Family Business
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Paspaley pearl farm off the North-West coast of Western Australia ReportSPECIAL GROWING WEALTH ✈ 92 FAMILY BUSINEss / THREE ICONIC AUSTRALiaN DYNasTIES ✈ 105 PRIVatE BanKING / KEY LENDERS DYNASTIES FOR THE big spENDERS SET THEIR SOME OF THE WORLD’S greatest family companies In those companies that thrive there is typically an intense passion started out at a kitchen table, in the garage, maybe even on the back and pride. Above all, there is sacrifice, not only by the founders, but of an envelope, and some now straddle the globe: Ford and Colgate, their families – willing or otherwise. “There is a deep sense of owner- Barclays Bank, Wal-Mart, Samsung and Aldi all began as family ship, because if the business fails, the family home is on the line,” COURSE businesses. In Australia, family endeavour was the genesis for some says Peter Strong, executive director of the Council of Small Business of our best-known companies: Westfield, Foster’s, Arnott’s and most of Australia, which reaches some 500,000 association members. major retailers, including Coles and David Jones. The businesses “If the business does go under, often relationships – and health – go Managing a family business is rarely child’s play. don’t always stay in family hands, or even in Australia – and on aver- with it. There is so much angst because of the enormous pressure Three dynastic business heads talk candidly about age don’t succeed much beyond a generation. when things go wrong.” On the upside, you get to call the shots and Some heirs cultivate their inheritance. Rupert Murdoch built a that’s a major driver, he believes. the opportunities and challenges, the pressures media empire from one small newspaper, employing three of his That is obviously an attraction for many, if statistics from Family and pleasures of keeping it all in the family. children, to date. Meanwhile, the scion of another media dynasty, Business Australia are a guide – family businesses account for Warwick Fairfax Junior, did the reverse. He took over a huge busi- around 70 per cent of all Australian businesses, employing 50 per ness and blew it to bits, chiefly through bad advice, amateurism and cent of the workforce. But is being your own boss enough to balance very bad timing. Family businesses can also crumble due to lack of the downsides? Maybe not in the long term, according to research WORDS DEBORAH LIGHT interest or internal battles – the like of which we see today in the conducted in 2011 by KPMG, which found 60 per cent of business bitter conflict among Lang Hancock’s successors. owners would consider selling out if they were made an offer. 92 QANTAS JULY 2013 JULy 2013 QANTAS 93 The minority, just above 40 per cent, intended to hand it on to family So is it possible to handle the pressures, juggle the expectations profitably, but also to keep it in Australia.’” This sense of duty spreads Hat tricks: Stephen Keir IV (opposite page) and his family members. So make way for an avalanche. With the average age of a and stay sane and in the black? The heirs of three iconic Australian beyond his locale. “Australians have passion for our brand names. company’s Akubra hat factory in Kempsey, New South Wales family business owner 55 years (according to the KPMG report) and businesses talk about being bequeathed a corporate legacy. My father was passionate about the brand, as my sisters and I are. some 80 per cent planning to retire within 10 years, there’s going to You feel like custodians of one of the last iconic brand names in says, “It’s a big plus because they have quite a different perspective.” be a radical change in the landscape. Among many ramifications, it Australia. There’s a fair bit of pressure in that.” He’s laughing, but He also values the input of others he has met through Family Business means people such as Don Manifold will be busier over the next Stephen Keir IV admits he sometimes feels the strain. “A lot of Australian brands Australia. “I’ve talked to people in exactly the same position as me decade. Working in mergers and acquisitions for accounting firm CHaiRMAN AKUBRA have gone overseas [among them: Speedo, Vegemite, Foster’s and and you can offload about things such as the costs of doing business. Ernst & Young, he’s typically called in when owners have made the Arnott’s]. You hear people talk about Akubra and it hits you what I’m not on my own.” call to sell a business. “It’s a challenging and stressful time. The vast When Stephen Keir looks at his office wall, three former Stephen your responsibilities are. The name has been here for more than 100 Since their father’s death last year, Keir says of himself and his majority have faced the decision: ‘Do I hand it on to my children or Keirs look back at him. “Often I look to the left and think, ‘Oh man, years and there’s a lot of pride in it.” sisters, “We’re all just finding our feet. Dad had a pretty good succes- do I sell it?’ Do the kids want the business anyway? Often, the answer I’ve got a bit of responsibility here.’” He feels their gaze as he weighs In recent years, it’s been challenging. Like many other employers, sion plan in place and we’re adhering to his wants. We’re trying to get is no. They’d rather be having a glass of wine in Pitt Street [Sydney] decisions, not only for the iconic Akubra hat brand his predecessors Akubra is feeling the pain of doing business in a climate of rising that balance, making sure that everyone’s open and honest and we than [working] out at the family factory in Parramatta.” established more than a century ago, but for Kempsey, the country labour and power costs – but there’s another pressure peculiar to this all know what’s going on so we’re all on the same page – because once Either way, don’t delay. “You should be preparing for sale for two town on the NSW north coast where his company is a major employer endeavour: the cost of the chief raw material – rabbit skins – which you lose any trust, you’re struggling from then on.” Of course, there or three years beforehand,” Manifold advises, “driving earnings, with about 85 people on the payroll, turning out 160,000 hats a year spradakis has rocketed by 125 per cent in the past three years due chiefly to are occasional strains. “There wouldn’t be a family business out there a working on management structure, looking at the balance sheet and for $160 or so each. It’s also where Keir has seen firsthand what the calicivirus disease that has devastated the Australian rabbit that wouldn’t have moments when there’s tension because someone ianni tax arrangements.” Likewise, if you choose to hand it over to the kids. happens when a brand decamps. “After King Gee was bought by [a y population. The rabbits may be coming back, but the shooters never doesn’t agree with what someone else is doing. It’s good for you. I’ve “Those discussions should happen when the patriarch or matriarch US investor], within 12 months they were being made somewhere returned in sufficient numbers. Now Keir is forced to import the furs made mistakes in my time and you need someone to tell you you’re is in their early 50s rather than older, when there is less ability to else and 65 people were out of a job. You notice that in a small town. from such places as Kiev in the Ukraine. not always right.” Their father also ensured the Keir siblings didn’t communicate openly about the transition and who’s getting what.” Our employees have got mortgages and their own lives to lead. You On his board, along with himself and sisters Stacey and Nicola, are need to tap into the company’s coffers for funds by establishing an But that’s not always easy, he says, “There can only be one CEO.” sit back and think, ‘OK, my job is to keep this company running photography: two longstanding independent directors, of whose contribution Keir investment fund two decades ago. “If we ever need money to build 94 QANTAS JULY 2013 JULy 2013 QANTAS 95 FaMILY BUSINEss SPECIAL REPORT I TOOK SUCH PRIDE IN WHAT MY FATHER HAD ACHIEVED. HE PUT EVERYTHING INTO THAT VISION a new factory, we’ve got the money [set] aside. That was the plan – to keep Akubra safe.” Asked if he ever felt the burden of destiny growing up, Keir remembers his father sitting down with him when he was 17. “I didn’t know what I wanted to do and he said there was no pressure to come into the business, but it’s there if you want.” Keir did an accounting course, played rugby union and stretched a gap year into two. “Then I went home and haven’t looked back. It’s been hard. I’ve been there 23 years, but I’ve spent 15 years on the factory floor.” He’s had a similar chat to his Marilynne Paspaley, a director of own son, another Stephen, who is 16 Paspaley Pearls; jewellery atelier workshop, Darwin (left) and – as he was – unsure what he wants to do. The elder of Keir’s two Nicholas Paspaley into the family pearling daughters shows “a fair bit of inter- business.