Dragons' Den review: Peter Jones' cash gives family sausage firm chance to sizzle

One of Dragons' Den's consistently fascinating points of interest is the insight it offers into the dynamics of family businesses. According to the Forum of Private Business, around three million of the UK's 4.6 million SMEs are family businesses - a ratio of around two to one.  By my reckoning, the ratio of family businesses that pitch for investment on Dragons' Den is pretty similar.

In many cases, a younger family member is the key figure in a new family business - or the driving force of a new direction for an existing one.

A few weeks ago, we learned how Henry Blake had transformed the fortunes of his father's invention Wood BlocX by developing a new website to sell the company's build-it-yourself landscaping product. The introduction of the younger man's skills and expertise had helped increase the company's revenue from £80,000 to £480,000 over two years.

Elsewhere, we've seen a trio of sisters secure investment for a sauce endorsed by their family's award-winning Chinese restaurant, and a young man's poise offset his father's self-confessed cantankerousness to receive an offer for a device that increases the capacity of wheelbarrows.

The traditional notion of a British family business is male-dominated and involves the passing on of skills and knowledge to members of the next generation. The younger family members eventually graduate from apprenticeship positions to take leading roles in the company and begin the cycle again.

This isn't the type of business that tends to seek or receive investment from multi-millionaire Dragons, but strangely enough that's what happened in last night's episode. Peter Jones, a man who has made his personal fortune in multinational telecoms businesses, is now the part owner of a family butcher shop on North Lane, Aldershot.

Paul Turner, a third generation butcher and co-owner of the shop, pitched for investment in a new business that draws on his family's sausage-making heritage to turn A. Turner & Sons from a local institution into a household brand. Turner presented some tasty-looking gourmet bangers called 'Pickled Pig' and 'Hair of the Hog', which came packaged with a seal of approval from Turner's grandfather Alf, who established the business and started developing the sausages in 1956.

Despite Turner's evident pride in his grandfather and the fact that he had already had some success selling the sausages in supermarkets as part of the Help for Heroes campaign, the Dragons were wary of entering a busy, noisy marketplace with a product that yields relatively small profit margins.

Peter Jones discovered that the butcher shop shows annual profits of around £50,000 after salaries have been paid, so proposed that he also take a share in the existing company to offset the risk involved in investing in the new one. Turner's natural instinct was to protect the family business - but he made a counter offer to Jones in which the Dragon returns his equity in the butcher shop while retaining it in the sausage business once his £80,000 investment has been repaid. Both parties were happy with that, and Jones looked pleased as punch as he walked towards Turner saying the unlikely words "I'm in the sausage business."

The family theme continued throughout the episode. A young woman led a presentation for a theatre production in which her father took a peripheral role in a mentoring and support capacity, while in the final pitch, a matriarchal figure in a family of 'grafters' sought investment for a business that imports and redistributes a new kind of ground de-icer.

Dragons' Den regularly demonstrates that the modern family business takes a range of different shapes and sizes. My own experience throws up yet another model - and I'd be interested to read about others in the comments section at the end of this blog. Not long after setting up Make It Cheaper in 2007, I headhunted my own brother to join our busy IT department. Since then we have backed him to take Make It Cheaper overseas by co-founding our operation in Sydney, where he now employs 120 staff and helps 8,600 Australian homeowners and businesses to lower their bills every week

It's clear that family businesses have an important role to play in the UK's economic recovery, so one final thing to mention is that the Institute for Family Business (IFB) is on hand to provide advice, support and advocacy that help member businesses to grow. Their challenge is significant: family businesses currently contribute to around 31% of Gross Domestic Product, whereas the equivalent figure in Germany, for example, is just under 50%. Furthermore, statistics suggest that only 30% of family firms succeed to the second generation, while only 13% hand over to a third generation member like Paul Turner. Since the meaning of the term 'family business' is now much more open and fluid than it once was, the complexity of the IFB's work is perhaps more pronounced than ever.

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