Handing over the wheel

By Brian Wheeler
BBC News Online business reporter

Passing control from one generation to the next is the hardest task most family businesses will face.

For Kent-based Caterham Cars the process was particularly tricky.

Like father like son?

The company's owner, Graham Nearn, had successfully carved out a niche as a specialist sports car maker, establishing a solid customer base in a notoriously fickle market.

But his core product - the Caterham Super Seven - was based around a 40-year-old design, and competition was crowding in from all sides.

Keeping it in the family

Graham, who was keen to retire, toyed briefly with selling the business.

But the trade buyers' offer of between £5m and £10m was considered too low - and the idea of bringing in an outsider to run the company seemed too risky.

So Graham decided to keep it in the family - and hand over the reins to his second son, Simon, then 28.

Tense time

Like the rest of the Nearn clan, Simon had worked in the business on and off since childhood.

But although he had run his own motorsports promotion business, his real passion was sailing and he never imagined he would one day follow in his father's footsteps.

"It's not something I ever planned to do," Simon tells BBC News Online, "but I have no regrets.

"From my point of view, it was a huge step," he adds.

The only pressure I had was from myself - I never had pressure put on me from above Simon Nearn Running a family business

"It was a big change in my lifestyle and a huge responsibility.

"I knew the business intimately, but that doesn't necessarily mean you are going to be a great managing director.

"I think it helped that I had run my own business, and had also worked in other industries and companies both big and small."

Nevertheless, the handover was a tense time for both men.

Graham, who became company chairman, initially moved into the office next door, to keep an eye on his young managing director.

Simon, for his part, had big plans for the old family firm.

The Caterham Super Seven's lightning acceleration and race-tuned handling had made it a favourite with generations of boy racers.

New car

But the car - based around the old Lotus Seven chassis - was looking increasingly long in the tooth, despite continuous design improvements.

Simon decided the only answer was to develop an entirely new car - a make-or-break move for a small company like Caterham.

CATERHAM SUPER SEVEN Based on classic Lotus design Prices start at £12,950 600 cars built per year Factory employs 75 people 35% of cars for export

The company spent the next three years researching and developing a new high-tech model to compete with the likes of Lotus's Elise.

But it was eventually forced to abandon the project when its design partner Reynard Racing Cars went out of business.

With hindsight, this may have turned out to be a blessing in disguise.

The economic tide had begun to turn buy this point.

And many of the young upstarts that had threatened to drive Caterham out of business were now looking vulnerable themselves.

Tough business

Simon decided to switch Caterham's focus and concentrate on motorsport, developing track days for customers and bespoke racing championships.

Under his guidance, the Caterham has become the most raced sports car in the world, with 14 separate championships for owners to choose from.

Growing up with the business had given Simon the insight not to put all of his eggs in one basket.

"The motor trade is a pretty tough business.

"I don't think it is very easy to revolutionise anything.

"The past is scattered with companies that have come into the sports car market with big plans.

"Some of them have never made it," he says.

The family tie also gave Graham the confidence to gradually take more of a back seat.

Letting go

Now 70, he is still involved with the running of Caterham, but, Simon says, he tends to limit his visits to the factory to quarterly board meetings.

"My advice is that if you going to hand a business on, hand it on.

"It never works if you try to dictate to someone. You have to let go.

"I was lucky enough that my father took that view.

"The only pressure I had was from myself. I never had pressure put on me from above," Simon says.

He also stresses the importance of seeking outside help - or training - when it is needed.

"Don't be afraid to admit when you feel you lack knowledge.

"There are training courses available, from the Institute of Directors and elsewhere," Simon says.

Managing people

On his own management technique, he adds: "I just feel I need to understand 100% what is going on in every area of the business.

"If you don't understand a particular aspect of it you go away and learn about it.

"I come from a sales and marketing background but I didn't know a great deal about banking and finance, so I had to learn about that.

"Then there is the whole management of people side of it, and trying to bring people along with you."

But he is philosophical on the question of whether he will be able to hand over the business to his own son or daughter, when the time comes.

"I don't know where we are going to be in 35 or 40 years time.

"I think we still be here, but it is a tough business."