The Family entrepreneurs- a model for the future?
Björn and Thorben Scharnhorst are proprietors and CEOs of “Exportverpackung Sehnde GmbH”, an SME family company based in Sehnde in the Region Hannover. The brothers are the fifth generation of the family to run the company. In the interview, they explain how they transformed the skilled crafts industrial business run by their father into a fully digitalised cutting-edge company, whilst also talking about the challenges they face at present and where they see the family business in the future. The brothers are the fifth generation to run the company. In this interview, they explain how they managed the transformation from an industrial craft business run solely by their father to a state-of-the-art, fully digitalized company, what the challenges of the present are and where they see their family business in the future.
Björn Scharnhorst and Thorben Scharnhorst, 14 years ago you took over the two skilled crafts companies “Holzverpackung Hannover GmbH” and “Exportverpackung Sehnde GmbH” from your father Gerhard Scharnhorst and are now the fifth generation of the family to be running the business. You have radically transformed the companies and even merged them in 2018 under the name of the former smaller company, “Exportverpackung Sehnde GmbH“ (EVS). What challenges did you face in this process?
Björn Scharnhorst: The company has changed drastically since we took over from our father. A skilled crafts industrial business with one man at the helm has turned into a fully digitalised cutting edge company with more than 180 employees. 2014 is sure to be the key milestone in this process. It was a phase when things were going really well with our customer base, the business was flourishing and the new generation in our company was accepted by the customers. Everyone was talking about a ‘breath of fresh air’. However, production failed to keep up with the very high volume of orders. As chance would have it, we just happened to be talking to a former employee from Poland who had since returned home. Together with him, we decided to start up an additional company in Poland, which deals primarily with making wooden crates. The associated services that we offer here in Germany have since been established in Poland. This step was a huge adventure for us – the first step towards internationalisation in the more than 150 years of our company’s history. At last, we were able to meet the growing demand from our customers, relieving the pressure on our site in Sehnde.
Thorben Scharnhorst: At about the same time, we started to reorganise the internal structures in Sehnde. The sharp increase in our workforce – from about 75 to 160 – meant we were no longer in a position to manage all these people in the same way that our father had done all his life. In former times, employees could always bring their concerns directly to our father. ‘The boss’ then solved the problem. This was a huge challenge for our father, and was actually already more than he could cope with. We were then forced to change things, also because we see people in a completely different way and no longer feel that autocratic management is the right way to run a company in this day and age.
How did the staff react to this change?
Björn Scharnhorst: Looking back, we must say that we didn’t really do it very well at first, simply because we didn’t know how to do it. This was a real problem for some of the employees. They were used to a secure work situation and now felt they were losing this security, they no longer knew where they stood and what their position really was. Unfortunately, some people left the company in this phase, although we were just trying to do everything right. We weren’t very successful with this and we have paid dearly as a result. Since 2015, we have brought in outside help. Today, we can say that the internal structures are now properly established and working well. Meanwhile, as CEOs we no longer work in the company but for the company – and that is a good thing.
What is the difference between your family company and a large corporation?
Björn Scharnhorst: Large corporations often have the possibility of offering their staff lots of benefits, starting with a mobile phone and a tablet, a company car and many more. Furthermore, they also offer stability, or what seems to be security – simply through the size of their company. On the other hand, every single employee has little influence or scope for making a difference, and I have often seen them ending up in a kind of unsatisfactory treadmill. As a small SME company, we score with a very interesting work environment. We offer people many possibilities for developing ideas and taking on responsibility. In fact, we depend on this. If the ideas are good, they are implemented. So people can have a direct influence on how things work and the results are swiftly apparent. Recently, for example, our trainees implemented a project that I knew nothing about: they reorganised the whole entrance area of our company headquarters, with amazing success. I could tell you many other examples like this.
Thorben Scharnhorst: Another difference is that we think long-term and act sustainably. We do not focus on short-term balance sheets or profits, but have the future in mind. We want us to still be around and for the people who work for our company to enjoy doing it and have fun doing it.
Information
Facts and figures Exportverpackung Sehnde GmbH
- founded in 1858 purely as a crate factory (“Kistenfabrik Scharnhorst” – then Holzverpackung Hannover)
- now in the fifth generation
– today, an expert go-to partner for all aspects of logistics - Awards:
• SME Grand Prix
• TOP 100 innovator 2021
• BEST OF innovation award for IT - Three sites: Sehnde, Hannover, Zabrze (Poland)
- headquarters of the company Exportverpackung Sehnde today: Sehnde industrial estate
- more than 180 employees (together with the site in Zabrze)
- Turnover: roughly 20 million Euro
CEOs Björn and Thorben Scharnhorst
Björn and Thorben Scharnhorst are the sons of Gerhard Scharnhorst, who took over the Kistenfabrik Scharnhorst from his father at the age of 19 and continued to run the business successfully. The two brothers each did commercial training in a different company, before studying business management. After careful consideration, in 2008 they joined their father’s business as equal partners. Meanwhile, the firm also has a third CEO, Matthias Duensing, who is not one of the family.
And how to you manage to keep a comparatively small family company on the market?
Thorben Scharnhorst: Thorben Scharnhorst: We listen to what our customers say and need, and take this as the basis for continuous further development. It is crucial to remain viable. I remember something my father said to me during the handover process: ‘You really must let things calm down a bit!’ I was utterly confused at first. Then I replied: ‘Once things calm down a bit, that’s when it’s all over!” In fact, it’s the other way round: we must remain alert and flexible; the company has to change with the times and develop new areas of business. We must adjust to the needs of our customers, and not vice versa. That’s why we have changeable structures and why we always work with the very latest and best technology, in every area. We’ve been spending lots of money on this for years now.
Björn Scharnhorst: But it’s not easy and our success is due to the fact that we’re operating in a very small niche. Many other SME family companies won’t be able to compete with large corporations. In my opinion, digitalisation is driving this development even further, with extreme growth in customer expectations and thus also in the pressure felt by the companies. The reality of our market is that a few large companies buy up many small ones, it’s a process that is in full swing. I can see why this happens, why the small companies slide under the wings of the large ones, so to speak. It’s where they find protection and security. But it means their lose their independence.
So is there any future at all for the “family business” model?
Björn Scharnhorst: I must admit I’m sceptical about it. As far as our customers in the engineering sector are concerned, nearly half of the family companies have already been bought up by financial investors. Their only aim is to maximise profits: companies are bought up and then sold on again at a profit. They don’t care about sustainability and tradition. The current crises are making this situation even worse. For our part, we are trying to make our customers more competitive by offering them services that will help and strengthen them. Our declared aim is to do – or learn to do – whatever makes our customers better. Even so, I still see clouds on the future horizon. I don’t want to make things seem worse than they are. Our company is in a good position and has always had the mindset of standing our ground. Our customers are also great. But the general trend certainly has some question marks for us.
Buzzword sixth generation in the family business: what are your plans in this respect?
Thorben Scharnhorst: We certainly want our company to survive so that a sixth generation can take it over as a going concern. We’re currently working flat out to ensure this is possible. But it’s only one side of the story. If this is what our children might want to do one day, that’s something that is completely up to them, and we make sure they know this with more than just words. Our children should do what they want with their lives, something that fulfils them and that they enjoy doing. If that’s Exportverpackung Sehnde, then that’s fine. If they want to be a surf instructor in Hawaii or a gardener or live as a recluse in the forest, that’s also fine, and we really mean that.
Header picture: Thorben (li.) and Björn Scharnhorst – Family business in the fifth generation
Photo: Exportverpackung Sehnde GmbH
