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How we avoid problems in our family business

Family businesses represent the most common business ownership model, and yet few survive beyond one generation. Rachel Miller talks to thriving family firm, Hobbs House Bakery, about the secrets behind its success

In many ways, family businesses are the unsung heroes of the entrepreneurial world. Resilient, hard-working and trusted by their customers, there are more than three million family firms in the UK - from corner shops to the likes of Dyson and Warburtons.

According to the Institute for Family Business (IFB), family firms account for nearly 90% of UK private sector businesses, providing more than 12.2 million jobs and generating revenues of £1.4 trillion. The family business is the most common business ownership model.

Loyalty, dedication, a strong vision and clear values often form the basis of a highly successful family firm. But these businesses also have distinct challenges - in particular around leadership and succession planning.

According to the Family Firm Institute, 70% of family businesses will not survive into the second generation, and 90% will not make it to the third generation.

But many firms do achieve impressive longevity. So what are the secrets of these successful family businesses?

Hobbs House Bakery is a thriving family business based in the Cotswolds, headed up by managing director Trevor Herbert. The Hobbs House brand was established in the 1980s, but baking bread has been in the Herbert family DNA for five generations. Indeed, the bakery uses a sourdough culture that is 63 years old.

Humble beginnings

The Herberts started baking in the 1920s, explains Trevor. "My grandmother was a baker's daughter. Then my grandfather, who was originally a blacksmith, turned his smithy into a bakery."

The Herbert family went on to run bakeries in and around Bristol. Eventually, Hobbs House was established when Trevor's father bought a butcher's shop in Chipping Sodbury called Stewart Hobbs, and converted it into a bakery. That became the first Hobbs House Bakery store.

Today, there are four stores in the Cotswolds, two in Bristol, a Hobbs House butchers and a cooking school.

"If we have learned anything from history, it's that the business never stays the same," says Trevor. "I find it hard to think of the business as 'successful' because there are always new challenges. It's not a case of 'job done'. The marketplace is always evolving."

Avoiding resentment

Hobbs House is very much a family concern. Trevor has five sons. Three of them - George, Tom and Henry - manage wholesale, operations and retail in the business respectively.

In addition, Tom's wife Anna and Henry's wife Jess play key roles in marketing and retail. Trevor's brother-in-law, Sam Wells, is purchasing director.

"When I was young, I was given no choice - I left school at 15 and went into the bakery," says Trevor. "But I was always very grateful that I really wanted to do it. People are often forced into family businesses and suffer a lifetime of resentment. So I didn't want my sons to work in the business unless they really wanted to."

In fact, two of Trevor's sons are not currently involved in Hobbs House. And Tom and Henry have another string to their bow: fame - they are TV's Fabulous Baker Brothers.

Recruiting from outside the family

"You need a healthy family dynamic," says Trevor. "Fun is also important, you must enjoy coming to work. But at the same time, everyone has to be accountable and accept responsibility for the area they've been given."

However, it's not just the family that makes Hobbs House what it is. "I think, as employers, our great strength is how well we work with people who aren't family," says Trevor.

Many employees stay with the firm for years. "The irony is that there are three generations of some families working for us," says Trevor.

"We believe in training and our apprenticeship scheme is integral to our success," he explains. "We want people to feel engaged and not limited because it's a family business. And the right person for a job may not be a family member - you have to do what's right for the business first and foremost."

Hobbs House also has a non-executive director from outside the family. "This has been really healthy for the business," says Trevor. "They've been able to offer objective advice and they have helped us to step back from the day-to-day running to focus on the future."

Focusing on the brand

Perhaps the biggest challenge for any family business is agreeing on the way forward. "It can be hard to deal with different opinions within the family," admits Trevor. "One of the biggest problems we have is that we actually have too many ideas."

It's all about focus, he says. "Sometimes we have to bring it back and say is that what we should be focusing on, is this good for the brand? Otherwise things can get out of kilter."

On the flipside, families need to learn to switch off from the business when they are not working. "My tendency is to think business and talk business all the time, and that can be counter-productive. You need boundaries," says Trevor.

Looking to the future

So what's next for Hobbs House Bakery? "We are looking at franchising as a way to grow," says Trevor.

But Trevor's not ready to hang up his hat just yet. "I don't think it's healthy to have really old people in the business," he says. "But I may create the title of chairman so I still have a role in the future!"

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