By Phil Lane
Phil Lane, financial advisory and consumer partner at Deloitte, looks at owner managed businesses and why a clear strategy is essential to success.
Owner managed businesses (OMBs) continue to be major drivers of the Welsh economy and key contributors to UK productivity, and this includes a number of companies with UK-wide and internationally recognised brands, but perhaps are lesser known as Wales-based OMBs.
Complexity of OMBs
In my role, I often have the opportunity to meet or work with owners to discuss their strategy and plans, and this is always a pleasure. The role of shareholder, director and family member often overlap and, therefore, ensuring there is an aligned strategy from a commercial, tax and ownership / value creation perspective, which is also consistent with trends in the underlying market, is essential.
A private company’s success is built over generations, which can create additional complexities. They precariously balance the interests of the family and the business itself, and a combination of a robust growth strategy in conjunction with a carefully thought-out succession plan will support these businesses to thrive for generations.
Navigating the pandemic
Whilst the pandemic has challenged some businesses, it has created opportunity too and many OMBs have been able to flex and continue to grow in the virtual world.
OMBs with a sound strategy have been able to embrace new ways of agile working and we have seen the acceleration of digitisation across a broad range of industries over the past 12 months, especially online and direct to consumer retail.
Social distancing restrictions have created new challenges and every business I have met in the last 12 months has been impacted by COVID, both in a positive and negative way, but it will be interesting to see which changes businesses have adopted during the pandemic will remain when life returns to ‘normal’.
The effects of Brexit and the fallout of trade restrictions appear to have taken a backseat amidst the pandemic, but this too has created challenges and opportunities.
Businesses are still working through how they navigate exporting to certain countries and addressing any related impact on their supply chain particularly in respect of and new restrictions in place and the delays it brings with them. OMBs that incorporated Brexit planning into their business strategy are continuing to successfully trade with EU countries, along with taking advantage of new global market opportunities.
Strategy for growth
The last 12 months have demonstrated a need for OMBs to focus on having a resilient business model which can be rapidly adapted to changing conditions. The strength of these businesses is testament to the adoption and adaptation of a strategy which incorporates daily structures and operational procedures, but more importantly, has been executed well.
These are themes that my colleagues and I outlined for businesses in our framework on Emerging into a post-lockdown world to help them navigate the range of challenges and opportunities the new normal is presenting many organisations such as OMBs.
There is much to be learned from the world we live in today, but one lesson we already knew is that without a clear strategy for growth, including risk planning, a business is more likely to fall foul of the changing economy rather than ride the wave and come out the other side.