Family-run businesses are thought to be the oldest form of business organisation and are arguably well suited to the childcare industry, with the structure bringing a strong, long-term commitment and a natural link between families and childcare.
There are numerous combinations of family-run businesses including husbands and wives, parents and children, siblings, extended families and multiple generations, all of which can be found in the childcare sector.
While family-controlled enterprises play a powerful role in the world economy - with recognisable family businesses including Samsung, Toyota and Gucci - they make up a large part of the UK childcare sector too.
Andrew Steen, managing director of business brokers Redwoods Dowling Kerr, estimates that a high percentage of nurseries are owned and run by families, with the majority of single-site nurseries - which make up 75-80 per cent of the childcare market - being family run. The actual market percentage may be higher than this because some of the nursery chains are also owned and run by families.
WORKING IT OUT TOGETHER
Cass Business School's Professor Ajay Bhalla, who specialises in strategic decision making in familyand employee-owned businesses, believes that family enterprises have an advantage where businesses typically require a bond between employees and customers, as is the case in nurseries.
'They take a much more active and personal approach because there is a direct inclusion of family in the business,' he explains. 'Most family-owned businesses do not have a short-term hire-and-fire ethos but have a much longer relationship with staff. This relationship extends beyond five o'clock and, as a result of this, staff will go a step ahead when it comes to the call of duty to their employer, such as staying late.
'Parents are also more likely to form a bond with a nursery business where a family is involved with the day-to-day running because they are more likely to be able to demonstrate continuity of care to parents.'
Sarah Carroll, who with her mother opened Little Feet Day Nursery in Bolton in February, deliberately promotes the business as family run. The family aspect extends to the wider business, with Ms Carroll's father working as the caretaker, her grandmother as the cook and her niece and nephew attending the setting.
'We see it as a selling point for parents. It gives the impression of being a closer and more caring team. I think knowing that family money is at stake also makes you harder working and shows even more commitment to the business,' she says.
It is thought that there is more incentive to work together and keep going when times get tough if it is a family business at risk, rather than a company belonging to someone with no personal connection, because there is a sense of loyalty.
Professor Bhalla finds that most family owned businesses also have a long-term approach and that rather than look at performance on six-month or yearly terms, as many corporate businesses do, they measure over decades or generations, which can bring greater quality.
'Family businesses are not paying dividends to investors and tend to reinvest in the business more candidly,' he adds.
'With the investment horizon and pay back horizon being longer, they are more sustainable businesses. Bankruptcy rates are much lower in family owned businesses.'
QUICK DECISIONS
There is often less bureaucracy in family businesses, which enables them to make strategic decisions on a 'day in day out' basis, says Mr Steen, whereas under a corporate structure a slower 'decision tree' or escalation process would be in place.
Natasha Kirby (pictured), who along with her husband owns Boys and Girls Nursery group based in Hertfordshire, agrees. 'There are no chains of managers, area managers or heads of department - just a yes or no from one of us and the decision is made,' she says.
The owners of Boys and Girls are due to open a fourth nursery this summer and are proud to know each of their 110 staff by name, helped by an open door communication policy.
Ms Kirby and her husband have demarcated roles within the nursery group. While she has responsibility for the care side of the nurseries, her husband, who has a financial background, deals with the business and development aspects.
They have recently secured finance for their new nursery and believe that being a family run business worked in their favour. 'The bank was positive about our structure, core team, hands on "get it done" approach and commitment to the sector,' she says.
While less bureaucracy is a positive factor, Mr Steen warns that it can be outweighed by family differences and personality clashes, depending on the family structure. 'Generally the most successful ones are where one member of the family is the most dominant in both the business and the family tree,' he says.
COPING WITH PRESSURES
Janis Crutch, joint owner of Little Monkey's Nursery in Windsor with her two daughters, admits that they have had their 'moments' when it comes to disagreements about their two settings, but they have never argued about anything major. 'Now and again there's a family squabble, but we're careful to keep it away from the nursery,' she says. 'It is nice to work with my daughters because overall we get on well but it can be quite hard not to be "mum" when it comes to the business.
'We all bring something different to the nursery. My oldest daughter does the business side; she was previously in banking. I'm in charge of all the food and my youngest daughter does the marketing and helps the nursery managers. All three of us are hands-on and work across both sites. I think being a family business brings more stability. We were never in it for the money, but to work together at something we enjoy doing.'
Overall, staff appear to like working for family run businesses because they are often treated like extended family, but Professor Bhalla argues that these types of business may not attract employees who want to rise up the career ladder. Employees may not see progression after years of service and feel 'stifled', unless the family management team wants to take a step back or open more nurseries, he says.
While growth is often much more stable in a family owned business in comparison to a corporate one, Professor Bhalla finds that they can be more risk averse and that this can stop them from evolving.
RICH REWARDS
The pressure of a shared income and the difficulty of switching off from work when at home tend to be the main negatives for those involved in family-run nurseries. 'I think a corporate business would be easier to split between work and home, but when it's family run it's hard, especially as it's all our livelihoods,' says Ms Crutch.
Johnny Watts, who owns Little Owls Day Nursery in Toftwood, Norfolk, with his wife, agrees, 'It's our livelihood and we never truly switch off from it; even when we're walking the dog at 7am we're talking about the nursery. I'm told the golden rule when working with family is from 6pm onwards and on Sundays to never talk work, but that's not something we've felt the need to enforce yet.'
After running nurseries together for 15 years, they can play off each other's strengths. 'We have got working together off to a fine art and know each other inside out. They say opposites attract and certainly if we were the same type of people we would not work so well together,' he says. 'I'd not change anything. As a family business people see just how passionate we are and what we are prepared to invest.'
More information
- Cass, www.cass.city.ac.uk
- Redwoods Dowling Kerr, www.redwoodsdk.com
FAMILY AFFAIRS: THE PROS
'We actively promote our nursery as a family-owned and family-run business because of the warmth and love this portrays and which we offer. It's an ideal fit with the caring nature of childcare and it's through care for our daughter that our 50-place nursery was established 17 years ago,' says Ken McArthur, owner of Polly Anna's Nursery, York.
'My wife and I had a hotel and restaurant, but the youngest of our four children had started university and we were looking for a change. Our only daughter, Helen, was a qualified nursery nurse and struggling to get a full-time job. The Conservative party had started childcare vouchers and we realised there was growth in the childcare sector.
'Opening our own nursery was an ideal fit for my business skills and Helen's childcare expertise. My wife also qualified to work in the nursery. Unfortunately she's retired because of ill health, but she still takes an active interest, as do our sons.
'Helen and I are a double act because we know each other so intimately. Our skill sets are different so we don't interfere with each other's roles, but we do challenge each other. It's always for the benefit of the business because we've got no axe to grind.
'People say a negative of working with family is you can't escape, but I don't agree. The amount of good policy decisions we've made around the dining table is incredible. You can be reflective in a relaxed environment over a glass of wine. It's spontaneous rather than arranging a business meeting with colleagues.
'Parents like that we're a family business. They see me as a grandad figure and Helen has since had two children who attended the nursery, which is a selling point. Staff say that they feel part of our family and we have a low staff turnover.
'When the business has struggled we've shared worries among the wider family who are perhaps more honest than business colleagues. There is longevity in a family business; we're building a legacy for our family. I'll still be going into the nursery with my Zimmer frame.'
FAMILY AFFAIRS: THE CONS
'I opened a 24-place day nursery with my husband. We ran the business downstairs and lived upstairs with our three sons,' says a nursery owner who prefers to remain anonymous. 'This was ideal because managing a nursery involves long hours and I wanted to see my children and be there when they went to school and came home.
'We extended the nursery and then opened other premises, but unfortunately it wasn't all happy families and after nine years we divorced. Working together wasn't totally to blame, but it did contribute. I was trained in childcare and management and I think my ex-husband found it very hard that I would make all the decisions.
'We also didn't successfully separate home and work. We were often at different sites during the day and would then talk business at night. There were increasingly more disagreements and I felt the atmosphere started to go into the business.
'We should have had clear lines right from the start with demarcated roles - such as the care and the administration. I feel both partners have got to bring a skill to the business and then I think it works well.
'I retained a nursery in the divorce settlement. My niece and son both work at the nursery now, so I haven't been totally put off from working with family; I can completely trust them. They report to my deputy so that there isn't preferential treatment, but sometimes staff have forgotten he's my son and had a whinge about me, which he finds difficult. Occasionally we'll chat about work at home, but we tend to leave business talk for working hours.
'Parents certainly like family-run nurseries and I feel the nursery has retained a strong family ethos.'
