Keep it running in the family

An MBA helped Vindra Naipaul expand her father's retail business. Diana Hinds reports

As a girl, Vindra Naipaul had no intention whatsoever of going into her father's supermarket business in Trinidad. "I felt it was never my style, it was always chaotic," she says. Instead, she went to work for Scotiabank, where she was corporate operations manager, and in 1994, with the bank's support, she embarked on an MBA, through distance learning, with Henley Management College. "The MBA led to so much more creative thinking," says Naipaul. "It really opened my mind to becoming an entrepreneur."

Several years later, when her father's retail business was poised to open a new branch in a high-profile shopping mall, she found herself no longer so resistant to the idea of getting involved. She teamed up with her father, becoming the firm's chief executive, while he worked as senior auditor. "I came back into the family business as a professional," she says. "The first thing I did was to change the structure. I created a board of directors, who no longer interfered in the day-to-day operation, allowing me to take full rein in providing the strategic direction of the company."

Naipaul brought in training for the staff and built up their motivation. She introduced in-store cameras and point-of-sale inventory management, she cut costs in warehousing and streamlined the firm's advertising. Within a year, Xtra Foods Supermarket had seen a rise in sales of 500 per cent. Her family did not, at first, find the change of style easy. "Sometimes they had to come in and zip their mouths up. But they quickly saw the benefits, so they were ready to accept it."

Her father's entrepreneurial instincts had been first awakened when, working as a clerk in a sugar cane factory, he realised that he could buy cigarettes wholesale and sell them to his bosses for a profit. "It was amazing how his business grew based on the level of risk that was taken, and how much he worked by instinct," says Naipaul. "Now I combine the instinct of the family business with the analysis of the MBA - so I still take risks, but they are intelligent risks."

Ellie Hamilton, director of the Institute for Entrepreneurship and Enterprise Development at Lancaster Business School, is keenly aware of the tensions that can arise as control of a family business passes from one generation to the next. "People often find it difficult to step back from a business that they have grown and nurtured, possibly over a whole lifetime," she says. Careful succession planning is vital, therefore, to a healthy family business.

The MBA , which provides a whole tool kit for management understanding, can prompt innovation and help people find ways of moving a business forward, Hamilton argues, even if there is often a painful transition period.

"Every generation has to find its own way of doing things, within the context of the times they live in. They will need to reconfigure parts of the business, to help them grow into the next generation." Keeping open the family's channels of communication is an important part of this process, he emphasises. Managed well, a change in direction or leadership can benefit all family members.

Haani Hasnain, 26, took over from his father the running of Haani Cables in Hartlepool, a business with a turnover of around £15m, 130 staff and clients in more than 30 countries - and says he became "closer" to his father as a result. "It's brought me a tremendous respect for my father. I walk in his wake."

Haani Hasnain joined the business after completing an engineering degree and worked his way up from driving the forklift and making cables. A part-time MBA at Durham Business School proved a useful stepping stone into management, he says, developing his knowledge of accounting, employment law, and particularly globalisation. "My learning style was to soak it all in, and then adapt it to the way I wanted things done."

Richard Whitaker, programme manager in the executive education enterprise department at Durham Business School, stresses that the MBA is not the only option here; other courses, such as Durham's Enterprise in Management programme, are more practical and less intensive. But the key issue for family businesses, he believes, is that the family members see the business "as an entity in itself, which they need to grow" rather than as some sort of comfort blanket providing family salaries. As well as sticking to a succession strategy, family members must accept that there has to be a boss, not a team of joint managers, and that everyone in the business has a designated role. They must continue to invest in the business, whether they plan to keep it or sell it, and resist the temptation simply to draw lifestyle-enhancing dividends from it.

Professor Joseph Pistrui, director of the entrepreneurship department at Instituto de Empresa in Madrid, where he teaches an MBA elective in Family Venturing, is prepared to go further. "I am on a personal mission to change the conversation," he says. "Survival is the wrong goal. Family businesses need to know when to shed or redeploy resources, to create new wealth-producing assets. They need to think in trans-generational, not generational terms, so that running the business is more a question of stewardship."

Pistrui's students soon begin to look at their family businesses in new ways, he maintains. They become collaborative, rather than competitive. "They start to ask, 'what can I do to grow and expand the business?' instead of asking 'when can I take it over?'"