Learning from family enterprise

Steve Morris FRSA grew up in a family business. He argues that the model could provide some answers as we look at the future of capitalism.

The experience of growing up in a family business shaped my life, although I didn’t realise it at the time. I learned so much about values from my parents; in our little shop we had time to listen to people and everyone was welcome. We treated people fairly and our reputation for honesty mattered to us. My parents weren’t in debt; they paid tax and we were at the heart of our community. Our business was about much more than making a profit and we were in it for the long term.

Having just finished writing a book about this, I realise that these hallmarks of my family’s business, actually run through all the best family enterprises. Indeed, it strikes me that the template of family business might be an answer to capitalism in the raw.

Much has been written about the perils of neoliberalism and the idea that a deal can be down between business and society at large, where markets are unfettered and the casualties are picked up by the state. This is of course a caricature but I know many are uneasy about businesses that are all about short-termism and profit. As our high streets collapse under the weight of corporate debt and other bad choices, we need to ask deeper questions about the future shape of our businesses and communities. Many businesses that started out as family enterprise with clear values have become just like any other. If a business becomes detached from that original benevolent family ethos then it can be all at sea very quickly.

But does an increase in scale inevitably lead to a distance from original values? Perhaps it is because family businesses don’t have shareholders – who on the whole are looking for quicker returns – that they can take their time and continue to be who they are.

In recent decades executive pay has spiralled and there is much disquiet about the way corporations behave and do or don’t pay tax. But there is little discussion of the powerful contribution that the ethos and actuality of the family firm might add. It is a gap that surely needs filling. At the very least the family perspective might give us a way of seeing how to do trade and how to do capitalism in its advanced form.

The contribution of family enterprise to UK Plc is truly astounding. According to the Institute for Family Business, two-thirds of UK businesses are family-owned, that’s 4.8 million in total. Overall, they employ 12.2 million people. And yet despite this, we rarely hear spokespeople from this sector in the media and we don’t get much of the flavour they add to national life. Why is this?

My book is both an exploration of the verities of family business and a wondering about what we can learn from them. I am a vicar, but before I was a vicar, I was an entrepreneur. I began to realise that the very best churches had an odd way if mirroring the very best family businesses. They were places of welcome, where people could enjoy and foster their talents and where the aim was usually to stay in it for the long-term.

Family businesses are not all plain-sailing. Succession is an issue. Nepotism is a constant worry. But despite all the problems they do offer an alternative. It has sometimes been suggested that we emulate the German model of family enterprise (known as Mittelstand). As Germany rebuilt after the second world war small and medium-sized, mainly manufacturing family business, dominated the economy, supported by favourable tax regimes. But this model has proved hard to export. Perhaps it might just be better to celebrate the benefits of our home-grown ways. My temptation is to be optimistic about what family business has to offer. As high street chains collapse could innovative family business – helped by a business rates amnesty – reclaim the high street? Families are creative and the power of the family business might just add fresh colour where drab and dead zombie chains once roamed.

I guess that very few vicars worked in a family business. Probably very few politicians did either. For me, the family business helped me to listen to people and see the heroism of everyday life. I saw the amazing dedication and sacrifices my parents made to keep the thing going and I learned how creative business can be, especially without red-tape.

Eventually we were put out of business by a superstore that opened just down the road. As I drive past our old shop it still makes me sad.

Lessons from Family Business, Steven Morris, The Centre for Enterprise, markets and Ethics, www.ceme.org