Young companies should consider bringing in a Chairman and a Non-Executive Director or at least a Non Exec as they will be of great benefit enabling them to grow with a solid foundation and experience and ensure that key decisions you make are the right decisions.
The benefits of Non Execs for young Companies:
- Outside objectivity and strategic input
- Entrepreneurial flair
- Help identify the key issues – an “ideas sounding board”
- Raises company profile
- Mentor & sounding board for the MD/CEO
- Assists with growth problems
- Network of contacts
- Good value resource compared to consultants & advisers
- Facilitates fundraising & provides comfort to funders
- Reduces Board conflict
- Can provide specific skills such as: finance, management of growth, “done it before” etc.
More often than not, young companies struggle to gain funding due to the lack of credibility in their management team and this shortcoming can be addressed with the appointment of a high calibre, successful and experienced Chairman and/or a Non-Executive Director including maybe a Non Exec FD to ensure the finances are well managed.
First Flight very much work on the credo that successful companies are 85% good management and 15% good idea and it is widely accepted that funding tends to follow successful people which Non Execs have to be.
Businesses are started by passionate entrepreneurs - people with a vision and talent in their fields. However there are often skill and experience gaps at Board level that may hold the business back, cause it to make wrong decisions and concern investors. A Non-Exec is an affordable way to access those skills and experience.
If SMEs/Growth Companies are considering strengthening their Board they should consider appointing a Non Exec and should use a provider with considerable experience of helping young growth companies. First Flight has handled hundreds of Non Exec projects over the years for young companies. In addition to providing Non Execs who are “business savvy”, add value and contribute to the success of the company they also sometimes consider investing to align their interest with the existing Directors who are likely to be shareholders – this is known as “smart money” and the added commitment of a Non Exec having some “skin in the game” is beneficial and gives comfort to outside investors.
First Flight advocates that for companies with a turnover of less than £1m the Non Execs should not be paid any fees and should be focused on preserving cash and growing the business; this is only practical when the Non Execs invest and of course this is a most cost effective option – a wise owl or two and no cost!