“The single most powerful determinant of success in an SME business is having a professionally-qualified Non Exec on board”
Warwick University Business School

How we do it...

Due to many concerns, primarily surrounding the poor reputation of some long-serving old style Non Execs in larger companies, many SME business owners’ perceptions of Non Execs are understandably vague, and often even negative, and are maybe based also on the perception of the said Non Exec’s abilities to just make useful connections in business or political circles and / or on regulatory responsibilities such as corporate governance issues

Whilst these aspects can sometimes be a minor part of the role for a Non Exec working with an SME business, they are most definitely not the primary essence of the role, with the essentially key focus for an SME Non Exec being always on the maximising of the (safe and secure) medium and long term commercial and financial success of the client business

So, what does an SME Non Exec do actually? - Let’s look at a typical scenario and take a company about fifteen years old with a turnover of around £8 million as an example. The owner and his or her family are living well out of the business, but the company is not making any really significant Net Profits and is always short of working capital. The owner wants to increase turnover significantly and to make real and substantial net profits year on year. Let’s say they are aiming for £12/15 million sales and at least £1million minimum pre-tax net profit per annum - and to achieve this within three to five years. There may also be an aim to exit the business, at that point or later, with a target of realising say £5m to £10m - or more - for self and family

How does it all start? - Stage One of the SME Non Exec’s work is dedicated to the assessment with the business owners of all of the relevant problems and opportunities, and on agreement with them of the primary strategic objectives - then devising with them - and with a very powerful emphasis on the “with” element - the strategies and tactics required to achieve those objectives with timescales and resource implications indicated. These will be incorporated into a brief two to four page strategy change business plan, plus financial modelling exercises and projections in various scenarios

This type of work is sometimes carried out (and usually extremely expensively so) by Accountants and or Management Consultants. The difference is that when an SME Non Exec is involved and driving the process, the resultant plan is one that costs vastly less, does not rely on pre-conceived financial judgements, nor on pre-prescribed solutions, nor on pre-prescribed management theory, but on the real down-to-earth and hands-on business-life experience and expertise of the SME Non Exec who will have actually run SME businesses, and who will have helped other SME businesses to achieve similar objectives

How long does this initial stage take and what is involved? -- It may take three or four months of the SME Non Exec working closely with Directors, maybe also shareholders, and maybe also senior management to build together - and with a massive emphasis on the “together” element - and to complete such a brief strategic plan. This timescale leaves time for thoughtful and careful joint discussion research and reflection, testing of financial models, marketplace reviews and consultations with others inside and outside the business

“The most common reason for lack of success in implementing plans successfully is due to management failing to analyse problems accurately and rigorously, or by not facing up fully to the many and varied implications of changes, or by not making the brave but well-considered decisions.” Comments: Peter Gray, OMSG Non Exec Group’s Joint Managing Partner

Crucially, the SME Non Exec will not let critical issues remain un-addressed or be fudged and he or she will ensure that plans are down to earth, realistic and achievable. He or she will also gather data and information, question assumptions, investigate options, generate ideas, challenge perceptions, develop and propose strategies until a mutually-entirely-agreed plan is generated - and with a huge emphasis on the “mutually-entirely-agreed” element - and only when all parties are confident and committed and when they are determined to make that particular plan happen

And the next step? - The next step is to turn the strategic plan into an Action Plan with realistic monthly / quarterly / annual objectives and activities. A strategic plan without the Action Plan will almost inevitably stay on the shelf, and half-implemented strategies are doomed to failure. The SME Non Exec becomes the key driver of action plans, reviewing them and updating them assiduously and rigorously with senior management, and doing so on at least a monthly basis at specifically-scheduled Monthly Business Performance Review (MBPR) meetings

How is the SME Non Exec’s time spent during implementation? - An SME Non Exec is engaged typically for two days a month of task-based time and expertise, and spends about half of that time in board or other meetings on site - and half working off site exploring options, updating actions plans, undertaking various tasks as agreed, working on financial models, consulting other external professionals or sourcing potential partners, routes to acquisition or on other resources

The ’third half’ of his time, whilst travelling, in the bath, reading or on other business is non-chargeable - and usually equates to an approx. further two days per month - and is spent on the absolutely essential background thinking, plotting and planning

Does the SME Non Exec usually work with several companies at the same time? - Yes they do, but a professional SME Non Exec would not ever take on more than an absolute maximum of five or six clients at any one time, and usually much less than that. They need essentially the extra time within the twenty-two days available to them each month for the ‘third half’ of their remit as described above, i.e. careful background thinking plotting and planning, in order to be able to deliver the full quality of Non Exec service which the client has every right to expect

And how would you summarise the SME Non Exec role? - The SME Non Exec is the catalyst for change and progress. He or she prevents pitfalls and knocks down barriers to progress at every stage, ensuring that nothing is overlooked and that all opportunities are recognised and exploited appropriately and professionally

SME Non Execs are sometimes called ‘an eagle on the shoulder’, sometimes a Sounding Board, sometimes a Wise Counsel, sometimes a monster progress chaser, but it is their professionalism, objectivity, detachedness and prior experience and expertise which will time and time again guide business owners to good decisions and to the effective implementation actions which will ensure successful and speedy and safe achievement of their commercial and financial objectives