By Guy Rigby, Head of Entrepreneurs, Smith & Williamson
Growth businesses which find they are lacking in knowledge or expertise in a particular area may find that the answer is to bring an experienced non-executive director (NED) on board. A NED will have typically enjoyed a successful business career, and can bring a range of benefits to your board and executive team. They often have several directorships with companies of differing sizes and usually work part-time.
Been there, done that
Many NEDs will have either seen or dealt with problems like yours before. They may have expert insight and knowledge of your business sector, and be able to provide you with contacts and relationships with potential customers and suppliers. Alternatively, they may just have a wealth of business experience that they can apply for your benefit. If they do have experience in your industry they may be able to offer business intelligence and information about your competitors. It’s always useful to have an objective perspective on your business and a NED may spot opportunities that you might otherwise overlook.
With years of experience behind them, NEDs can help in fast tracking the growth of your business and provide invaluable strategic advice. They may be able to offer the financial expertise you need to help you raise development capital, or sell or float your business. A NED is likely to understand the importance of good corporate governance and have risk management skills to help you stay in business and avoid costly, or even fatal, mistakes.
Building external and internal dream teams
Having experienced many professional advisers over the years, NEDs should be able to match these external skills to your needs. And having worked in management in a variety of businesses, they should also be able to offer good judgement and people skills, adding value to your senior recruitment strategy.
Are there any downsides?
In smaller companies, management may question the worth of the role of the NED, so it’s important to clarify the specific reasons for their appointment from the outset. NEDs who are brought in without a specific role may not deliver value for money. In addition, watch out for those with strong views or relevant experience who may be tempted to interfere where they are not needed.
Finally, remember that NEDs will need to be paid for their involvement. As directors, they will give their time and are just as responsible for the conduct of the business as the executive directors.
If you would like more information on the benefits of engaging a non-executive director in your business speak to Guy Rigby on 020 7131 8213 or email firstname.lastname@example.org.
By necessity this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. Article correct at time of writing.
Smith & Williamson LLP
Regulated by the Institute of Chartered Accountants in England and Wales for a range of investment business activities. A member of Nexia International.
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