Honor Northam (centre) with Nicola and Nick Parsons of Parsons Bakery in the UK. Photo: Supplied.
A research trip to the UK has cemented Honor Northam’s conviction that an Employee Ownership Trust (EOT) is the right path for her Bermagui business Honorbread.
She is determined to make it easier for Australian businesses to preserve the legacy they have built. Too often when a business in a regional town is bought by someone from outside the area, something is lost including local knowledge, relationships and networks.
Mrs Northam believes EOTs could be the answer.
EOTs are a well regarded and rapidly growing business model in the UK. Mrs Northam visited John Lewis and Partners, Britain’s largest and oldest employee-owned business, along with Timpson, a key-cutting business with a program for people leaving jail to find a job.
She travelled to Bristol to meet a family bakery with similar beginnings to Honorbread. Since its inception in 1926 it has been passed down the generations, most recently to Nick Parsons and his brother. The family transitioned to the EOT model this year citing long-term stability, community roots and recognition of staff as the true heart of the business.
Mrs Northam spent two hours talking to Nick and learnt the bakery’s entire history.
“Like me, Nick wants to save the family business and not to sell to anyone else,” she said.
Parsons Bakery started with one shop, then opened another. It wasn’t until it reached eight shops that it became a good, viable business with a strong foundation for growth.
It is in a town outside the city of Bristol, with 450 staff and 80 shops. It has just four vans travelling 100 km in each direction.
“We have been approached by people in the Far South Coast to do satellites, so we could head in the direction of Parsons,” Mrs Northam said.
Parsons’ general manager had started as a delivery driver while an Honorbread apprentice became a manager in around four years.
“That is what is possible in a business that looks at the person and their skills and provides training,” Mrs Northam said.
Honorbread does a lot in the community including hosting a weekly market. Photo: Thesapphirecoast.
The visit strengthened her resolve to do things that are meaningful and align with her values “rather than just blindly expanding”.
In London she spoke with employees of John Lewis and Partners, owners of upmarket department store John Lewis and high-end supermarket Waitrose.
The UK is going through hard economic times so unlike the previous 10 years, employees didn’t receive a dividend from the EOT.
“I spoke to enough people to realise they loved working there,” Mrs Northam said. “Their attitude was it is a tough year, and we are all in it together. It was so clear.”
She also visited Timpson where more than 12 per cent of staff have a past criminal conviction.
“There are obviously values in these companies that align with mine,” she said. “That reassured me that is the pathway I want for Honorbread.”
Tim Northam (left) with some of the staff at Honorbread and Honor Northam (second from right). Photo: Supplied.
A few Australian businesses have become EOTs, but it is very expensive, starting with a valuation fee of around $30,000. Because there are so few precedents, it requires hours of work by lawyers and accountants. The few with some knowledge of EOTs have exorbitant fees.
Mrs Northam wants the ATO to issue guidelines so that transitioning to an EOT is easier and affordable for businesses like hers.
To help make that happen she met with NSW Premier Chris Minns and explained how attractive Honorbread would be to Canberra and Melbourne businesses, so NSW would lose the payroll tax.
Having lived in Bermagui for 15 years she has also seen instances of not-for-profits losing a vital sponsor or donor when a local business was sold to someone from outside of the area, either unaware of, or unwilling to continue, the charitable role.
“I told the Premier it is important these businesses stay in our communities and in NSW,” Mrs Northam said.
Ultimately, she wants to meet Federal Treasurer Jim Chalmers to argue her case that the ATO provides guidelines for establishing EOTs.
Mrs Northam’s e-petition for clear tax guidelines and the creation of a legislative framework for EOTs got 138 signatures, enough to be considered by the Federal House of Representatives’ e-petition committee.
“My expectation is that it will be discussed in the House of Representatives.”
