When you first start a business there can be little need for a formal Board. Small teams – indeed the team may just be the Founder – usually develop their own informal ways of reviewing options, discussing issues, making decisions and reporting progress. However, as the business grows, and particularly if you take external investment, formalising these processes and introducing impartial, independent advisers into the business in the form of non-executive directors can be very helpful.
Why would you want a Non-exec Board?
Introducing external directors to a startup or small business brings outside experience and fresh perspectives into the business. External directors – often call Non-executive Directors, Non-execs or just NEDs – are usually experienced, senior business people who have worked in a range of businesses or who may have run and successfully sold their own business. They help founders and business owners by sharing their knowledge, skills and experience of a specific sector or discipline, all to the benefit of the startup or small business.
The benefits of working with Non-execs are well documented and include:
- Fresh perspectives on strategy and tackling business challenges
- Acting as a sounding board
- Objectivity, for example in exploring strategic options or managing teams
- Bringing specific expertise which allows the business to learn and grow faster
- Making new connections for the business by proving access to their address book
- Commitment to keeping the team “on track”
- “Real life” understanding that can be beneficial in reacting to and solving problems
For founders and business owners – who often work on their own and can feel lonely – such benefits are a god-send.
Is a Non-exec Board always the best option?
Bringing together a Non-exec Board isn’t, however, without cost. It can take time to find the right person with the appropriate mix of skills and experience – and may involve search and recruitment fees if you seek external help with this. Once you have found your ideal candidate they may require a retainer fee for their services. Having a board also has hidden costs in terms of the time required each month to prepare reports, arrange meetings and keep Board members informed of developments.
Are there other alternatives?
If your startup or small business is not yet ready to incur these costs then there are alternatives. Peer Boards which bring together business owners (usually on a monthly basis) to support each other with impartial business advice offer many of the benefits of a Non-exec Board but without the costs and hassle.
Focused for Business runs Funding Masterminds for founders closing a funding round which helps hold founders to account in setting and reporting on actions and deliverables. Joining Funding Mastermind keeps you on track and gives you an access to a wealth of experience – just like having a Non-exec Board.