Is a NED the best kept secret of a successful business?
Many people will have heard of the term non-executive director (NED) but few fully understand what they are, much less what they can potentially do for a small or growing business.
It’s assumed by many small business owners that NEDs are the things of big businesses or major corporations, but recruiting the right NED can help a small business gain experience, knowledge, contacts and ideas as well as constructive criticism – all of which cannot fail to be of value to a company regardless of its size.
So what are the benefits of NEDs?
Got the T-shirt
A NED can fill a gap in a small business owner’s experience or can add industry knowledge of a specific sector the business is targeting. Whatever the reason a NED will be an experienced business person with a respected background who has probably helped a number of businesses find their feet, grow or survive tough times. And, if a NED is faced with a situation they’ve never dealt with before, they’ll know someone who has.
Think outside the box
A NED doesn’t work with a business full-time and won’t be concerned with day-to-day issues but will instead look at the bigger picture. What is the direction of the business? Are targets being met? What environmental changes might affect the business? Which competitors to watch out for and what are the plans to keep ahead?
A NED doesn’t work with the business day to day, does not engage in office politics and retains their independence. In addition, a NED will have witnessed changes sweep over the business sector in the past. All of these factors mean they will have the ability to advise with confidence and make unbiased decisions in the interests of the business.
Connections that count
A successful business is a connected one and a great way of making connections is through networking. However, for a small business it can be time consuming and can often prove difficult to build a trusted network of contacts. A NED, in many cases, can offer an address book of relevant contacts to go along with their own experience. This could be suppliers, distributors or potential customers to help boost business or a marketing guru or potential partner to add a new dimension to your business.
Keeps the management team in check
Many boards become the victims of bad habits; missed agenda items, conversations being side tracked, and opinions being discounted. The introduction of a NED will not only help to keep things on track but can help alleviate tensions and “put out fires”. Time is important for small businesses and meetings need to be specific and to the point.
In fact NEDs can round off a board by not only providing experience and knowledge that other directors may not have, but by being able to take a more objective view of issues affecting the business and offering a wider sense of the possibilities for growth.