In his role as the bank’s Managing Director of Corporate and Commercial Coverage, Andy Gray understands well that the contribution made by family-run businesses to the UK’s economic picture can sometimes be overlooked. But that, he believes, is starting to change.

“We know that family businesses form a significant part of the UK economy, representing nearly 30% of UK economic output and employing more than 50% of all those working in the private sector – so it’s hugely important,” he told the audience as he introduced the webinar.

The event brought together some of the country’s most innovative and fast-growing family businesses to discuss some of the unique challenges and opportunities they face, and to celebrate the diversity and ambition of the sector. 

They demonstrated that successful family businesses typically: 

• have strong networks and value external advice as well as actively seeking alternate sources of talent in order to remain fresh

• proactively pivot, remaining agile and alert to the changing short- and long-term market dynamics that inevitably arise

• plan for succession prioritising clear and open communication, adopt flexible strategies and accept that things will change

• codify and revisit the business’s founding principles, ensuring its unique DNA runs through all aspects of operations and endures growth

• focus on putting in place bespoke governance structures that allow for all voices to be heard while ensuring decisions are made swiftly

For Sarah Dunning OBE, Chair of Westmorland Limited, the core strength of her business lies in protecting and projecting its DNA into every aspect of operations. “I think often the strength of a family business is its differentiation in its market and sometimes its refusal to become too corporate,” she says.

As the owner-operator of some of the UK’s most prestigious hospitality venues (including the famous Tebay Services), Sarah knows that the history of the family is a key differentiator. She and her sister, now the second generation to run the business, have worked hard to protect and strengthen that difference, though it can be difficult, particularly with the pressures of maintaining growth.

But Westmorland has enshrined its core values in an internal ‘bible’ that helps management stay on the right path. “We try and make sure that our innovations are always born out of that, because that’s what I think will keep us unique,” said Sarah.

In practice, Westmorland has adopted a set of headline values such as ‘We know our place’, which Sarah said serve as a reminder of the uniqueness of the family’s approach and which will also guide the next generation as they grow the business.

“Alongside that, we have five measures in our business, and we try and hold ourselves to account on them at all times: customer, colleague, commercial, community and climate.” All of the key measures were informally adopted by Sarah’s parents when they founded the business, and she – along with her sister Jane – have now formalised and codified Westmorland’s deep-seated commitment to its values to be passed on to the next generation.

Handling the tricky question of succession, of course, is something every family business must address if it’s to remain vital. Sarah says her family feels strongly that if none of the third generation wants to come into the business that is absolutely OK. “They shouldn’t feel the pressure that somebody has to come and take it on, because you only get one chance at life and career.”

So, while the family DNA remains a central strain running through Westmorland’s strategy, Sarah knows that few family businesses can rely exclusively on family expertise if they are to remain fresh and agile through the generations.

“I think the single biggest thing that has helped us is having external people as part of the team to help us through it,” she said. “I think it sometimes changes the conversation; it can change the tone.”

It’s certainly true that Westmorland’s policy of introducing talent, ideas and structures from outside is a hallmark of many other successful family businesses. Up until recently, the Mathew family, who have owned and run Dunsters Farm for half a century, had simply relied on family members to drive the business forward. But, as Dunsters’ Executive Chairman, Jeremy Mathew, explained, the influence of supermarkets meant it had to “adapt or die”. 

Relying on leaders from the family is “what a lot of family businesses do, and that certainly used to be to their detriment,” said Tom Mathew, who recently returned to the firm after a career in law to become Commercial Director alongside his sister Hannah Barlow, Managing Director.

The two have worked together to bring in new ideas to refresh the company’s thriving food-service offering. “For the first few years, I was so busy with the business that we didn’t really look outside, even though we came from a corporate background and we were well aware of the importance of networking,” said Tom.

“So we did want to bring an aspect of it in, but I think it is hard to find people who understand the sort of nature and dynamic of a family business,” he said, explaining that the company recently recruited a non-executive director to sit on the board.

“So certainly there are people out there, and building your networks through things like family business associations is one really good way to do that. Ultimately, it is about that relationship – they’ve got to understand the family dynamic, as well as the business world.”

And part of that understanding must take in the need to adapt to survive, particularly in the face of the recent disruption brought about by Brexit and Covid. However, the idea that family businesses are less prepared to change and pivot is a persistent myth, said Fiona Graham, Director of External Affairs and Policy at the Institute for Family Business (IFB).

She pointed out that people tend to confuse the age of the business with the way it is run. “It’s undoubtedly true that if you’re an 80-year-old business you have been adapting and changing the whole time – you can't do anything but, because things have changed so much in that time.”

Indeed, making the point eloquently was Hannah Barlow’s experience of Covid, when 95% of Dunsters’ customers were forced to close overnight because of the restrictions, leaving the food-service business with a warehouse full of stock, having been encouraged to stock up on account of Brexit.

“Back when supermarkets didn’t have tinned tomatoes or toilet rolls, we opened our doors to the public for the very first time, and then launched yard sales to help move some stock,” explained Hannah. “We supported our school customers with food hampers, as well as building a B2B website in two weeks, using that to be able to deliver to homes in Manchester using smaller vehicles.”

It is a great example of the enduring adaptability of the UK’s family businesses. “Just because the business is old, it doesn’t mean it’s old-fashioned,” Fiona said. “I think some family businesses can be incredibly agile, where there is a family that is aligned and has a strong sense of purpose, and they can make decisions quickly when they need to.

“A lot of times, people think about family business and think about internal family strife,” she said. “Not thinking about, well, actually, what is the power when this business is united, how incredibly powerful can they be, and how incredibly efficient can they be in their decision-making.”

Andy Gray agreed, and summed up the session by thanking everyone for providing “the kind of actionable insights that will hopefully inspire all of you in the day-to-day running of your businesses, and help you to navigate everything from succession planning to sustainability and supply chains”.