Families can be difficult to manage at the best of times, so imagine going into business with them.
Today marks National Family Business Day and a report published yesterday by KPMG and Family Business Australia found a family’s shared values, strategic planning and committed workforce made them more resilient to market conditions.
However, the report also found some major threats to the long-term success of a business, including a failure to adequately succession plan, maintaining family control and balancing family and business issues.
Kennards Hire was founded in 1948 by Walter Kennard, who was a merchant selling hardware in Bathurst at the time.
The business began when a customer came in asking to borrow a cement mixer because he didn’t want to have to buy one and Kennard realised there was an opportunity to run an equipment hiring business.
Now, Kennards Hire rents a variety of equipment to professionals, has 142 stores across Australia and New Zealand, and has survived multiple economic downturns.
The business is now in the hands of Walter’s son Andrew Kennard, with his four children currently preparing to be the next generation of business leaders.
SmartCompany spoke to Angus Kennard, the son of Andrew Kennard and the head of Kennards Hire’s assets and procurement division, about being part of a family business and the best ways to navigate the complex environment.
Establishing clear family values has a positive impact upon the operation of the business.
Kennard discovered this firsthand 10 years ago after his father joined Family Business Australia while at a conference in Tasmania.
“From this experience we learnt a lot of things about running the business and we went on to establish our family values,” he says.
“It took about two years to agree what they were, and working out how to word them in the right way was a challenge, but we did that as a family and it helped us bond.”
Kennard says it’s also important to have a written document to help enact family governance structures.
“We’ve devised a family charter, which is like a constitution, and I think we’re up to version eight now,” he says.
“It’s really clear and it changes each year or so and sets out how you get into the business, how you get out of the business and it allows us to be guided.”
Kennard says the charter came about naturally after the values were established.
“The charter is basically all about working in the business and how that works. However, you do have real-life scenarios at times to deal with and it’s hard to make a rule for everything, so you have to be adaptable,” he says.
Kennard says the success of a family business ultimately comes down to the strength of the family unit.
“A lot of family businesses which have failed have done so because the family has failed,” he says.
“Each year we have a family retreat which involves a bit of work and a bit of play, but it really works on the bond of the family. This is particularly important given the next generation of owners will be cousins working with cousins and this will be more of a challenge.”
Freedom to choose
While Kennard grew up working in the business, all the siblings were encouraged to make their own career choices.
“I wasn’t totally sure if I would get into the business. I knew I liked and had an interest in equipment, but I guess the thing which drew me in was I had the opportunity to come in and work under someone in the business that had been there for a very long time,” he says.
“After school we were encouraged to do our own thing. My sister is on the board of Kennards and my other brother Cam runs the Kennards property business, but my other brother Rory owns his own business.”
Succession planning is fundamental to the long-term success of a small business, but KPMG’s report found 40% of chief executives had no retirement plan and a third of businesses intending to enact succession in the next five years had no plan for how ownership would be transferred.
At Kennards Hire, the siblings are already preparing to lead the company.
“Now we have next generation meetings where myself and my three siblings get together and look at what’s happening in the business,” Kennard says.
“We’re looking to step up as a group, so we discuss any problems we may be having. We are the next generation so at a point in time we’ll be totally responsible and rather than having that as a big shock, we’re preparing now.”