has rights, responsibilities and there is a duty of care.”

Darlington-BASED Stone Technical Services, established by brothers Dave and Grahame Stone in 1998, specialises in high-level maintenance, lightning conductor installation and steeplejack services.

The firm now employs 27 people between its headquarters in Kellaw Road, Darlington, and satellite offices in London and Middlesex.

In recent years the firm has won work on St Paul’s Cathedral, Westminster Abbey, the Royal Courts of Justice, Lambeth Palace and Buckingham Palace.

Despite their success in the south, managing director Dave Stone said the company’s main base would remain in the North- East.

He said: “We are North-East guys, based in Darlington, and our roots will always be here.”

Mr Stone said one of the advantages of being a family-run firm was the personal touch it could give to customers.

He said: “You may have an organisation that has 3,000 employees but they are not necessarily going to be the same employees year in, year out.

“Somebody may ask what leaf we used on the Royal Courts of Justice and I don’t have to go and find a record, I can tell them.”

There was also the advantage, as Ms Armstrong pointed out, of the commitment to the business engendered by it having family links.

Mr Stone said: “It is obviously the shared responsibility and the fact you are doing it for yourself.

“A family business integrates other parts of the family, you may have your cousins, brothers and others there, which we do.

“I think it is the collective thinking going forward.”

Last month, Grahame Stone’s son, Luke, became the latest member of the family to join the firm, as a junior steeplejack engineer, after completing a three-year apprenticeship at the National Construction College, in Norfolk.

Family businesses also tend to have close links with the communities in which they are based, both because they provide employment and because the owners are probably personally known there.

Ms Armstrong said: “The owner of a family business walks into the pub or golf club and there are people who have bought from him, people who work for the company, the bankers in there are his advisors.”

MARK DOWDALL, environment and community director of County Durham-based mining and development company The Banks Group, said: “Harry Banks set the business up in Tow Law and he always did a lot with the community.

“It is something we encapsulated, with a whole ethos for development with care.

“It is not just care for the environment but care for the communities in which we have our operations and where we have our offices.

“I think it is more relevant today than it has ever been, it is nothing new.

“The Government captured these phrases ‘localism’ and the ‘Big Society’, but we have been doing it as a business for 35 years.”

Last November, Banks signed up as a corporate partner to Durham Cathedral, pledging to support the Cathedral’s five-year, £7m development plan, aimed at increasing its role in North-East life through music and worship, heritage and conservation, learning and outreach.

In recent years the firm has donated funds to Wolsingham Cricket Club for new kit and £10,000 to Durham Amateur Rowing Club for a new boat.

One characteristic of family firms that Ms Armstrong pointed out was that often generations of the same family had worked for the business, and, once there, stayed for a long time.

Banks employs 400 people, predominantly in the North-East, with 100 based at its Durham City headquarters.

Mr Dowdall said: “It helps that there are a lot of people in Banks who have worked for the company for a very long time.

“We have people who have worked on our operational side a long time. Our human resources manager has been with the company for 30 years and our managing director at our Banks Properties division has also been with the company for that sort of period.

“There are people in the business who, when they come, they like working in a family business so much that they stay for a long time. There isn’t a big staff turnover at that level which I think is a testament to the whole approach.

“Family businesses have their own characteristics, but one benefit is longevity of members of the family and members of the staff who work with them.”

The connection it felt with its community was shown when Banks decided to move its operations to be all under one roof last year.

The firm, founded in 1976, had been split between offices in Tow Law and West Cornforth, County Durham, and decided to move to a purpose-built office in St John’s Road, Meadowfield.

Mr Dowdall said: “I wrote to the local MP and the town council to tell them we would be moving from Tow Law, but were still supporting community groups and organisations there and the links are still strong.

“We still employ a lot of people from Tow Law and we want to benefit the Tow Law community and support them through our community fund.”

Ironically, it is family businesses that may offer more long-term security for their employees than multi-national plcs.

Ms Armstrong said: “They can make much longer term decisions because they are not shareholder driven.

“They can say ‘I don’t want to trade short-term growth for long-term sustainability’.”

“If you are a family business in a locality you can’t afford to pick people up and drop them.”