Select a region
Remi Krug, former president of Krug Champagne and Peter Lamble, chairman of Start-rite Shoes agree that family businesses measure strength rather than growth as the key factor behind their continued success.
Both were speaking at The Exchange, a Barclays hosted event in Guernsey and Jersey this week, to explore how the rest of the business world might adopt this approach in order to replicate the long term success of the family-run business model.
Director of global investment strategy at Barclays, Henk Potts, said: “Family businesses are driven by their values and try to do the right thing by their key stakeholders. They measure success in more ways than just on a balance sheet. PLCs are driven by their quarterly numbers, which prioritise growth and encourage short termism, whereas family business plan for a 20 year time horizon, ensuring their businesses have the strength to endure.”
Peter Lamble, himself an eighth-generation descendent of the founders of one of the UK’s oldest fashion brands, summed this up by describing some decisions Start-rite had made and how they had taken their time in moving manufacturing jobs to India.
“As a family business we have the luxury of time,” he said. “Without the pressure of quarterly numbers we can make decisions that are financially sub-optimal but are the right thing to do for the long-term strength of the business.”
The debate was moderated by distinguished financial journalist and former host of Sky News’ breakfast programme, Sunrise, Emma Crosby.
During the evening the panel discussed family business success being a combination of drive and DNA and how family-run businesses focus on long term decisions aimed at benefitting the future health of the business, rather than looking for short-term gains.
Remi Krug, a fifth-generation descendant of Johann-Joseph Krug, who founded the famous Champagne brand in 1843, said that his family business’ success had perhaps come at the expense of growth. Over the years the brand has resisted the temptation to increase its production: “It’s not a matter of size, it could be the energy, the drive or the passion. You could be small but put your ambition and uniqueness into your planning to give you the will to succeed,” he said.
Director at Barclays, Nick Gordon also reviewed a variety of challenges for family-run businesses, including dealing with multiple dependents and stakeholders and providing an objective viewpoint which benefits all.
“It’s our role here at Barclays firstly to understand the dynamics between different family members. This is important as their views may differ whether they are actively or passively involved in the business. After this, we have to bridge the gap between these two different groups to find common ground, which can sometimes be tricky.
“By ensuring you have reasonable governance procedures to deal with the business dimension and consider setting up family councils to deal with family issues and shareholders meetings to deal with ownership issues, there is no reason for your business not to be successful.”
The Exchange, now in its second year, is a thought leadership panel event organised by Barclays featuring experts from the world of business and finance.
