The founder and owner of the UK’s largest catering equipment supplier, Nisbets, has hailed the positive contribution that family-owned businesses make to the UK economy and said he would love to see more entrepreneurs keep their companies in the family rather than seeking outside investment.
Andrew Nisbet, who set up his catering equipment supply business 30 years ago and to this day remains its principal owner by virtue of his shareholding in Key West (Holdings) Limited, Nisbets’ ultimate parent company, believes that family-run firms often benefit from a freedom to be more “experimental” and “entrepreneurial”.
Writing in a column for business website Management Today, Mr Nisbet gave a fascinating insight to his views on family ownership and said he consider himself a “company steward” than a manager, whose job is to protect the long-term future of the business.
“As entrepreneurs continue to develop an appetite for going public, I would encourage ambitious founders to seriously consider this alternative: keep your company within the family. Not only will you benefit, the country and our local communities will too,” he wrote.
“First, family businesses often have the freedom and flexibility to be more experimental and entrepreneurial. They can pursue ‘moon shots’ that may not deliver an immediate short-term return. If you take on outside investors, they’re likely to be keen to see a quick return – sometimes as soon as the next quarter – so your flexibility is curtailed.
“Family businesses, on the other hand, can commit to longer term projects; investments that might not see a return for 10, 20 or even 50 years, or experimental ideas with a higher risk of failure. Research from the IFB backs this up. Families strongly embrace ‘creativity, experimentation, novelty and technological development,’ often seeing innovation as a route to long-term sustainability and viability.
“And that’s why family businesses make such a positive contribution to the country as well: they tend to be more focused on the long term. Unlike professional investors, who may hold stakes in many different companies, a family will likely hold most of their assets in one single business. As a result, they are constantly working to guarantee that company’s long-term success.
“In fact, many family owners, myself included, consider ourselves ‘company stewards’ rather than managers; overseers whose duty it is to protect the long-term interests of the business for future generations.”
Mr Nisbet said there was a misconception that raising large amounts of outside investment is a rite of passage for a successful entrepreneur – something you have to do if you want to create a large, successful business. But he suggested that overlooks the 4.7 million family-owned businesses in the UK, including some of the country’s largest such as Bestway, Laing O’Rouke and Specsavers.
According to the Institute for Family Business (IFB), family businesses collectively employ more than 12.2 million people, providing 36% of the UK’s jobs, he noted. His own business employs is understood to employ more than 1,600 staff, the largest of any catering equipment business in the UK.
Nisbets’ sales are expected to significantly exceed the £321m it posted last year when it next files its financial accounts, with the company’s focus on omnichannel growth and overseas expansion an ongoing driver of his success.
In his article, Mr Nisbet suggested that during times of short-term uncertainty, such as the Brexit negotiations, family investors maintain a “calm, stable hand on the company tiller”, largely unmoved by outside forces, as they think in terms of decades rather than just years.
“Family businesses also tend to make a greater contribution to their local communities, having been active regionally for generations. This often means we tend to employ a certain proportion of our employees locally. The figures bear this up. For example, family firms employ more than 1.2 million people in the North West, almost 40% of total employment – more than any other company type.”
Posing the question of how a greater use of the family-led business model can be encouraged, he claimed that something needed to be done to reverse the fact that family businesses are often less visible in the entrepreneurial community in order to show that bringing in large amounts of external investment is not the only way to build a large business.
Specific policy measures to encourage family businesses would also be welcome, he noted.
“Perhaps the most valuable contribution would be smoothing rules around transfer of ownership. Some 100,000 family businesses transfer ownership to a new generation every year. Ensuring that this process is as smooth, tax efficient and simple as possible would do a lot to encourage families to retain ownership through the generations. Family businesses play a critical role in the economy. I would love to see the government and more entrepreneurs celebrate and champion this model.”