Does a SME need a board?

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As members of Springboard, Appoint Better Boards & Women on Boards, this article from stuff resonates with us – couldn’t have said it better ourselves 🙂 –


When should a small business make the jump to having a board of directors?


Anytime, unless you’re not going to listen to what they have to say, according to one Kiwi governance adviser.


Simon Telfer, managing director of Stimulus strategy and governance consultancy, said small to medium businesses (SMEs) could draw huge benefits from having a formal board, but only if they were prepared to share decision-making and be challenged by an independent person outside the business.


“If they’re not, it’s a waste of everybody’s time,” Telfer said.


But if they were, a board could give and SME great advantages and help in growing to the next level.


Telfer has created the website to match small businesses with the right directors and advisers.


Many New Zealand businesses still held to the pioneering spirit and the belief they should be doing everything themselves, he said. Others were put off by the perception that taking on a board of directors was complicated and costly.


“It’s important to remember it’s a continuum,” he said.


“Most people think of a board of directors and think a large number of people, and a very structured process with a high cost.


“Maybe that’s something to aim for eventually but you can start with a mentor, then call them an adviser. Then get two advisers and turn it into an advisory board. Then formalise one of those individuals into an independent director, who would be legally responsible for the business and registered at the companies office. Then you’d get other directors and form a board.


“It doesn’t have to be all or nothing,” he said.


Telfer created Appoint Better Boards because many small business owners liked the idea of a board but were often at a loss on where to go to find the right people.


Giving up even a modicum of control was not easy for some of these business owners and they were cautious about finding people who would be the right fit for them.


First port of call was often the business’ lawyers and accountants, which rarely worked, Telfer said.


“They’re trained to mitigate risk, which doesn’t lend them to focussing on strategy and growth,” he said.


“Plus once you have the client relationship it’s very hard to change it and to start to challenge and critique.”


In most cases friends and family did not work as directors because they did not have real independence and objectivity, he said.


The key to a good board, or adviser was a balance of those with some experience in your industry and those new to your industry who could provide a fresh perspective.


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The other key element, Telfer said was diversity of thinking.


“You want people who all think slightly differently,” he said.


“We place a lot of women and young people on boards because we think that’s a proxy for diverse thinking.”


NZ Women on Boards (NZWOB) CEO, Lesley Whyte said women added real value to boards because they tended to think differently to men and have fresh perspectives and ways of challenging convention.


Diversity in terms of expertise was also vital.


“It means you get all the styles of thinking and expertise, whether it’s finance or marketing or digital media,” she said.


But she added it was important for business owners with boards to still do their own due diligence. “One thing that’s come out of the collapse of financial institutions is that you can’t rely solely on the advice of the person who’s an expert in something,” Whyte said.


“Do your own due diligence and make sure you have your own understanding of the situation.”


One business making the most of having formal independent advisers is Auckland company Rubbish Direct. The waste management company took on an independent adviser nine months ago, with assistance from Appoint Better Boards, when it became apparent there was a gap in its strategic planning and governance.


Joint-owner Rodger Howie said having grown the business from nothing, he and his partner realised they would need expert advice and help to take it to the next level.


“We are believers in surrounding ourselves with people who know more than us,” Howie said.


“And we saw a need for professional expertise in governance if we were going to get the business to where we want it to be.


“We wanted to put the structure in place now for what we want the business to be in three or four years. We needed a strategic plan for getting there.”


Howie said the company’s adviser had helped “with that front-end vision stuff” and now the company had taken on a second adviser to help build a sales and marketing plan.


“We want to grow fairly quickly and we need to do it through sales, so we need a professional sales team – and a plan,” Howie said.


“He’s already given us a much clearer picture of what we need from our sales process, what our KPIs are and how we get to where we want to go.”


The company had just signed a “milestone” new account which would boost growth, he said.


– © Fairfax NZ News

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