Often a young ambitious business, often a technology business asks me about getting a Non-Executive Director or NED. Sometimes they ask me to be the NED.
I always say no to this. Partly because I spent a lot of my life in Scotland where NED means “non-educated delinquent” so I don’t feel qualified for this role. And mostly because those young ambitious businesses don’t need a NED of either variety.
What NEDs are good for
You might need a non-executive director if you’re going for a substantial angel or venture capital funding round and your board is made up of young techies who haven’t run a company before. The idea is that you bring in a “grey hair”, that is, someone a bit older who has been around the block a few times, probably built up a company and is now working part time, probably for the fun of it rather than for the money.
That’s the conventional wisdom anyway, but as with most “common sense” ideas about business, reality is a bit more complex. I want to take you through some of the common myths about NEDs so you can make up your own mind if you need a grey hair or not.
The myths of NEDs – and what happens in the real world
These are the common reasons why companies think they need a non-exec.
- We won’t get funding without strengthening the board
- I need someone with more experience who can help us out
- We’ve started this thing, it’s growing and now we’re all a bit nervous about what we’re doing
- We don’t have a clue and we’re all terrified
- They’ll have a great address book and will introduce us to funders/clients/important people
- They’ll be able to sell loads of stuff to big companies
Any of these sound familiar?
Here’s how it works in the real world.
Banks, angel investors and venture capitalists are all primarily interested in you, the business founder, and your business plan. If you glue a non-exec person on to your board just to make the company look good, they’ll see through this instantly.
If you think you need someone with more experience, what should they have more experience of? Do you need someone who can negotiate or sell for you? Get a sales person. Do you need someone to help you with strategic planning or to support you as a board or founder as you grow? Get a business advisor/mentor. If you need help planning out complex financial planning (especially for a funding round or big step up) get a part time financial director. All of these will actually add value to the business, and will be a lot cheaper than a non-exec.
Similarly, if you want to get introduced to the people who can make a real difference to your business, either use LinkedIn or google the right people and email them. If you’ve got a good proposition for investment or for a new piece of technology, you’ll get interest from the right people just by putting it in front of them. No one is going to fund you just because your non-exec suggests it to them, they’re going to assess whether that’s a good opportunity.
NEDS are not a short cut
Many of the myths around creating a successful business are based on a lazy approach, and the idea of the non-executive director is that they could create short cuts for you. Unfortunately, success in business is all about hard work. It’s about researching and learning (that’s why you’re reading this article isn’t it?) and finding out the right way to go about things, finding the recipe for how to create the business you want. You can find this stuff out for yourself, but you have to work at it.
Think about a business advisor who has done it before instead of a NED
If you’re uncertain as to how to grow your business, confused by all the conflicting advice out there, or don’t know who to trust, think about getting a busines advisor or mentor who has been in business, grown companies and been around the block. In my opinion, this is a more honest relationship, where you pay for business consultancy and advice, and get someone honest and on your side to help you with the business. And you don’t have to locked into a relationship where you’re paying someone a couple of grand a month just to look pretty on your board, or worse, interfere in your business, tell you what to do when they don’t know about your sector, and slow you down.
Not everyone needs ongoing business support and advice. Sometimes people just want some help with a particular issue they’re facing, or they need help to make a big decision for their business.
So I’ve invented what I call decision making sessions for people who want a couple of hours of intensive Julia time, either to really understand how to do something, or to talk through a big decision they have to make. Sometimes, this can be a review of the whole business and where it’s going – those ones can be very powerful indeed.
Here are some of the issues I’ve been helping with
Shall I carry on?
One person got me in to ask if she should carry on with a business which wasn’t making much money and wasn’t a lot of fun. I think she knew already that she had to give it up and do something different, but wanted to be totally sure this was the right thing. Although the business was dead in the water, I did manage to come up with a way for her to sell the mailing list to a competitor, which at least paid for my session and a wee holiday after winding up.
Shall I start this business?
Someone I’ve known for ages with one business got in touch because they had an idea for a new venture. Although it looked very exciting (much more interesting than her current freelancing role), we had to carefully think through whether it had any potential. In just 2 hours, we couldn’t possibly make a final decision, but she left the session with a long list of things to research, test and ideas to steal, plus introductions to a couple of my clients from years ago who had previously sold to big supermarkets, so she could pick their brains. I reckon she’ll be back in about a year with a very solid business plan, and wanting some support at that stage.
Should I go into partnership with this person?
A client from about 6 years ago got in touch as he’d been offered the chance to go into partnership with someone who worked in the same field. It looked good on paper, combining forces for something bigger and better together, but should he do it? After me asking lots of nosy questions, it actually got down to a very emotional decision that he didn’t really trust the other guy, so he shouldn’t do it. About 5 minutes before he left, he mentioned something else that he’d been thinking about, but hadn’t got round to yet. This was a ridiculously good idea (one of those where I wish that I’d had the idea myself) and we’re meeting up again to make an action list for getting this one on the road.
I’ve been offered investment, but I don’t know understand the implications of giving away equity in my business.
I do quite a lot of work in this area, where people with growing companies want to understand the ins and outs of giving away equity either to investors or to staff. With this one, we spent three hours going over pie charts and potential investment levels, and by the end of it, my client knew how to negotiate a really good deal.
Would you like some help?
If you’d like some help with a big issue in your business, then book yourself in for a session. I work in Brighton, Sussex and London, or if you’re further afield then the decision making sessions work well on the phone or by Skype. Drop me an email with what you’d like to talk about, and we’ll set up a time to get together and really crack it.
I’ve been asking myself what my clients really want, what they really, really want. Once I could get rid of that annoying Spice Girls song, I was able to think about this a lot more clearly.
We all make the mistake of thinking that our customers want what we want to sell them. But that’s not necessarily true. When I go to a restaurant, as a customer, it’s not actually the food that I want, or even the good service. What I want is the experience of going to the restaurant. Maybe I want some quality time with my partner, or an exciting taste experience. Maybe I want a good night out with friends. Whatever it is, the restaurant has to give me that experience, not just nice food and a friendly waiter.
What do you want from the Joy of Business?
- You want to learn how to make your business great
- You want to know what to do to make your business great
- You want to feel confident in what you’re doing, and know that this is the right thing
- You want to make good money, and have fun while you’re doing it.
You don’t just want a business advisor. You want someone who is on your side, and can help you to make your business great, and make sure that you’re doing the right things, not the wrong things.
What do your customers want?
What do your customers and clients really want? Is the meal or the experience of going out for the meal? How can you tell the difference?
I’ve been catching up with asking clients for testimonials for my website. These are two which made me laugh out loud.
Tim Simpson from Plunge Productions in Hove offered several versions of his testimonial:
Short and punchy…
She looked at our business, understood it, then made it grow.
If we’d never been introduced to the Joy Of Business, goodness only knows what kind of pickle we’d be in by now.
Call Julia, Meet Julia, Thank Julia.
We at Plunge have been searching for years to find a Business consultant and mentor who truly understood our needs as a business. Finally we met with Julia and Ohmigod; she opened our eyes to how our business works and what we could do the develop its true potential. She’s simply amazing. Wow!
She’s a bargain. A few consultations and now we’re rich. RICH I TELL YOU. RICH!!!!
Yeah, running a business is such a joy!
And Sarah Carter from WorldWide Performers offered:
Working with Julia is like having a second superior brain which is bigger, better, smarter and more experienced than mine and which can think logically and accurately when mine is ready to hit the G and T. She has helped me turn business ideas into real opportunities and has given me the confidence to make decisions which I would have found difficult to make on my own. I recommend Julia wholeheartedly though, if you are going to have a meeting with her at her place, take some milk just in case.
I’m one of the facilitators for the new Wayfinder peer support sessions run by Brighton and Hove Chamber of Commerce. I did my first session a few weeks ago – and it was great!
Wayfinder is a really simple idea – we get 4 business people, who are all at a similar stage of their business, together in a room. They all pick one issue they would like help with and get to speak about those issues for 20 minutes. Everyone helps to solve the problem, generate ideas or just provide emotional support by listening.
The session was a challenge for me professionally as usually I’m the one giving the advice, ideas and support. This time, my job as facilitator was just to listen hard and make sure everyone got a chance both to talk and to be heard.
What was great about it?
I had high hopes for the sessions anyway. What really blew me away was the way that everyone in the room was supportive and caring of everyone else. They all asked really great, and often surprising, questions, and were coming out with great ideas to help one another. Some of the thinking was quite profound.
Having someone else care about whether or not you do well, challenging your assumptions and coming up with ideas and practical offers of help is incredibly important in business. Although running a business is one of the most creative and rewarding things you can do in life, it can also be one of the most difficult.
Judging by this first session, Wayfinder is one way of having other people on your side.