On the day of my birthday earlier this month, I had the opportunity to have lunch with Peter Thornton who previously worked in his family business (Thorntons Plc) for 30 years, eventually retiring at the age of 54 as Chairman.Â Prior to meeting him, I sent him an email saying…
My grandfather ran a utensils retail business with his brothers when in Mombasa (Kenya), and my father ran a menswear retail business with his brothers in London (UK), and I would love to launch a business several years down the road with my own brother.Â Thereâ€™s something very magical about family businesses, and naturally Iâ€™m sure they have their own challenges and a unique dynamic (!)
When you have a moment, it would be wonderful to hear what your top three tips for running a family business would be.
Peter then sent me a very thoughtful response to my request.
I thought what he shared would be valuable for my friends who are reading this blog, so asked if he would be happy for me to publish it and if he would give a little more information about himself, his background and his services, in case any of my friends would get value from having a longer conversation with him or engaging his services.Â You’ll find some gems very much applicable to marriage too I’m sure…
Here’s what Peter wrote…
My Top Three Tips for Running a Family Business – before ever starting!
Relationships & Roles
Your suggestion is that this is with your brother only.Â Naturally this is far more simple than if there are more relatives involved.Â However there is a need for various roles to be covered in the initial team, for more on that see below.
The most successful operations are run by emotionally mature people working in equal partnership.Â By ‘equal partnership’ I do not mean that every decision however small or large has to be always taken by all partners mutually but there will be specific areas where each individual has primary responsibility and within which, to understood limits, they can make their own decisions without reference to the other partners.
This paragraph has certain built-in requirements which need to be understood in advance:
‘Emotionally mature people’ – this is of paramount importance, whether in business or in marriage!Â The totally emotionally mature person hardly exists most people are immature in some way.Â Going into business with your brother has advantages and disadvantages; on the positive side you know him extremely well already, on the negative side you automatically and permanently have an emotional relationship with him.
You need to understand each other’s state of maturity, do you both feel yourselves to be totally independent, adult individuals? have you progressed beyond the childish relationship?Â Do you behave like two adults to each other? does either of you have a serious emotional problem, such as the need to be always dominant, or the need to always be right?Â Do you entirely trust each other in terms of honesty, intentions and communication in individual, team and family relationships?
A major contributor towards ‘progressing beyond the childish relationship’ will have been to work completely independently of each other in separate organisations doing separate things for a period of time prior working together.Â This will establish the individualâ€™s independence, abilities, self-confidence and usable experience to bring to the business relationship.
‘Specific areas where each individual has primary responsibility’ – to run any organisation it is necessary to have specialists in several different roles.Â Mike Southern in his Beermat set of books defines them extremely well as: Sales Cornerstone, Technical Cornerstone and Finance Cornerstone.Â One or more of these will be the Entrepreneur, most likely the Technical Cornerstone.Â The Entrepreneur is essential of course.Â The operation can manage without the Finance Cornerstone at least initially because this can be delegated to somebody else part-time.Â You therefore need to be certain about each other’s strengths, one needs to be fully capable of being the Sales Cornerstone and the other capable of being the Technical Cornerstone.
The individual running each of these areas will of course have primary responsibility and decision-making powers in those areas.Â The overall corporate governance will probably be shared equally between the two of you initially that it will eventually become necessary to decide that one individual will make the final decision in corporate matters having fully sounded out the other’s opinion.Â In other words this person will become the CEO.Â Whatever happens this role must not be decided on the family hierarchy basis but only on the basis of ability as must every other role.
Future Family Governance Systems.
You need to be fully in agreement in advance of starting the business what your objectives are.Â Do you intend always to run this between the two of you and eventually to sell it without involving any more family members or do you intend it to become a family institution for the long-term?
If it is the former it is essential that you do not ever bring in, at a later stage, any other family members because if you do so you will immediately turn it into the latter.
If it is to be the latter then you need to agree with your brother in advance the principle of and some outline rules for the following:
The Governance Structure for Business and Family.
Agreeing Vision and Strategy
Rules for Entry of new family members
Future Share Ownership
As requested, a few paragraphs about Peter himself…
I started work in the family firm of Thorntons Plc (manufacturing retail confectionery business) at the age of 10 working during the holidays until I was old enough to start full-time. I became a director of the company when I was 29 and retired when I was 54 in 1989 as Chairman.
This gave me much valuable experience as a director of a family company where at one time there were six members of the family all working together.Â Since that time I have studied the theory and practice of family business thoroughly preparing myself for working with family businesses.
Conflict can become very serious and destructive within a family business and it needs an outsider to relieve it.Â I offer my services for this purpose and also for prescribing the stages that follow resolution of the conflict so that systems and procedures can be set up to avoid these problems occurring again in the future.
Hope you found the above words by Peter useful.Â Are you running your own family business at the moment?Â What are the highs and lows?Â What tips would you offer?Â Would these tips translate well into the world of marriage too?