The Board and Management Team in Growing Businesses

An Instant Guide

Guy Rigby

• Publisher: Harriman House
• Year: 2011
• eBook ISBN: 9780857191830
• Topic: Business
• Subtopic: Entrepreneurship
• Index: Business

This eBook a guide to how to run the board and management team in growing businesses.The author of this instant guide from Harriman House, Guy Rigby, has also written From Vision to Exit, which is a complete entrepreneurs' guide to setting up, running and passing on or selling a business.

The Board and Management Team in Growing Businesses

“If you limit a company by its structure or by the people in the company, you will, by definition, limit the full potential of that business.”

— Michael Dell, founder of Dell

Hitting the glass ceiling

The average early-stage business doesn’t spend a lot of time thinking about management teams and board structures, but instead focuses on carrying out the immediate and necessary task in hand, whatever that may be. As the business begins to grow, however, increased resources will be required. This means that more and more people become involved and a pattern of working emerges. As a result, a rudimentary management process begins to take shape.

In these early stages, natural talents and capabilities tend to become apparent, with individuals taking responsibility for different disciplines and roles. These informal and unstructured arrangements can often be surprisingly long-lasting and perfectly satisfactory to take a business through its formative and early growth phases.

The ‘board’ in these businesses will often consist of the founders, or perhaps a husband and wife team, with no formal meetings and no real agenda. Suffice to say that this is a perfect stamping ground for entrepreneurial heroes and meddlers who, unchecked, will typically go on to run small, often family-dominated, businesses.

For many, successfully establishing and running their small business will be both satisfying and satisfactory. However, there are some who will recognise that, whilst capable of more, they and/or their businesses have hit a glass ceiling. This chapter is for those who want to break through this invisible, yet sometimes seemingly impenetrable, barrier.

Breaking through

You’ve recognised that something needs to change. It may even be you! But before you throw the baby out with the bath water, you may want to consider the most typical and potentially most beneficial starting point – getting help in understanding your finance function and using this to strengthen your overall financial position.

This may sound strange, but the finance function in a growing business is typically under-resourced and under-qualified. Getting the right resources, including the part-time or full-time expertise of an experienced finance person, can unearth a host of opportunities.

“We find that most small businesses don’t understand their finances and the opportunities they present”, says Sara Daw, managing director of the FD Centre, an internationally established business providing part-time finance directors (FDs, aka chief financial officers or CFOs) to growing businesses. “When we get asked in we can often use our experience to suggest operational changes that improve both profitability and cash flow.”

Experienced finance people have often ‘seen it’ or ‘done it’ before, so they can prove to be a valuable sounding board on a host of business issues. Getting the right person on board may well transform your view of your business and its potential.

Once you’ve sorted out your finance function, you can start thinking about other roles in a more formal way. There may be some major challenges at this stage, as you realise that the people who fell into senior roles during the formative stages of the business, and who have supported you loyally ever since, may not be the right people to lead the business forward. Sometimes it will be possible to retain them in the business, but most will not enjoy being passed over in favour of more experienced, external recruits.

Unfortunately this can be a recurring theme – nothing is forever and the skills you recruit at a particular stage in your business’s development may need to be reviewed as the business continues to grow.

This includes you. Typically, you have been chairman, chief executive officer (CEO), managing director (MD) and chief operating officer (COO). You may also have been sales director (SD) and chief technology officer (CTO). So what’s your own role going to be in the future of the business?

This is often when the concept of a board of directors starts to take shape – the time when the business starts to move away from being entrepreneur-centric to being more reliant on key executives with proven experience and expertise. This certainly doesn’t mean you shouldn’t be involved, or that you should step back from the business, but it does mean thinking about what your future role should be.

And the last step, often not present in smaller or privately-owned businesses, is the appointment of one or more non-executive directors (NEDs). NEDs sometimes get bad press, as in the old joke:

Question: ‘What’s the difference between a non-executive director and a supermarket trolley?’

Answer: ‘You can get more wine in a non-executive director.’

Nothing, of course, could be further from the truth! NEDs can bring a wealth of experience and contacts, often taking the role of non-executive chairman or heading up board committees. Consider the benefits they might bring in one or more...

Table of contents

• Cover
• Publishing details
• Praise for From Vision to Exit
• About the Author
• Preface
• The Board and Management Team in Growing Businesses
• From Vision to Exit
• Other Business eBooks From Harriman House