Non-executive directors (NEDs) have often held a strategic and political role in larger companies.
But now, smaller businesses are cottoning on to the fact that having one can be a valuable asset, providing a source of impartial business advice, experience and contacts.
Simply speaking, an NED is a completely independent company director and doesn't have any relationship with the company or its employees. They sit on the board but don't have any part in the day-to-day running of the organisation, nor do they have any managerial responsibility.
The NED is there to make sure that the company is operating to its full potential and that its interests are protected.
There are manifold benefits to having a NED.
When it's your own business it can be easy to fall into a staid mindset. However, a NED has an outsider's perspective and is remote from the machinations of everyday business. Because of this they can offer objectivity and may spot opportunities or flag up problems that the management hasn't noticed. An experienced, independent voice can help you to avoid pitfalls and make better, more informed decisions.
In the capacity of mentor, an NED can offer advice and guidance, helping you to establish procedures and comply with regulations and legal requirements.
With their experience should also come extra business contacts and connections. They can provide networking opportunities and put you in touch with people who will help your business grow.
So where do you find one?
You are most likely to acquire an NED through your own personal, informal contacts or via the bank or your accountant. However, if you want to get a completely independent person then you can hire a third party to help. Specialist recruitment services can help you with this or there are registers of suitably qualified individuals available on dedicated websites.
Then there is the extra cost. The majority of NEDs attend a few meetings a year, charging around £500 per time. Although the cost may seem excessive, it actually works out cheaper than hiring a consultant.
An NED will undoubtedly be a boon. They should be looked at as a long term, cost-effective source of business consultancy, especially in the areas of strategy, independent thinking and knowledge.