Window Cleaning Family Business To International

Office Cleaning Services was formed in 1930 and combined with New Century under the OCS name in the 1970s.

Family firms defy downturn as generation game fuels profits: Overshadowed by big corporations with their brands and easy access to finance, some have argued that family businesses have been pushed into the shade in recent years. However, it is now becoming clear that the recession has been a leveller, providing opportunities for well-run family firms that can overcome the problems of financing, management, succession and liquidity. “A limitation of family businesses is that they don’t have as much access to cash as quoted competitors,” says Chris Cracknell, chief executive of cleaning and services business, OCS, itself a family business with plenty of advice for smaller, similarly structured firms. “Maybe that instills different disciplines in us which have been beneficial over time. There are many fabulous family businesses in the UK, from Wates to Swire Group and others with very good track records.”
 

Family businesses are an important and often overlooked sector in the UK. Their lack of a listing means they are often ignored up against FTSE 250 rivals. In 2011 a report by Oxford Economics revealed that family businesses account for 66pc of all SMEs in Britain, employing more than 9m people – 40pc of total private-sector employment. They generated revenues of £1.1trillion. But there are also dangers inherent in being a family business. “The number of family businesses that make it through to the fourth or fifth generation is not that great,” says Cracknell. “The failure rate is very high.” OCS is an exception. Based in Crawley, West Sussex, its roots date back to The New Century Window and General Cleaning company, founded by Cracknell’s great grandfather, Frederick Goodliffe, in 1900.
 

Office Cleaning Services was formed in 1930 and combined with New Century under the OCS name in the 1970s. OCS now employs 76,000 people, including 26,000 in the UK. With a turnover of £800m, it is one of Britain’s largest privately owned companies. It remains owned by 130 individual shareholders, all but five of whom are members of the original founding family. The company’s history demonstrates some of the perils of family firms.
 

Goodliffe and his wife had five daughters and three sons. The sons went into the business, diversifying it to such an extent that its assets 35 years ago included a Kent hotel, shirt and carpet makers and a UPVC window manufacturer. The board, however, remained solidly family-based until the late 1980s. The company sold its manufacturing businesses and hotel to concentrate on support services, ranging from security to laundry and cleaning.
 

It has also embraced globalisation to such an extent that it is now the second biggest British-owned employer in Thailand, after Tesco, with 26,000 staff. Cracknell, 54, joined the family firm in 1977 and has been chief executive since 1996. He says that managing those transitions had to result in loosening the family’s traditional control. The first external non-executive directors were appointed in 1999, while five years later a share option scheme for senior management was introduced. OCS also now has remuneration, nominations and audit committees with external non-executive directors, including a group chairman.
 

Cracknell believes the group has progressed from being family-owned and run to being family-owned and professionally managed. “We’re now a meritocracy and the board is not just reserved for the family,” he says. “It’s helped preserve our family culture, ethics, background and style as an organisation. I think it’s a differentiator that’s enabled us to compete and grow to the size we are today. “The key stage was a recognition that the family relied very heavily on the board management team and staff who worked in the group to make it successful and go forward.
 

“Secondly there was a recognition by the family that there was no genetic disposition that they had the capability to run it and that we needed expertise to come in. “My successor could be family or non-family. At the end of the day, all of our interests are best served by having the best people to lead us in the future.” Another issue for family businesses is providing exit routes for members who want to liquefy some of their assets. OCS has provided a share-sale scheme that allows this to be managed carefully and Cracknell says this has helped maintain continuity and keep shareholders on board. “There are many models out there for family companies,” he says. “Some have elected to buy out some of the shareholders. We’ve not chosen to go that route. We’ve kept our full number of shareholders. The largest shareholder has only 5pc.”
 

The success of OCS in overseas markets means Asia now accounts for nearly a third of group turnover. But the difficulty of financing such growth has meant that it has been a slow journey since the first investment in Thailand in 1989. “Typically we’ve formed partnerships with other family businesses, taken a minority shareholding and grown it up to 100pc,” says Cracknell. “As a family business, we’ve got the patience to use that approach and it aligns us very well with many family businesses in Asia. “Our Asian activities are by far the fastest growing part of our group. Last year, we did two acquisitions in India, a second acquisition in Malaysia, completed an investment in Singapore and began a new joint venture in Qatar. “We grew by more than 17pc in India last year and anticipate our growth there will remain in double digits.”
 

Such success has led to quoted rivals eyeing OCS, but the family is in no hurry to sell. “The market knows we’re not for sale,” says Cracknell. “We do get loose approaches, but we don’t solicit or have any desire to have formal approaches. “One of the great strengths is being able to wake up in the morning and know who owns you. That’s what the family gives us. It’s that stability and confidence.”