More science than magic

Oct 18 2006 By Lucy Armstrong, Chief Executive Of The Alchemists, The Journal

Congratulations to the directors of this year's Fastest 50 companies.

It is encouraging to see that there is a spread of different types of firms operating across a range of industry sectors. This is good news for the region and for its economy.

Interestingly a significant number of the Fastest 50 firms are family businesses. The family business sector in the UK is estimated to account for over two thirds of all companies and represents approximately half the UK's private economic activity and employment.

Over the past year The Alchemists has been working with a growing number of family firms, including some listed in this year's Fastest 50.

Family businesses face some specific challenges. Only a very small proportion of family businesses survive into the third generation. And this can be an area where The Alchemists make a difference.

There is an immediate tension between the two concepts of family and business, the former being nurturing and supportive, the latter competitive and challenging. The passion and enthusiasm that brings success to the founder and his or her generation can take a business so far. And then it reaches a critical point - how does the business maintain or accelerate the growth and manage the succession from one generation to the next.

The growth and transition from a family business to a broader corporate entity can be a painful one, but one which can be eased through planning and sensitive communication.

Often The Alchemists are brought in by family companies to tackle a specific strategic problem. The solution to the problem frequently raises the issues facing the family in the business as well.

It can involve introducing new structures and ways of working which have the additional benefit of focusing on the role of the individual family members and how they can bring value to the business.

The Alchemists focus exclusively on high growth businesses - typically those with the potential to double their value each year for the next three years. They work with businesses to accelerate this rate of growth and often achieve a step change in their development.

They match successful, experienced business people to work with senior managers of these companies to create a plan to accelerate the business's growth and then provide appropriate support to achieve their objectives.

In the case of family businesses the support often centres on nurturing the intertwined family and business relationships as family members move to become shareholders rather than directors. The Alchemist will work with family members as they make the transition from having executive to non-executive responsibilities.

When the transition works well the family and the business both benefit. The family relationships are not soured and the business is strengthened and supported by the skills and experience of the non-executive directors.

And the strengthened business is able to make that step change and maintain the momentum that has launched it into the Fastest 50. And that can only benefit the region, too.