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Boards for SMEs - A strategic tool for growing a business

 
 
 

Boards for SMEs - A strategic tool for growing a business

When a company is formed the directors take on a governance responsibility, though often not viewed as such. Directors of any company, large or small, have to comply with statutory requirements and have responsibilities and duties they must deliver on. We just can’t escape them. Likewise Trustees, whether they are paid or act in a voluntary capacity all have fiduciary duties and obligations to fulfil. As the statutory obligations continue to increase, and as the judiciary system is currently reminding us about, is that we can no longer just say well I am a director of a company but I really leave it to my business partners to run the business. Directors of any company need to know what is happening in the business and to be part of the decision-making process.

Most companies work hard to build their market(s) a task that is usually driven by the passion of the owner to succeed. As the company grows the owner does his or her best to steer the business forward, which often comes at a cost of restless nights. Like most business people the owner(s) possess a range of skill sets and are often the product/service champion, caring for it like it was his or her own child. It’s great that they do care but the key to their success is that they often are passionate about the products and services they are delivering at the cost of looking at the business from a wider perspective. They need to continually ask themselves the hard questions, like why do it this way ……, or what would happen if we………. And, if we did what resources would we require at what cost?

There are many pitfalls in any business from raising capital to exporting to foreign countries yet such considerations are all part of a company’s growth strategy. The knowledge often required is diverse and/or specialist in nature, something that is not usually possessed by just one person.

The consequences of poor decision-making can be far reaching for any business whereas strong decision-making at a governance level can add considerable value to a business. This is where a small board can assist a growing company. Such a board can support and ensure the owner’s governance obligations are achieved. With the right skill sets, experience, competencies and knowledge the board becomes the team that sets the strategic direction, tests propositions, looks to ensure the company is able to manage risk, that it complies with the law and is continually watching the financial situation. In essence a small independent and experienced team can bring a wealth of knowledge to the business.

While a board may not be the solution for all businesses having one can add considerable value by ensuring all aspects of business are driving it forward in a structured manner.