All the way to the Top – how governance reform at Rakem led to significant growth
Bury based manufacturing firm Rakem Group was founded by the current owner’s father who was later joined by his three sons. Now the sole owner and MD of the firm, Kieran Rafferty talks about how the company has changed and how working with GC Business Growth Hub has improved governance and profitability at Rakem.
The beginning of Rakem
The origins of Rakem go back to 1996 when Kieran’s father was working for a large German company, part of larger chemical company, selling their products in the UK. The company chose to close their international sales offices and offered Kieran’s father the opportunity to continue as their agent in the UK selling their products. After a career of 25 years in the business, he decided to take the offer and set up the business, Rakem. Subsequently his three sons, Kevin, Kieran and Eugene also joined the business.
Over the next few years Rakem sought to take on more principles to act as agents for and to expand on the legacy set by the first German one. The search took them around the world, and they obtained principles in the US, South America, Europe and then Asia.
“Unfortunately, by the mid noughties the UK manufacturing industry, especially the ‘smokestack industries’ retracted and reduced. By this time my dad had retired, and the three brothers were running the business. At this point we had become quite stagnant in terms of our growth.”
“We quickly decided that as we sell all the constituents, for instance, to make decorative paint, why don't we make the paint and sell it ourselves? There was also an opportunity to help our customer by enhancing their portfolio with products we could make as a toll manufacturer.”
Moving on to the present day, Rakem now has three very distinct channels. Rakem, the chemical distributor; Maker, the manufacturer; and Cemkem the provider of products for the construction and cement industry.
The Growth Company enters the picture
After Kieran’s father retired the company brought in a non-family member to be MD.
“It was a typical family business where disagreements can occur on how to run it and move forward; despite this we were still successful. What we needed was professional support in terms of identifying and making the next step.”
GC Business Growth Hub linked them up with corporate consultancy firm, Ruby Star Associates. “They came in and worked with the senior management team. We then embarked on a few projects with them. The main one, and the one I speak about a lot, is governance of the business.”
The year 2020 saw challenges arise for many businesses due to covid but also for the directors of Rakem personally. Rakem was structured as a group of businesses and each brother looked after one of the businesses within the group. In 2020 this was set to change when the eldest brother, Kevin, sought to retire and withdraw from the business as shareholder. At the same time tragedy struck when Eugene, the middle brother, died suddenly.
“It was an enormous shock to everybody. Eugene left an enormous hole. I was fortunate that I had a strong team and great advisors.”
The help from GC Business Growth Hub continued throughout this period. “We identified where we could use their support to drive the business positively through the pandemic and the major shift in ownership. The focus on this new era helped us to grow significantly, and we have benefited greatly from it.”
Consultants from Ruby Star Associates have assisted the business in analysing and reviewing their values, but Kieran says the major help was on the governance side. This became apparent when Kieran became the sole owner and MD of Rakem after the death of Eugene and retirement of Kevin.
“The succession of founding members when they decease and the resulting changes in ownership can be an issue for family businesses. A lack of a firm planning, legislation and governance can result in major fall outs and businesses imploding as a consequence. Because of the governance we already had in place, the process through the change of ownership was quite seamless.”
The company Chairperson was appointed through Ruby and is a non-family member who doesn't work directly in the business; this enables them to remain independent. Kieran says this has been essential in steadying the ship and building a foundation platform for the future.
“We now have a company structure with three statutory directors; me, and two colleagues. We set the goals and governance for the business. The executive team then bring these to the rest of the Rakem ‘family’. I have two daughters who work in the business, but the ‘family’ now includes all the employees, not just those named Rafferty.”
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The impact they have had has been massively positive. Since our involvement with the GC Business Growth Hub, we've doubled in size and tripled in net profit.
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Growth Company impact
“I am a member of the Manufacturers’ Alliance and when my colleagues and I discuss and share best practices, governance is always close to the top of the list. We have benefited extremely positively from working with the GC Business Growth Hub. It’s not just a consultant coming in telling us to ‘not fill a bottle that way, do it this way’; it enables us to take a step back and look at the company as a whole, identifying areas where support could be useful. This has included focusing on our management level meaning our values, mission and practices now flow down throughout the business at all levels.”
“Our chairperson has been an amazing part of our journey. She joined us at a time where major things had happened, covid, Kevin retiring and Eugene dying, and she's been very supportive throughout. But I think what I've really appreciated is her independence and her willingness to challenge; I can't value that highly enough.”
Kieran says he is interested in tapping into other areas of the GC Business Growth Hub. “I think we should do. It's interesting because the person most involved was the Operations Director, Steve Bunker, who came from a banking background. Discovering that funds were available to access the support of the Growth Hub was a real eye opener. I’d like to see what we could achieve with the same support at other levels in our business. “
With a lot of work already undertaken, Kieran says the management and governance of the business is now quite set. He believes the next area in need of support is production because of expected accelerated growth. He fully appreciates the support that the Rakem has received, and the significant impact it has had.
“At the end of the day, since our involvement with the Growth Company, we've doubled in size and tripled in net profit. What can’t speak can’t lie.”
You can find out more about the Rakem Group on their website here: Home - The Rakem Group
Rakem received services that were previously funded by ERDF. To find out more about our previous ERDF funded offer click here.