Why establish a board?
If any of the following questions are keeping you awake at night, it may be time to think about establishing a board for your SME beyond what is required under law:
- Are you looking to broaden your shareholder base beyond family members?
- Do you want to take your business to the next level?
- Do you need some external expertise to advise you on growing your business, but you still want to retain control?
Whether the board is an advisory or governing body will depend on the nature of the company and its strategy. However, an effective governance structure can significantly increase the long-term viability of the business:
- The separation of management from control means that the managers are accountable to the owners, who are represented by the board—good governance fosters accountability.
- Good governance practices will improve a company’s access to capital as it provides confidence to investors, financial institutions and venture capitalists that the company has instituted better systems of internal control. This is particularly the case for companies seeking growth and expansion.
- A well-structured board can contribute to the performance of the business through roles such as strategy, advising and mentoring the owner or CEO and providing the business with vital contacts or access to key resources.
Effective Governance will work with you to achieve your business goals through either an advisory board or governance board.
We will ensure that:
- A governance framework is established to suit your organisation, e.g. a board charter, policies, processes and procedures that facilitate the board’s operations;
- The board complements and supplements the skills of management; and
- The selection and appointment of directors will focus on the necessary and desirable competencies of board members.
Board establishment will generally involve the following steps:
Avoiding director selection mistakes
The selection and appointment of directors is one area where mistakes are often made in board establishment. For example, it is especially important for a new board to include directors with governance experience rather than simply looking for directors who are accountants, lawyers or industry experts.
We focus on both the necessary and desirable competencies of directors, e.g. governance experience as well as technical skills such as accounting, marketing or IT.
In establishing a governance framework, we will also include a process for regularly reviewing the board’s capability requirements against the mix of composition. This will ensure that the board can develop and evolve in line with business requirements.
Contact us to discuss your board establishment needs.