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How To Find And Appoint A Non-Executive Director For Your Small Business

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How To Find And Appoint A Non-Executive Director For Your Small Business

When it comes to running your small business, there is a good chance that, as Founder and CEO you will have been the most senior and experienced person working within the business for a while.

This may work for a short period, but there will come a point when you realise that to grow your business, you will need access to other's people knowledge, insight and experience. 

A great way to get that injection of senior input and knowledge, without having to invest in a senior full time hire, is to bring together a board of advisors to help you with the next stage of your growth. 

Of particular benefit to small business owners and often overlooked is the role of the non-executive director.  I'll explore this role further in this article:


What is a non-executive director?

A non-executive director's (NED) role is to deliver a strategic contribution to the board. NEDs are fundamentally ‘outsiders’ to a company, detached from day-to-day operations and valued for their objective insight.

All businesses have directors, no matter how big or small they are. However, in smaller companies, the directors are also usually workers... working operationally, deep in the business, as part of the day to day executing team.  However, this doesn’t have to be the case for all your directors.

A non-executive director is an acting member of the board of directors of a business; BUT, they do not have any decision making or managerial / operational roles within the business.  They are simply there to act as a trusted business advisor - to contribute fresh advice, industry knowledge and experience, which in turn boosts the capability of the business. 


Why might you need one?

There are several reasons why hiring a non-executive director within your business might be a good idea.  NED’s can provide amazing support for lonely Founders and CEO's who are looking for someone to bounce strategic ideas off and seek guidance from when making tough commercial decisions. 

A great non executive director will also provide an independent view and constructive challenge on:

  • Strategy
  • Performance
  • Resources, including key appointments and financials
  • Standards of conduct


The functions of a NED (non-executive director)

Non-executive directors are expected to focus on board matters and not stray into operational ‘executive direction’. NEDs are removed from the day-to-day running.

They can also offer a unique perspective towards strategic decisions, corporate governance, risk management and succession planning. They typically bring:

  • Independence and impartiality
  • Wide experience
  • Specialist knowledge
  • Personal qualities and connections

They will bring a fresh, new perspective into your everyday thinking. They are independent, and they don’t have any ties at all. This means that they have no ulterior motives and just want to see you succeed.  As business advisors, they will help you work things through and consider decisions at times when this can be hard to do on your own.

Not only this, but they are also someone who will be able to offer a wealth of experience across a range of industries and other business types. This means that they can give you some guidance on what works and what doesn't for your business model - especially helpful when you may not know which way to turn. 


How To Use Your NED

Founders and CEO’s should use their NEDs to provide general counsel – and a different perspective – on matters of concern relating to your business. 

As ‘an outsider’, the non-executive director will have a clearer or wider view of external factors affecting the company and of course market opportunities too.

Founders and CEO’s should also use their NEDs to help hold themselves accountable, monitoring their team's performance against the achievement of strategic goals.


What should you look for in a non-executive director?

Whilst there are many things that you are going to want to look out for when it comes to choosing a non-executive director, the priority is that they have the skills and experience within your industry, or even better, directly with your unique business model.

You want them to be knowledgeable enough that they bring examples of what can work for your business to the table and ideally be a natural business coach and mentor for you. 

You may also want someone who can bring industry connections to help you open doors and be happy to share their opinions on new product ideas, brand positioning and marketing campaigns.


How do you find one?

If you are thinking about hiring a non-executive director for a small business, you will clearly want to try and find the best one for you and your business. This means doing your research and also making a criteria list of what a great NED for your business would contribute - what skills, what experiences, what type of connections?

You should take your time to meet with individuals who might be good potential candidates, and see if their is a genuine connection between you both. 

This relationship is an important one and there must be a feeling of mutal trust and respect if the appointment is to be successful.  It is always best to ask your extended network too in case you can get a recommendation and personal introduction. 


Make It Happen In Your Business

As you can see, there are various reasons to hire a non-executive director for your business. Whether it is to help you grow or show you the right direction to move in, having someone experienced on board that will guide you can be one of the most valuable moves you can make for your business.


Next Steps:

  • Consider how your business could benefit from bringing together a board of trusted business advisors.  What capability gaps do you have right now and what knowledge do you need?
  • Do your research and ensure that you meet any potential candidates for the role and check that their is a genuine connection and the chance for a trusted business relationship. 
  • If you would like to talk to me about how I help my clients, acting as a non executive director and senior board advisor, please schedule a call with me. 
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