A Non Non Executive Director!
Is This You?
You are a start-up or a Small or Medium-sized Enterprise (SME)[1].
You have been trading for less than 5 years and things are going from strength to strength. You have a healthy turnover and your company employs less than, say, 20 staff.
Everyone you employ has been selected personally by you, not only because of their skills and experience, but because of the values you share with them and the enthusiasm they have for your company’s future.
The product or service that your company provides is innovative, is attracting the right levels of attention and is scalable.
Your Board or senior management team is made up of the founding Directors, supplemented by a set of interested supporters and/or investors.
You need to expand your customer base and provide your offerings to a broader set of clients such as government departments or other tightly regulated sectors and organisations which demand high levels of support, governance and compliance.
The UK Government is committed to supporting SMEs.
The UK Government View
The UK Government committed to ensuring that at least £1 in every £3 it spends, is with smaller businesses by 2022[2]. In practice this means that your company should be viewed favourably by both the Government and those who sub contract to provide products and services to it.
Similarly, large UK companies are under increasing pressure to contract with the 5.7 million UK SMEs as they make such a significant contribution to the UK economy. Smaller businesses employ 16 million people across the UK and account for £1.9 trillion of UK turnover[3].
This has the UK Government’s attention and therefore it features heavily in the deliberations, strategies and plans of large UK companies too.
So What?
Whilst this is all great news, theoretically made more so by initiatives to make contracting directly with the government less complicated, there is a dependency on smaller businesses to make sure that they are correctly configured to do this work; this requires governance, accreditation and compliance.
The further great news is that we can all list young, innovative and energetic companies with exciting, possibly even game-changing, products and services right now.
They have attractive offerings but often need significant assistance to move forward. This assistance can be with strategy, the identification of risk, leadership and management issues, business development, or putting in place governance such as Cyber Essentials, ISO, safety, security and logistics support that will enable them to expand into their target customer base.
Start-Ups and SMEs can employ full time employees to take on this compliance role. They can engage a large consultancy to do it for them, or they can appoint Non Executive Directors (NED) to oversee governance, advise and take on specific projects which are then implemented across an existing workforce.
Whilst these options will generally achieve the aim, they can be expensive and can sometimes deliver a sub-optimal result. There is also the fear that a new, senior hire could dilute the Board’s or senior management team’s decision-making process; one that has served them well so far.
Consultants from smaller companies can offer a bespoke perspective.
A NED in All But Name and Cost
There is an alternative. Small, agile consultancies are fantastically well-placed to provide advice and guidance to companies which face these issues.
Often these smaller consultancies are staffed by people who have a wealth of real-world experience across different sectors and have felt the pain that their clients are feeling.
Smaller consultancies are themselves SMEs and contain people who have had extensive client-side careers and are therefore able to offer a fresh perspective.
Far from being formulaic, they offer hands-on, practical advice and guidance which they can then go on to implement.
They do not judge and, most importantly, they roll their sleeves up and deliver what you need them to because they understand the value of a quantifiable result delivered on time.
Consultants from SMEs offer smaller businesses a meaningful, long-term relationship with fee structures that are generally based on a simple daily rate rather a long-term remunerative commitment such as is often preferred by larger consultancies or NEDs.
This in no way criticises the approach taken by more established, large accountancies and consultancies, nor does it devalue the vital role of a dedicated NED. It simply offers an alternative to companies who do not yet wish to go down this route for whatever reasons.
Thinking smaller can often yield better results for your business
Consider Keeping it Small
Whilst we would be delighted if you would consider The IWH Group, the bigger picture is that there are a great many smaller consultancies that tailor their approach to the specific needs of a SME client base. They offer the chance to work with front line professionals on a collegiate basis.
Businesses will always need accountability and structured governance, but it is in the very best interests of start-ups and SME’s to do this on their own terms. Small consultancies offer that opportunity.
And, arguably, this is a good time to take stock of your business requirements. Be they a through-life logistics support wrap-around for your product, cyber resilience, a training management plan to ensure your customers are able to use your services effectively, or just a second opinion on a workforce incentivisation scheme, smaller consultancies can deliver.
So, when is a NED not an NED? When they are a consultant from a small consultancy.
[1] The UK Government adheres to the EU definition of an SME, which is: micro-business = less than ten employees and turnover under €2 million; small business = less than 50 employees and turnover under €10 million; medium-sized business = less than 250 employees and turnover under €50 million.
[2] HM Treasury Small and Medium Enterprise Action Plan dated November 2018.
[3] Department of Business Enterprise & Industrial Strategy (BEIS) Small and Medium Enterprises (SME) Action Plan dated March 2019.