The family firm: How to survive and thrive when mixing business and family

Laura Kavanagh used to think she would never be regarded as anything except "the boss's daughter" if she were to return to her native Co Kilkenny to work in the bus business that her father and uncle run.

Having left home straight after school to do a business degree in Dublin, then a marketing master’s, she was happily working with start-ups in the capital. Yet “there was something missing. You just can’t make change the way you would in a family business.”

JJ Kavanagh & Sons, a coach operator based in Urlingford, was a very traditional business. The drivers dealt with ticket books and cash, and Laura could see what a difference digitalisation would make. Without saying anything to her father, Paul, or uncle JJ, she devised a plan and then asked if she could present it to them one Saturday morning. She wanted to go into the family firm only if she could make a difference and stand on her own two feet.

There was me rocking up and I'm quite small in stature

“I started within a month and it was scary,” says Laura (33), seven years later. She was coming in to implement changes with the introduction of technology, and many of the drivers were aged in their 60s and had known her since she was a baby. “There was me rocking up and I’m quite small in stature.” She felt she was regarded as just a “young wan” with notions in a male-dominated industry – it was JJ Kavanagh & Sons for a reason.

Borrowing or renting toys could be the best play for parents in Ireland

---

‘I was amazed. I was looking at him on stage thinking: Is that my son doing this?’

---

The psychology of climate change

---

No one likes change, she says, and that first year was “very tough”. It sounds as if her blood ties to the owners made it harder, not easier. “I wasn’t really liked a lot of the time,” she says frankly, recalling a session with about 50 staff in a hotel to present her plans. When she invited questions, she says, “I got loads of questions, personal questions, like ‘what are you doing here?’”

There were no interventions from Paul and JJ who, she says, “wanted to see if I could sink or swim, in a tough love sort of way”. She knew that while she had their 100 per cent support, she had to make these plans a reality on her own. “I didn’t sink, which is good, I’m still here.”

She has done more than keep her head above water, having helped to grow the company significantly, been appointed the company's commercial director in 2019 and winning the Rising Star gold medal in the recent Energia Family Business Awards. "It's very personal working in a family business because it's your family," says Laura, who is the oldest of Paul's four children, while JJ has eight children. "Nobody else in my generation has stepped forward – I hope someone else will."

She believes she has earned the respect of staff and enjoys a very close relationship with her father, although business and family matters are kept separate. “I think I am very lucky that when I’m in the boardroom, I don’t take things personal. You could be in a boardroom meeting and absolutely get ripped out of it and then go down and have dinner with him.”

When Covid-19 hit and the company had to close for the first time in its 101-year history, the digital side provided a path out of the crisis. During that five-month hiatus, it was “only myself, Paul and JJ – and a few consultants in with us”, Laura says, coming up with a strategy for reopening the business that has a staff of 250 and runs 230 bus services, as well as coach hire, out of depots in Urlingford, Waterford, Carlow and Nenagh.

Preliminary findings of a University College Cork research project on organisational resilience and family firms in Ireland, based on how businesses responded to the pandemic, suggest that the next generation have had the opportunity to innovate. "Due to the necessity to react and adapt, the next generation were able to introduce new ideas to survive, which in previous times may have been met with some resistance by the senior generations," says the research leader, Dr Linda Murphy, a lecturer at Cork University Business School.

Family members can rally around and help out, even those not formally involved

However, the knowledge and experience of the senior generation of prior crises has also been a key resource in how family firms navigated Covid-19, as many of these companies are multigenerational and have lived through and survived multiple crises, she points out. This is one aspect of how the family is a significant resource for such firms, along with the way “family members can rally around and help out, even those not formally involved”.

That was the experience of Paul Finnegan (52) at E Finnegan & Sons in Co Meath, which won the top award for agri family business in the Energia awards. When they had staff out with Covid-19 or having to isolate as close contacts, at a time of increased demand for their products, extended family members pitched in. It helped that plenty of them live locally.

“There are seven Finnegans on one bend of the road to the next bend of the road,” says Paul – five siblings live on one side and an uncle and a cousin on the other. Two of seven children, Paul and his brother Joe, are directors of the business that specialises in potato growing and pre-cooked products. One of their sisters, Colette, is also very involved and their mother, Marie, too, at 80 years of age. It was their late father, Eddie, an agricultural contractor, who started the business after getting a 13-acre field from his father.

Paul has four children and Joe has three and “they all play their part here”, says Paul. Their cousins too. “What we specify here is that they go off and get some sort of a college education. They must have a minimum of two years’ college before they come back here. Sometimes I see guys come straight from school back home to work and it doesn’t really benefit them I think.”

His eldest son, aged 23, who was farming, is now studying for primary school teaching, while the next in line has just graduated in agricultural science and is actively involved in the business, having set up a successful YouTube channel for the Finnegan’s Farm brand, showing everyday life on the farm. “We don’t push. I always advise them to get down as much as they can,” says Paul. “You’re sowing the seed and then all of a sudden they are taking an interest. They have that information to be able to talk about it – they will make their own decisions in life.”

Paul and Joe are already looking at succession, a rock on which many a family firm flounders. The satirical television drama Succession, in which Logan Roy’s manipulation of the next generation’s sibling rivalries is both hilarious and excruciating to watch, undoubtedly had real-life cases to draw on.

In the course of buying and renting land from farms where siblings couldn’t agree, Paul has seen plenty of very messy situations – “People fall out so much over land,” he says – and it has made the family resolve that it must never happen to the Finnegans. “We will put the succession plans in early so people will know exactly what role they are going to be and what they are going to get, so at least you’ll have no issues then.

“It is tricky enough. Our place has got big and it takes a bit of handling. Some of them might not want to be up to doing some of the jobs. But they will grow into it.”

Survivability of family firms tends not to suffer from problems with product or service but rather with "soft issues", such as conflict and jealousy, says Dr Eric Clinton, director of the Dublin City University National Centre for Family Business. There's emotional baggage and the memory that "you stole my toy when I was eight" can linger.

For non-family employees, hiring of people with the right surname but the wrong credentials is very demotivating. “If a family business has a culture that is not driven on meritocracy, that is not transparent, it can be detrimental to the long-term planned development,” he warns.

The centre runs a course in family business continuity, to help multigenerational firms put structures in place that will give them a good chance of riding through crises. It’s very important to know what cap you’re wearing at any given time, Clinton says, be it as owner, employee or family member.

Family and business don’t actually fit that well together, he adds: “Family is about trust, respect and unity. Business is about development, opportunity growth and somewhat ruthlessness at times. It is too easy to talk about business and very difficult to talk about family dynamics, so a lot of families won’t talk about succession because it’s change.”

However, advantages that family firms have over “faceless” businesses, include a very paternalistic culture, looking after long-standing employees. “It’s almost like a family within a family.”

They also have non-financial criteria for judging their performance, such as the importance of their reputation and status in the community and family bonds. Known as socio-emotional wealth, “it is a stock that is very distinctive to family firms”.

Having families, plural, within a family firm is a strength of the manufacturing and engineering company Combilift in Co Monaghan, which won the overall title of family business of the year.

"Within our organisation we have multiple family members working together – fathers and son, brothers and sisters," says Martin McVicar, co-founder with Robert Moffett of the largest global manufacturer of multidirectional forklifts, trading in 85 countries. He reckons there are up to 30 family units among the 700-strong workforce, which has grown from just two founders and a design engineer at the outset more than two decades ago.

Martin had been working in the Moffett business, owned by Robert, his sister Carol and Jim McAdam, when it was sold in September 1997 to Powerscreen, a public company. Having felt his efforts were always appreciated within that family firm, Martin was worried that if he stayed on after the buy-out, "I would just be another number in a big organisation and that was my catalyst to do something on my own". By March 1998 he and Robert had established Combilift.

The next generation is starting to come in, with the two oldest of Robert’s three sons, Sam and Josh, joining the staff straight after school, although Sam has now set up his own company. Martin also has three sons, all still at secondary school, but they take summer jobs at the family firm. His eldest, Matthew, is already showing that entrepreneurship is in his blood by winning top prize at the student enterprise programme national finals last year for an anti-microbial face mask storage case that he developed.

The transition of Robert’s sons into the business has been seamless, says Martin, who believes if children can grow up with a business, they will have a better knowledge of it. He and his wife purposefully built a house close to the new manufacturing plant so he could walk to work. “I think the advantage for me is that at least my children get a bit more of an understanding of the business when you live close to work.”

We believe if we can recruit people who are local, the more likely they are to stay with the business

Martin knows some business owners prefer their children to go and work in other companies, or at least go to college, but they have no such ground rules. He is a big advocate of apprenticeships, “where you can put learning into practice”, and Combilift has been heavily involved in both local and national apprenticeship schemes. Employees’ children get first preference for coming in for work experience and local schools come in for factory tours.

“Our model is growing our workforce locally. It’s not that we won’t employ somebody from another county, we’re not actively going looking for people from other counties. We believe if we can recruit people who are local, the more likely they are to stay with the business.”

Robert and Martin don’t pursue a friendship outside business. “We don’t go to the pub together; we work as a family business and then we have our personal lives.” The fact that neither of their wives are involved in the company helps, he thinks, to give a good balance.

However, “I would like to think that out of our three boys at least one of them would have a keen interest in being involved in Combilift going forward – one if not all three,” he adds with a chuckle.

Seán Kelly (73) has seen both of his sons and one of his two daughters come into the family firm of artisan butchers, Kelly’s of Newport, Co Mayo. He and his brother Séamus (78) took it over in the 1970s after the death of their father, Dominick, who founded the business 90 years ago.

Both of Seán’s sons went to college and one, Kenneth, spent time working with another butcher, Joe Hayes in Ballinasloe. “It was a great learning experience for him,” says Seán, and he suggests that it was a mistake that his other son, Cormac, didn’t do something similar to see other ways of doing things, “whether they’re right or wrong”. He often regrets that he never worked elsewhere.

“I was dragged up in the butchering trade, as my mother died when I was five. I was the youngest of the four of us, and any place my father was going buying cattle and sheep, I was thrown into the seat.”

Kelly’s is unusual these days to still have its own abattoir but that provides highly valued accountability and traceability. Still operating the shop on Newport’s main street, Seán’s sons have grown the business by becoming suppliers of their award-winning black and white puddings and sausages to supermarkets all over the country. His daughter Shauna runs the next-door Kelly’s Kitchen cafe, which his wife, Kathleen, opened in the 1990s and where family products are staples of the menu.

Seán is extremely “chuffed” that Kelly’s was acclaimed top family food/drink producer in the Energia awards and proud that the family business is set to be carried on through the third generation, thus confounding the adage that “the first generation builds the business, the second makes it a success and the third wrecks it”.

Seán says he has tried to instil in his sons that the business comes first and if ever there are problems between them, “out front has to be right”. Meanwhile, he and Seamus, who has no children, aren’t going anywhere just yet. They may have got slower, he concedes, but they’re still working well together.

Seán has been advised to get in professionals to handle the succession. “I will deal with my accountant and I will deal with my solicitor. It’s not easy but every other family has the same thing and you have to get on with it. Whatever myself and my good wife think is best at the end, we’ll do it.”

As for Laura Kavanagh’s future prospects, while very fulfilled in her work now, she doesn’t feel she is locked into the family business. She would consider moving on “the minute I can’t make change or don’t like it”.

However, she adds, “I don’t think I’ll get what I am getting with someone else’s name over the door” – be that with her great-grandfather’s initials, or her own one day.