Whether your business is a start-up, scaling, or managed growth phases, you’ll no doubt still have a way to go until your desired exit point. While dreaming of this end goal is easy, it is challenging to know exactly how to get there, especially if you haven’t grown a business before.
This is where a non-executive director, or NED, can help.
With industry expertise, director responsibility, and a fresh sense of perspective, a non-executive director can be the difference your business needs to succeed.
So, should your small business hire a non-executive director?
What Is A Non-Executive Director?
In professional terms, a non-executive director is someone who sits on your board of director but has no managerial responsibility. They are not employed by the company or part of the day-to-day running of the business. Instead, they are an external collaborator. That said, they still have the same legal duties, responsibilities, and liabilities as other directors.
Put simply; a NED is a critical friend to your business. They are trustworthy, know you, the firm and industry well, but are also frank enough to tell you the hard (and sometimes uncomfortable) truth when you need it.
Why Hire A Non-Executive Director for Small Busines?
If your business is seeking investment, your high-profile investors may make it a requirement for you to hire a NED. This is to ensure the company has the monitoring and mentorship it needs from an experienced and expert leader.
Even if it is not required, a non-executive director can be a sound investment for any small business. Selecting the right director with industry expertise and a proven track record of achieving the business goals can help to propel your business forward. If you find your business stuck without a clear path to where you want to be, a fresh perspective may provide the answers you need.
Still not convinced? Here are some of the many benefits of non-executive directors
What Are The Benefits Of A NED?
- Experience And Credibility
The right NED for your business is likely to have already faced sector-specific challenges and will be able to help you navigate your current situation to achieve your objective. Furthermore, this experience will add credibility to your business, knowing that you have an industry expert on board.
- Fresh Perspective
A non-executive director has no axe to grind, and they have no interest in the internal politics of the business. They simply want the challenge of helping your business succeed. With this in mind, they’ll be impartial and will only act in the best interest of the business and shareholders.
- Invaluable Connections
From investors to partners to experts for hire and other influential figures, a NED can significantly grow your network, helping to get you in front of the right people at the right time.
- Resource Efficiency
A non-executive director will deliver the expertise you need quickly and strategically. All the while, they will help with monitoring (ensuring you stay on the right track) and are making the best use of your resources. With a NED in place, you allow your team to play to their actual strengths, while the non-executive director focuses on the areas the business may lack.
They Sound Expensive?
A NED has usually worked their way through the industry to be a highly regarded expert in the field. As a result, there is often a high price tag for this experience. However, as a non-executive director, you can simply pay for their time and expenses, or offer shares. It may be just one or two days a month that you need. With this, you’ll get the skills and experience of a six-figure-plus salary at a much more cost-effective day-rate.
What’s more, the difference they can bring to your business may mean they pay for themselves.
So, instead of fearing the cost, consider the return on investment they may be able to offer. Especially as they’ll cost significantly less than recruiting another member of the team and will be a bargain in comparison to hiring someone with the same level of knowledge.
Article by Stephanie Benfield on PeoplePerHour