A hundred years ago, E.J. Paxton opened Paxton Opticians in Sydney. Fifty years later, his son evolved the business into Paxtons Photographics. Another half-century on, it's business as usual for the third and fourth generation.
Business heir, John Paxton, spent his school holidays doing odd jobs at the Paxtons Photographics city store, before working in sales aged 18. When his father died unexpectedly, without a succession plan, Paxton was just 24. "There were two choices, either to run the business or to sell it. After some hard thinking and discussion, I made the decision to keep running it with the assistance of my mother," he recalls. "There was a lot of pressure to take over, but by default because my father died."
The transfer differed greatly from the first to second generation. Paxton's grandfather lived to 92 and retained significant control of the business until his death. In observing the first generation handover, Paxton believes the way he inherited the business was both good and bad. "I had the disadvantage of no father to guide me while I was finding my feet, so they were really tough years, but then I had the benefit of him not telling me what to do."
Paxton, his wife Marcia and their two sons, Michael and Matthew, are all employees of Paxtons Photographics, with seven camera stores in the Sydney metropolitan area. Although Paxton says there's no pressure on his sons to take the helm, he strongly advocates good succession planning, no matter what the intention.
"Every business needs a written plan, especially family businesses, in case you become unwell or die. Otherwise you end up losing the family member and the financial security the business offered. Insurance is essential, but you also need to leave things in good order, tidy and organised and accurate," he recommends.
For proper handovers, Paxton suggests owners recognise the right time to pass the reins and nominate an heir who understands the business. "And if family members want to be part of the business, they definitely need to have experience, which means apart from working in our business they need to go and work elsewhere," he says.
Paxton will have no problem finding a family member with knowledge of the business. Both sons currently hold sales positions, but have worked for other companies, while Marcia heads the sales and marketing department and works in the city store. Her firsthand knowledge of staff and customer issues assists upper management decisions. "When I work in the store I wear a uniform just like the staff and that's good for morale," she says. "A problem in a lot of businesses is that there's no real owner, they're shareholders. The customers think it's marvellous that the owner actually works in the shop."
While the family work well together, Paxton says the relationship between the family members and the rest of the staff is just as important. "It's basically a family business and we try to get the staff to be part of that family. In a large corporation you might end up being a bit of a number, whereas we have around 80 staff all treated with respect and as part of the team."
One problem they have identified is switching off outside business hours. "We have an unwritten rule that when we go for a walk or go out on the boat on the weekend we don't talk business, otherwise you never get away. For family members, that's essential," Paxton says.
Paxton’s tips
* Don't bring the business home
* Make sure you have a plan in place
* Spend money on your accounting
* As well as investing money in the business, look at other investments
* Health is more important than any business
Family Business Statistics
- 69 percent of family businesses turn over more than $5 million a year
- 64 percent of family business CEOs are male family members; 5 percent are female family members and the rest are outsiders
- 40 percent of family businesses are small businesses with less than 20 employees
- 57 percent of respondents plan to retire in the next ten years
- 25 percent of family businesses have a formal succession plan in place
Source: KPMG/FBA 2007 Family Business Needs survey
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