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Family ties

18 September 2009 by
Family ties

Noel and Liam Gallagher's feud resulted in the break-up of Oasis, but the hospitality industry seems to thrive on family-run firms. Rosalind Mullen reports on the relative issue.

For some families, running a restaurant, hotel, pub or contract catering business together is a brilliant way of combining business with private life.

Brothers and fine-dining chefs Chris and Jeff Galvin obviously see it as the way forward. The duo behind Galvin Bistrot de Luxe and Galvin at Windows are opening their third restaurant, Galvin La Chapelle, in the City of London later this year and bringing more family members on board. Their brother David will be in charge of ingredient sourcing, while Chris's wife Sara will act as patron and host and his son Emile will be operations manager.

For Sara, working with Chris is likely to give a boost to their marriage. "Chris and I have been married for 15 years and I only used to see him at the weekends. Now, with Galvin La Chapelle, I am looking forward to a shared experience," she says.

KEEPING IT PROFESSIONAL

It sounds idyllic, yet if a family business goes wrong, both your livelihood and your relationship could be on the line. One of the most high-profile bust-ups was Rick Stein leaving Jill, his wife and business partner of 27 years, in 2002. In the face of media reports charting the break-up, the couple split the multimillion-pound business in Padstow, Cornwall, 50/50.

So how do you manage the pressures of working together? For the Galvins, the unwritten rule is not to take any disagreement over a business decision personally.

"It's important that if somebody's idea is questioned at work, it should not be taken as a personal affront," says Sara. "The key is that we are good communicators. You need that on any team."

In the four years since the Galvins opened their first restaurant, the business has had to become more structured and, Sara points out, with the third venture it will have to become even more so. As a result, they now have a head office and monthly meetings.

"It is tempting to discuss business at home with Chris, which isn't fair to Jeff, so the business has become more formal," says Sara. "As the company grows you can't mention something over a cup of coffee any more. You need to keep it tight and professional."

But how do Chris and Jeff work together as chefs?

"Both Chris and Jeff are non-confrontational," explains Sara. "They work on a rota so don't see each other, but if they do work together, I've noticed Chris naturally assumes the lead as the eldest and Jeff falls in."

GENERATION GAIN

While not all families could work together, there are ways of avoiding tensions. One of the most successful family-run hotel and restaurant companies is Milsom Group, which the late Gerald Milsom started 57 years ago. Each of his sons has been involved with the business at some time, but it is now run by son Paul, as managing director.

Having shared an office with his father for 18 years, Paul has clear views about how family members should work together.

"When you work with your family, it's helpful if people specialise so that everyone does their bit," he says.

"When things are good, a family business is the best environment to work in. The difficulty is that when things aren't going well there is then the additional stress of making decisions that affect the people you love most."

But it can get complicated if more than two members are involved - and even more complicated if there are different generations.

"Our business was always easiest when it was just me and my dad or me and my brother. When there were three of us, one person was always isolated in the decision-making. And where there are also siblings, wives and parents it is quite a challenge. For us it got simpler because the business evolved into my wife, Geraldine, and me," says Paul.

Both husband and wife have clearly defined roles. Geraldine does the interior design for the business, which Paul says is much more cost-efficient than outsourcing.

BUSINESS BENEFITS

So what are the other benefits of running a family business? For Paul, it is the fact you're building something for the future together.

"People tend to look at an exit strategy instead of building it up for the next generation. I would love to see my business pass to my children," says Paul.

Running a pub has particular pressures as most licensees are living above the business. Chris and Rosie Robinson, who run the Stephan Langton pub at Abinger Common, Surrey, say they went into working together with their eyes wide open. But they admit that it was still a steep learning curve - especially as they have a young family.

However, like the Milsoms and the Galvins, the couple love working together as a family. They make the partnership work by taking on clearly defined roles. The fact they have separate areas of responsibility means staff are not confused about who they report to.

"It's important when running a pub as a couple that you know who is in charge of what," says Rosie. "We have developed enormous respect for each other over the past three years. We have developed our key skills and are able to cover each other. We have to be unselfish."

EXIT STRATEGIES

For couples who run the business together, the prospect of splitting up is a sensitive area. The Robinsons admit they have thought about getting legal advice on how to sort out their business affairs should they split, but discarded it. "It has not occurred to us that we won't be together," says Rosie. "And we will always want to work in this industry."

The Galvins find it equally unlikely that they would ever disband, but their arrangement has become more formal out of necessity. "There is a third partner who is behind the business and, as a result, they have now drawn up a letter of agreement on how the shares would be divided should one party leave," explains Sara.

"If it happened it wouldn't be nasty. Chris and Jeff love what they do and their temperaments are not like that. Anyway, both always said they wanted to create something long-standing."

Paul Milsom is unequivocal, though: "You should get legal advice," he counsels.

WHAT THE EXPERT SAYS: LEGAL CONSIDERATIONS FOR MAINTAINING THE FAMILY FORTUNE

Victoria Symons, a partner at law firm Boodle Hatfield, draws attention to some of the issues you may want to address, depending on the type of business you run

Tax planning for current and future generations

One size does not necessarily fit all, and with frequent changes in taxation rules it is important to keep this under regular review.

Ownership

Whether considering generational issues, or protecting against transfers of interest on divorce or death, ownership will have to be addressed (in the case of a limited company through its articles and shareholders' agreement). Typically, shares in limited companies are divided into "family shares" and "non family shares", with restrictions placed on transfer to ensure that ownership remains within the family.

Family charters

Many long-established family businesses adopt a family charter. This is usually a non-binding document that addresses and expresses the views of the family generations on a wide range of issues, from ownership and control to corporate social responsibility.

Control

Should non-family employees be able to hold senior positions or should these be reserved for the family? How should junior family members be encouraged and brought on by the business? What incentives would engage non-family staff?

Inheritance issues

How to ensure that family members who choose not to participate in the business are adequately catered for (and vice versa).

TOP TIPS FOR WORKING TOGETHER

â- Depending on the type of business you run, take at least one night off a week

â- Be sure of what your roles are - there is no time to consult on everything

â- Make sure your staff know who they report to

â- Know each other's strengths and weaknesses

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Jacobs Media Group is honoured to be the recipient of the 2020 Queen's Award for Enterprise.

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