For many businesses in the mid-market, the appointment of a non-executive director may feel like an unnecessary expense against the ongoing battle of balancing the books. You have a strong team and a clear vision, so why would you need to pay someone from outside the business to come in and tell you how to do things?
The answer is a simple one; because the return on investment is potentially exponential.
The gatekeepers to success
SMEs need to stop viewing non-executives as big business territory and realise that they may in fact hold the key to reaching objectives.
For businesses looking for honest, insightful and inexpensive strategic advice, a non-executive director can be a fast-track to commercial success, off market introductions and productive criticism of their strategy.
Providing strategic advice, especially in a business without the luxury of a full board, can be exceptionally rewarding for both parties, but in this market a non-executive must be of a certain character and culturally match the organisation.
The best non-executive directors appreciate sometimes the tough questions need to be asked. When problems arise, business leaders – particularly in an SME – are often too close the issue. The right non-executive can act as a safety net, taking an experienced and level-headed approach to overcoming the obstacle.
Not forgetting that coveted black book of contacts which is now potentially at your disposal. Non-executives are the gatekeepers to influencers and for many this is where real value is realised as doors are opened.
The right fit
The right non-executive director will also add credibility to a business which can be crucial in advance of a transaction or investment where strength of the board is key, for example. Private equity funds and venture capitalists take much comfort from the involvement of a non-executive director who has a strong track record within portfolio companies.
Of course the final decision on business direction will rest with the executive management team and the CEO or MD, but an effective non-executive using their benefit of hindsight (and insight) should effectively manage and direct decisions to the company’s benefit.
When it comes to the S of the SME, smaller businesses tend to opt for a non-executive finance director, a skill which can be both incredibly valuable and helpful in controlling growth or steering a business to a position where it is able to effectively execute a transaction. Depending where a business is on its journey, this skillset may not be required full-time and can often plug in to a wider network of professional advisers.
The most effective appointments have come from seemingly quite generalist non-executives who have an insight in to the business’ industry in question or where they are on their growth curve.
Indeed, many success stories arise after appointing a non-executive director who plugged a skillset or perspective gap that the business didn’t even realise was missing through pointing out the route to better decision-making, identifying potential blindspots, and providing breadth of experience and sectors.
Platforms including NonExecutiveDirectors.com and TheConsultantHub.com, offer businesses direct access to the best talent free of charge, avoiding expensive recruitment or headhunter fees. Recently launched platform, BusinessTransformation.com, uses advanced algorithms to match businesses with experts who have the precise experience in the area they believe can help their business; whether that’s specific market expertise, a sector focus or leading a business through a particular growth period.