[back]The Board You Could Never Afford ®
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For the owners of small and medium sized enterprises (SME), obtaining external input from other business professionals is essential. But it is not always easy to find people with the appropriate experience and expertise to act as a sounding board and provide impartial advice - not without incurring considerable cost. That's why the Academy for Chief Executives addresses the need for cost-effective external input through something that we call "the board you could you never afford. ®"
In many SMEs, the business experience of the founder is quite narrow. Business founders may be exceptional at sales, or brilliant innovators, but inexperienced managers of people, for example. They may not know the ins-and-outs of listing on the stock market, or implementing a CRM system.
Also, small business owners are often very isolated. They may not network much outside of the company. They may be reluctant to discuss business issues for fear of giving away information, or find it difficult to ask for advice, worrying that others will think them incompetent.
So who can they turn to when they need to discuss the tough business issues they face? Where do they find someone from outside the business with wisdom, knowledge and experience, that can be trusted, and who is able to provide a fresh perspective?
The conventional route is either through a non-executive director, or more informally, through an existing professional advisor, like an accountant or lawyer. But there are problems with both.
What often happens, for example, is that the business owner recruits a friend who lacks the experience or knowledge required. Using professional advisors is also problematic. The accountant may understand the numbers, but is probably not so good on management, or sales and marketing. Another issue is that external advisors may become "yes men", valuing their paid position over providing advice that may be controversial and difficult for the business owner to hear.
This is where Academy membership proves extremely useful for SME chief-executives, as members have regular access to up to fifteen "non-executive directors". At each monthly day-long meeting of the local group members, half of the day is given over to a facilitated discussion of business issues. The session is structured so that anyone bringing an issue, challenge, or opportunity for discussion, gets maximum value from each person around the table. These members, all chief executives, possess extensive business experience, and are able to deliver invaluable advice and feedback. The input is both genuinely impartial, the members aren't afraid to ask awkward questions or dig at an issue to get to the bottom of a problem, and extremely cost-effective.
It makes a real difference for SME owners (and chief execs of larger companies as well). One chief executive, for example, asked the group where he could get sales training for a newly appointed sales director. The groups' feedback was: why appoint the director if he lacks the necessary skills? Further clarification revealed that the director was appointed to the board because he was a family member, not for his sales expertise. As the group pointed out, what signal did this send to the rest of the sales team?
Before appointing family members to the board, said the group, make sure that they have the appropriate skills, knowledge and training, then they will be well received. The chief executive subsequently decided that all family members on his board must step down and earn their place on merit, just as any other director would.
In another case, a group member about to take a company onto the main stock exchange, expressed apprehension about marketing the share issue in the City. The director made the presentation, as previously planned with his advisors, to the group. As a result of the group's comments, 24 changes were made to the presentation. The flotation was one of the most successful of its time.
And, to emphasise the very tangible benefits of input from the "board you could never afford ®", one managing director who was selling a business wanted to discuss the heads of agreement. The group thought the company was undervalued, so the managing director upped the price, eventually selling for £2 million more than planned.
Now that's what you call useful, cost-effective advice.