The UK’s biggest supplier of hard hats and steel-toed boots does not share an obvious connection with a high-street chain of opticians and a global manufacturer of multivitamins.
Yet Arco, the protective clothing company, Specsavers and Vitabiotics, the health supplement suppliers, do have one thing in common. They are family-run.
According to the Institute for Family Business (IFB), which honoured the three companies at its annual awards on Friday, there are about three million family businesses in the UK, whose combined turnover of £1 trillion accounts for 30 per cent of GDP and one in three jobs.
The sector is proving particularly resilient to the economic downturn. “Family businesses are not immune to the recession,” Grant Gordon, the IFB’s director-general, said. “They face the same challenges as everyone else. But they do tend to take a long-term view and a more cautious approach than plcs. That can act as a cushion in difficult times.”
Kate Murphy, head of Family Business at JPMorgan, agreed. “The bonus culture has never reached ridiculous levels. The credit crunch may, therefore, have had less of an impact. This has allowed some to use the downturn to their advantage. Costs may have come down, there may be fewer competitors and there may be some good deals to be had.”
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Such is the case at Vitabiotics, where Tej Lalvani, the vice-president, adheres to the principles laid down by his father when he founded the company in 1971.
“We don’t take major risks, we don’t use agencies and we are debt-free,” he said. “The recession has actually been quite good for us, as the media rates have come right down and we have been able to double our marketing spend.”
Although Mr Lalvani is the only member of his family involved in the day-to-day running of Vitabiotics, his father remains president and his brother serves on the board.
Mr Lalvani believes that the family connection keeps the company true to its founding values. “My father is a pharmacist and a scientist, so was always concerned that the company would lead the way on innovation, quality and safety. So we run proper clinical trials on our products.”
Mr Lalvani knew from an early age that he wanted to join the company and tells of sitting at the kitchen table aged seven sticking labels on bottles of pills.
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Thomas Martin, joint managing director of Arco, also knew he was destined to join the company that has been in his family since 1884 — but he arrived via a much more circuitous route.
“It’s part of the family constitution that if you want to work for the business, you have to have worked somewhere else first,” Mr Martin said, “so I had a career in direct marketing in London.”
In 1988 he spotted an advert for the family firm and decided to apply anonymously. “I used my real C.V., but with a false name. The point was I wanted to come into the company through the front door. But I did have an interesting conversation with my father when I turned up for interview and I wasn’t Paul Jackson.”
Mr Martin believes that the family connection strengthens the company, but it has to be handled sensitively.
“As a family you have a much more dynamic relationship with your shareholders. We will meet formally three or four times a year, but there are many more informal occasions when business is discussed. Of course, it isn’t always easy. Relationships occur on several levels. Is it the boss talking to a head of department or is it a father talking to his son?”
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Dame Mary Perkins founded Specsavers with her husband in 1984 from a spare bedroom in their home in Guernsey. Today the company has more than 1,000 stores and all the family are involved.
“My youngest daughter is the country manager for the Netherlands and the two others are chartered accountants involved with the business here,” Dame Mary said. “I didn’t try to directly influence them, but I think if you’ve been brought up with the business and can see what great fun it is, then you are going to want to get involved.”
* The family business honours are organised by the Institute for Family Business in conjunction with JPMorgan Private Bank www.jpmpb-fbh.com