How to build an effective board

One of the toughest parts of running your own business, is knowing the right time to formalise your board or expand your senior leadership team. Taking that step to hire in the specific skills you need in order to take your business to the next level needs careful consideration. Hire too soon, and you may risk excluding the right long-term candidate. Hire too late and major opportunities could be missed simply because you haven’t got the right strength or depth to take advantage of them.

Whilst every situation is nuanced and different, there are some common questions you can ask to help address the ‘when’ and ‘how’:

Is the day-to-day leaving you without time to really consider the future of your business?

If too much of your time is being eaten up by operational matters, it may be time to hire a COO with classic completer finisher skills; someone who brings structure, discipline and task management, leaving you to focus on aspects of your role which drive real strategic value.

Is there sufficient review and challenge at the top of the business?

You may be happy to remain at the operational coal face. The question might rather be: is there sufficient review and challenge at the top of the business – that essential wise counsel? If not, now might be the right time to consider a chairperson, non-executive or mentor; entrepreneurs are invariably visionary, but the right sounding board can be enormously beneficial.

Do my business finances support or even enable growth?

Do you have enough of a handle on your business finances to ensure that you can invest appropriately for growth? If not, it may well be time to hire a CFO. Cash management is one of the principal reasons that small or high growth businesses fail. A bookkeeper or accountant may be fine in the early days to keep a track of finances but a skilled CFO can contribute immeasurably to your financial future. What gets measured gets actioned and the best CFOs will implement a reporting framework that really improves the quality and timeliness of decision making. Structure in support of intuition is a powerful combination.

Are there parts of your role that you are doing from the side of the desk?

Marketing by candlelight or HR Sundays will take their toll over time and impact any business. A core part of private equity investment is to build out the capabilities of a team by business function. This will be iterative and tailored to what a company can afford, but specialisation is a central component to driving competitive differentiation. If you want to stand out from the crowd, find the talent to make it happen, recurringly.

What keeps you awake at night?

Risks apply in any business but can be managed and mitigated. Have you considered risk frameworks, risk registers or the benefits of developing a structured ESG programme? These have become important evolutions that businesses need to consider, the latter increasingly a ticket to play and not just a feature of value creation. An effective leadership team can help codify, document and manage risk, setting a strategic agenda by which you can structure decision making in times of real adversity.

How diverse is your workforce?

Diverse workforces, like diverse leadership, can bring new ideas and a different problem-solving approach into the business. If you haven’t already considered this angle, it might be time to explore the value it brings. Advisory boards, employee councils, graduate board representatives can all broaden perspectives.

At Sovereign, we have a tried and tested method of supporting our portfolio companies to build effective teams – working closely with them to ensure we’re backing businesses where we believe our expertise, network and active partnership can significantly enhance their opportunities.

A great example of this is Skerritts, a successful independent Financial Advisory (IFA) and Wealth Management business which we backed last year to accelerate the firm’s growth ambitions and increase its UK presence. Building on the excellent foundations at the firm, we have helped identify and recruit talent at a number of levels, both non-executive in Andrew Fisher, former CEO of Coutts and Towry, and in executive roles. In anticipation of significant M&A growth we have increased headcount by 20% and introduced senior hires in finance, technology, marketing and business development.

If you’d like more information on how Sovereign supports businesses by identifying key talent, or how we could help deliver successful growth through Buy & Build, please contact Alex Hay.