As a company grows, the challenges it faces become more complex. The decisions made to move forward from these challenges fall upon the company’s Board of Directors. Hence, business owners must ensure that their board is knowledgeable about the current challenges the company is facing.
This is especially crucial for scale-ups and SMEs. From simply perfecting a business model and finding sources for funding, they now jump to bigger undertakings such as sustaining revenue and strategizing for long-term growth.
So the composition of the Board of Directors may be lacking in some areas of expertise now that it is entering the growth stage, where the problems are different from before.
What expertise do scale-ups and SMEs need in the Boardroom?
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In-depth industry and market knowledge
Definitely, business owners will already know a lot about their industry, but this is mostly what is learned from the conception of the business up to what it is today.
Since the redefined goal is to take on the next steps, it’s smart to have someone that’s already been through all the stages. An expert that knows how your industry and market works can anticipate what threats or opportunities are there for your business and provide valuable insight into the strategies you will develop.
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Operations and management expertise
While the business may be operating smoothly, business owners should take into consideration what they could be doing better. Eventually, the business will grow in size and enter bigger markets and competition, which may affect operations in the long run. A director on your board with vast knowledge about all these can help create more robust operational and management schemes for the business.
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Financial expertise
Scale-up or SMEs need to stay on top of their finances. Even if the business can stand on its own with its earnings, you have to consider its long-term strategic growth. Are you using the company assets in the best way? Are there investments that would be smart and reasonable moves for the business? These questions can be answered if there is a financial expert in your Board of Directors because they can do a thorough evaluation and analysis of the business’s financial standing and capability.
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Sales and marketing expertise
You know your product or service sells, so the next step is to grow sales even more. Expanding your revenue and market is a key goal of scale-ups and SMEs. Thus, it’s imperative to be aware of the most effective ways to market your products and services especially in a market landscape that’s ever-changing.
Though you may already have a promising sales and marketing team, it may speed up the process of crafting new tactics if a highly knowledgeable expert for sales and marketing is on the board. You won’t need to waste time on testing strategies or missing out on the most reliable approaches through lack of experience. With a director focused on sales and marketing, plans can be more decisive, creative, cost-efficient, and revenue-generating.
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Technological knowledge
Technological advancements will just continue over the years and businesses have to keep up with it. Innovations, incorporation of systems, and adapting to different technologies will be encountered at some point.
For this, a board doesn’t just need someone that is forward-thinking, it needs someone with the technical knowledge to discern the feasibility of innovative ideas, define the steps to achieve them, and foresee possible challenges that may come with it.
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Risk management knowledge
Scale-ups and SMEs are in a delicate position for dealing with risks. They have more to lose now than when they started the business, and they don’t have the financial stability yet to survive huge risks like big companies. Having someone with expert foresight and risk management knowledge can help protect the company and avoid potential harm. -
International trade experience
It is expected that with growth, going global may be on the horizon for some. If this is the path that a business wants to take, it should not venture into international trade blindly. Having someone in your Board of Directors who knows all the facets of internationalization can reduce the high risks involved.
Should your Board of Directors have all these skills?
The skills and expertise you need to have in your boardroom depend on your business objectives and challenges. Once you fully understand that, you will be able to see what expert knowledge is important for you to have on your Board of Directors. It may be all the aforementioned skills or just some of them.
After that, assess if the skills in your current Board of Directors are aligned with them. Are there knowledge gaps that none of the current board can fulfill? If yes, then you should address it to make sure you have an ideal group of advisors in your boardroom
How to address gaps in your Board of Directors
Look for seasoned directors that can provide valuable wisdom in those gaps. After all, it’s good to get advice from those who’ve been there already.
However, It may be difficult for scale-ups and SMEs to source such experts for their boardroom because of the high cost of getting one and the limitations in their current network. Fortunately, companies like ABL and Boardroom Advisors offer a pool of experienced advisors that you could choose from and hire part-time to join your board. For an affordable price, you can receive masterful advice to run your business.
International trade experience
It is expected that with growth, going global may be on the horizon for some. If this is the path that a business wants to take, it should not venture into international trade blindly. Having someone in your Board of Directors who knows all the facets of internationalization can reduce the high risks involved.
John Courtney is Founder and Chief Executive of BoardroomAdvisors.co which provides part-time Executive Directors (Commercial/Operations/Managing Directors), Non-Executive Directors and paid Mentors to SMEs without either a recruitment fee or a long term contract.
John is a serial entrepreneur, having founded 7 different businesses over a 40 year period, including a digital marketing agency, corporate finance and management consultancy. He has trained and worked as a strategy consultant, raised funding through Angels, VCs and crowd funding, and exited businesses via MBO, MBI and trade sale. He has been ranked #30 in CityAM’s list of UK Entrepreneurs.