The power of great boards for SME’s

Boards: Leadership – Value Add or a Necessary Overhead?

There is still mystique and miss-understanding what relevance boards have for SME’s.

Do you have a high performing board, inspiring your business?

SME business owners continue to shy away from establishing or maximizing the value of their board or advisory group. These business owners are missing out on the most cost-effective business tools.

For many, it could well be a throw back from what appears to be era of dysfunctional corporate boards i.e. the lack of good role models.  For others, perhaps they simply do not know what they are missing out on.

There is hope on the horizon. I recently attended a week-long IOD (institute of directors) company directors course, with 24 others who were willing to challenge the norm, while acknowledging the great heritage and knowledge from the past masters.  Watch out for these 40-50 something’s who are keen to set new benchmarks in governance.

I believe in the next few years a new wave of governance will emerge, as the  “old chaps” brigade run from threat of potential liability and litigation from their dysfunctional past and a new bread of “value add” board professionals will emerge.

This is a first blog post of a series on the topic governance for SME’s, in which I intend on exposing why and how leverage effective governance for SME’s.  Using a board the purpose of growing your business rather than just mitigating risk.

So what can you expect from a great advisory group or board?

Great board’s bring:

  1. Value to the company – improving the performance, beyond what would be achieved without them
  2. Awareness of the fiduciary responsibilities and risk management, but doesn’t act as a hand brake on the business
  3. Fresh thinking – challenging the norm – creating a new future, not just repeating the way they did in the past
  4. Personal support and motivation to the CEO – owner as well as other key executives of your company, keeping them on track to achieve their goals
  5. A radar for problems, with a willingness and capacity to act, rolling up their sleeves as an immediate response unit in times of crisis.

Simply put you board need to be the best performing – value for money team in your business.

No advisory group or board yet?

If you have a business plan, then you are ready for your first step into governance.  Establish an advisory group now!

 

If you have a board:

– Do they pass the 5 check point test above?
– Do you look forward to board meetings?
– Do you cringe at the thought of preparing pointless board papers?

Then it may be time to review -change your board.

Effective boards are not hard work, they add value and accelerate success.

The label of “governance” for many has the stigma of grey haired old men at the gentleman’s club, do you have a better handle for this activity – to help me in my crusade to bring better high level support to our emerging SME champions.

 

Let me know what issues you have with governance for SME’s and I will post an answer.

Other blog posts by Mark on Governance – Advisory Groups etc for SME’s

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Magnetic Cultures – the Netflix Example

Some businesses are magnetic in their cultures.

At a recent facilitated strategy day, when I gave  an example of a company’s value set, the development manager immediately said – “I want to work for a company like that”. We subsequently went on and revised their culture -value set and used phrases like “We dare to be awesome”

So is your company’s culture magnetic attracting the right people and more importantly are you managing to your stated culture.

Below is a link to a great insight into the Netflix culture …  have a read.

http://www.slideshare.net/reed2001/culture-1798664

If people are really your most important asset then learn from the Netflix example and challenge yourself – what is stopping you implementing and living a culture like this in your business?

New directors liable for previous capital raising

Did you qualify your investors in your company as “qualifying” under the securities act as “eligible investors”. Friends or close business associate ..yeah right  

Recently we have seen a few companies with long lists of existing shareholders looking at raising capital. 

Andrew Simmonds has kindly made me aware of a recently published cash where new directors were held accountable….

A recent High Court case (summarised in the Minter Ellision newsletter) puts a slightly different spin on the DD required by incoming investors/directors re Securities Act breaches.

The ins and outs of the case are a bit complicated, but it suggests that directors who join a company within 6 months or so of an illegal share issue could be personally liable for amounts invested in that share issue, if the company fails to pay the amounts back when requested to do so.  This will mean that early stage companies are going to get greater scrutiny of past share issues by incoming investors.

This will hopefully still not cause a problem for you, but I thought I should bring this new development to your attention.

Kind regards
Andrew Simmonds – www.simmondsstewart.com

(reference case summarised in the Minter Ellision newsletter http://www.minterellison.co.nz/publications/CorporateGovernance18March2010.pdf )