Non-Executive Directors are an often-misunderstood resource. They come in many guises and, if carefully appointed, can be invaluable, especially to early stage enterprises.
The traditional view of NED’s is of middle aged men sitting around the boardroom table of multi-national conglomerates; their reward for a successful life at the top of the corporate ladder. The reality is that NED’s come from all walks of commercial life. Many will take up unpaid roles for philanthropic reasons, choosing to “give back” at the end of their careers. For some, a NED role may be part and parcel of being a Business Angel as they seek to keep an eye on the progress of their investment. As a company considering a NED it is essential to understand what you are looking for and the type of role you want the NED to play. There are many online articles explaining the legal position of a NED, how they should be an independent counsel and the value of measured, impartial challenge. However, I thought I’d use this blog to offer a different perspective on how they can add value to early stage businesses.
The Doorkicker – As a tech entrepreneur operating in the meetings and events sector, I managed to attract one the biggest industry players to my Board. I didn’t want his input into the detail of our strategy (although his advice proved invaluable), primarily, I simply wanted a fixer and he was brilliant at that. One phone call and meetings with some of the most senior people in the hotel business were arranged. I could never have created that kind of access without months of careful planning – and even then, with no guarantee of success. How did I find him? I simply did some research and rang him up asking for 20 minutes of his time over coffee to talk about my business. It involved an 8 hour round trip and a dawn start but he was happy to support what he saw as disruptive and valuable new technology in an industry he had spent his entire professional life in.
The Young NED – Common perception, as stated before, is that NED’s are on the slide into retirement, years of experience being a necessary qualification for the role. In an age when fortunes can be made in your 20’s, many young entrepreneurs have been through the mill of equity finance raises, IPO’s or trade sale – if that is your ambition, these young trailblazers have a wealth of experience to offer. And it’s not just for tech companies, we have a member of our network who built a global household name fashion brand by the time he was 30. As he once told me, by then, there wasn’t much he didn’t know about the trade from branding, production, overseas supply networks, selling to major retailers and how to manage cash in a deeply cyclical industry. Again, many of these people would happily spend time helping other young businesses. They speak the same language, share the same passion for the industry but, crucially, have the scars of mistakes made and can help you avoid doing the same.
Undoubtedly, these types can still act as an impartial voice at the Board meeting, someone to bounce ideas off and a trusted ally. However, be clear what you want from the relationship and think beyond the norm – take it from me, you’ll reap significant benefit from a good recruit.
Andrew Finley is Project Director of Access to Finance, an ERDF funded programme supporting SME’s in Cornwall and the Isles of Scilly to raise investment capital from multiple sources including debt, grants and equity. Access to Finance have grants available to support the appointment of NED’s to eligible businesses. To find out more please follow this link