We’re going to take an unfashionably bright outlook in these gloomy times and devote some attention to the positive trends that we’ve noticed in recent months.

Crisis, What Crisis?

The kind of high growth, early stage businesses with which we work are gnerally insulated from the worst of the macro-economic doom that is filling our headlines.  These companies have an agility which allows them to respond very rapidly to their customers’ changing needs and many business feel that now is the time to be striking out in new directions; launching products, forging partnerships, or breaking into untapped markets.  In order to make these new ventures succeed they need the skills and experiences that a Non-Executive Director can offer.

Credit, What Credit?

Of course, there is no denying that we have seen not only a ‘crunch’ but a complete withering of credit, however banks are not the only funders and we have watched asset-backed lenders, equity investors, and grant-makers filling the gap.  Despite our ever-growing inflation we’re also seeing businesses making their own money go much further and the lack of available credit has caused many companies to be more creative with their income streams and less ambitious with their expenditure… often wisely so!  It is during this kind of strategic (re)planning that good Non-Executive Directors are worth their weight in gold.

New Ventures

We certainly don’t want to make light of the hardships that some businesses are facing and corporate difficulty can turn into personal tragedy when the effects of recession are felt by the workforce.  One positive aspect to this is that we’re expecting to see a flourishing of new ventures.  Many people are leaving jobs with the entrepreneurial ambitions that they’ve been fostering for years and one man’s redundancy is another man’s working capital.  Some of these ideas will be lifestyle businesses born out of frustration with corporate employment, others will prove to be more ‘whacky’ than ‘winning’, but some will be solid ideas led by enthusiastic entrepreneurs and, if they get the right nurturing and support they will grow to become impressive companies.  Where better to get that support than a Non-Executive Director.

Whether a company is just starting out, is launching new initiatives, or is restructuring its business model, we can help them to find the right support at the right level from a Non-Executive Director or Chairman.  Do please give us a call, drop us an e-mail or come in for a discussion.

There is no denying that homeworking is affecting almost every area of business and by embracing technology it is an extremely efficient and well-balanced way of running a successful business.

It can, however, be invaluable to have somebody available to give advice on the industry, on the markets, on developing the company, on your services and products, or on coping with high growth.  A Non-Executive Director or Non-Exec Chairman can provide that vital link to your wider business community which you can’t afford to leave behind when you take up the benefits of working from home.

I’m currently reading a great book by Emma Jones of Enterprise Nation called “Spare Room Start Up: How To Start A Business From Home” (click here for the Amazon page).  It’s full of useful hints and tips for new homeworkers and it’s well worth a read.

If you’re running your business from home there is no reason why you can’t also enjoy the support and added value of a Non-Executive Director.  They can not only play a role in the business but also act as a personal mentor and coach to you as a business leader.

If you would like to see a shortlist of Non-Executive Directors who are suitable for your business then do please read our pages for companies and make contact so we can discuss your needs. 

If you are interested in working with home-based business leaders as a Non-Executive Director, please visit our pages for NEDs. 

“We found IDsquared reacted swiftly and effectively in finding an appropriate Non-Executive Chairman for an overseas oil company looking to list on AIM.”
Nick Harriss -  Blomfield Corporate Finance

At IDsquared, we have a large number of Non-Executive Directors who have either taken a company through the process of listing, or who have a portfolio of currently listed Directorships from which they draw their experience.  They know their way around the AIM rules, they know how to work most productively with the various advisors and, they know their way around the investors in the City, throughout the UK and worldwide.

For companies considering an AIM listing, the guidance from the London Stock Exchange suggests that 2-3 years before listing  they “review management information systems and operational and compliance controls” and 1-2 years before listing they “adopt ‘best practice’ corporate governance standards”.  It really is never too early to begin preparations.

Whether you are currently AIM listed, considering a listing, or interested in finding a new Diretorship, please give us a call or drop us an e-mail so that we can discuss your needs.

“Manchester is the place where people do things… ‘Don’t talk about what you are going to do, do it.’ That is the Manchester habit.”
Judge Parry, 1912.

Our very first client was a Manchester-based start-up company into which we placed an experienced Chairman and today, more than 70% of IDsquared’s Non-Executive Directors are interested in working in the city.  For those who don’t know it, Manchester is an inspiringly vibrant city with a close knit but welcoming professional community and an excellent range of support services for the smaller, high growth business. 

Since the Victoria (nobody ever called it that!) University of Manchester and UMIST merged in 2004, Manchester has had the biggest University in the UK and its technology transfer units (UMIP and UMIC) are active and well respected.  Manchester is equipped with three entrepreneurial business schools and a seeming metropolis of small business incubators, science parks and high growth centres (MSP and OCP are prime examples).  The venture capital, private equity, corporate finance and professional community is also impressive with a choice of local, regional and national firms boasting excellent experience and often an entrepreneurial approach.  Even our Regional Development Agency (the NWDA) and the City Council (not always the most entrepreneurial of of organisations!) fund impressive initiatives to support smaller business and high growth companies around the city.

All of this produces well-informed, well-resourced, small, high growth businesses, many of which require the longer-term support and guidance that only a Non-Executive Director or Chairman can offer.

I’ll admit to bias, being an ellective Mancunian, but I honestly don’t believe that the UK boasts another city to rival Manchester professionally, socially or culturally (check out the current Jun Nguyen-Hatsushiba exhibition at Manchester City Art Gallery).  

I certainly don’t think that there is a better place be based, either as a Non-Executive Director or as a high growth business.  If you are either, do please get in touch to share your views – simon@idsquared.net.

There are many ways to develop such skills, below are a few ideas but feel free to let us know what works for you:

Mentoring
It is often thought that Non-Executive Directors should play a mentoring role in their relationship with the Chief Exec of the business on whose Board they sit.  Perhaps they should, but sometimes Non-Executive Directors themselves would enjoy and benefit from mentoring.  We can introduce you to some extremely experienced Non-Executive Directors who would be happy to act as a mentor, either formally or informally.

Peer Group Coaching
This is a method of coaching which brings together company leaders (usually Chief Executives or Non-Executive Directors) in a confidential environment to discuss issues and hear from high quality, specialist speakers.  IDsquared works with peer group coaching specialists in the South East, South West, Midlands and North West of England and we would be delighted to introduce you to a group near you.

One To One Coaching (Personal Coaching)
Non-Executive Directors, more than most Board members, tend to recognise the value of coaching.  The most important thing when choosing a coach is that you use somebody who is experienced and has a good understanding of the area in which you work.  Our Chairman, Jay Hale, will be able to give you some tips when choosing a coach.

If you would like to discuss Non-Executive Director development, do please give us a call or drop us an e-mail; we’d be delighted to point you in the right direction or hear your recommendations.  You will also find a few other blog articles on leadership development.

IDsquared’s Directors each have a background in small company investment, venture capital and growth businesses.  The following are our thoughts on the roles that a Non-Executive Director (NED) or Non-Exec Chairman (NEC) can play in the investment process.

The Early Stages
The most important thing about looking for investment is careful planning.  It’s essential to get the following things right at a very early stage:

• How much funding you need
• What is needed from an investor (skills, experience, contacts)
• What is on offer to the investor (valuation)
• What growth is going to be forecast

Getting these wrong will put off even the most interested investor.  The right Non-Executive Director will help a business to plan their fund raising strategically from the very beginning.  They will also ensure that the search for investment does not get all the attention to the detriment of the running of the business.

Making the Approach
Once the offer to investors is (carefully) planned, the approach must be made.  This is another area where experience is incredibly valuable.  You only get one chance to so make the most of it.  the right non-exec will almost certainly have raised investment before and may well want to put themselves in the role of investor for a few dummy presentations – it’s time very well spent.

Larger Investment 
If the business needs more funding than one investor will put in, it may well pay to appoint appropriate corporate finance specialists.  If they recommend a wider fund raising then they may well also recommend appointing a Non-Executive Director, or more likely Chairman, with relevant experience.  This may be a pre-IPO funding round, a float on AIM, PLUS (formerly OFEX) or even a main market listing.  An NED will need to know their way around the City and must be able to hold their own with major investors.

Venture Capital
You can search our blog for various articles which discuss the role of the Non-Executive Director and Non-Exec Chairman in Venture Capital-backed businesses.  You may also want to see our pages for Venture Capital clients.

If you would like to join our Non-Executive Director register then please read our pages for NEDs.

If you would like to see a shortlist of appropriate non-executive Board members then please give us a call or drop us an e-mail so that we can understand what stage you are at.

Non-Executive Director roles tend to last from 3 to 6 years and be very much part time, usually taking up 2-4 days per month.  (You will find several articles in our blog which discuss such roles in more detail.)  We work with over 400 Non-Executive Directors and Non-Executive Chairmen who, on average, have over nine years experience of non-executive positions.  Because our recruitment is from the register we have built up (rather than through search and selection) we know the individuals with whom we work and can tell quickly, and at no cost, whether we have the right person.

Once we understand what the company is trying to achieve through its Non-Executive Director recruitment efforts, we can produce an anonymous shortlist of potential NEDs from our register.  We prepare a profile for each member of the register.  We can then help as much, or indeed as little, as you would like with the arranging of meetings and subsequent discussions about terms, remuneration and the role itself.

If you would like to discuss Non-Executive Chairman or Non-Executive Director recruitment, do please give us a call or drop us an e-mail.  You will find more useful information in our blog which you can search and on our web pages which you can access through the menu above.

NED – Non-Executive Director (that one’s an easy start)
NXD – (Also) Non-Executive Director
Non-Exec – (Obviously) Non-Executive Director
Independent Director - (Again) Non-Executive Director

(An aside: there is actually a subtle difference between a Non-Executive Director and an Independent Director but it is one that is often forgotten in the use of the words.  A Non-Exec is so only by virtue of the fact that they do not have an executive, day-to-day, function within the business – this is often an imprecise judgement itself, particularly in a small business.  There is no reason why a Non-Exec can not be a shareholder or be appointed by shareholders, customers, suppliers, or a parent company, indeed they often are.  An Independent Director, when the term is properly used, should be ’independent’ of all these interests, they should be appointed purely as a Non-Exec and have no other links or loyalties.  An Independent Director is usually appropriate only for a larger company where corporate governance is the main concern.)

Chairman – Can be either Executive or Non-Exec
Non-Executive Chairman – usually ‘Chairman’ is favoured for either Executive or Non-Exec
NEC – Non-Executive Chairman
NXC – For some reason, we rarely hear of NXCs but it would be a Non-Executive Chairman

Director – ultimately, all Executive Directors and all Non-Executive Directors carry the same responsibilities under the Companies Act; they are all just Directors and in that capacity at least, they are equal.

Fiduciary Responsibility – this is the duty owed by a ‘fiduciary’ (in this case the Director) to a ‘principal’ (in this case the company).  The legal details of this relationship are laid down in the Companies Act but most Directors will feel that there is also a moral or ethical element to the relationship as well.

Personal Indemnity Insurance – This is a fairly new form of insurance – we currently know of three insurers offering it (with considerable difference in prices!).  It is appropriate for a Director who has several Board posts and it replaces, or supplements, several policies in company names which might have diverse covers and terms. (Use the search on this page for more on this.)

This list is one to which we will add from time to time.  If you’ve ever been thrown by the language used in relation to the appointment of a Non-Executive Director or their duties, do please let us know and we’ll have a go at translating it.

Venture capital investors tend to value previous experience of working with investors because the demands on a business can be very different once the shareholding expands beyond the founders and their ‘friends and family’.  VCs will also usually ask for a reasonable amount of management information from the company and whilst they are very much backing the strategy of the executive team in whom they have invested they will want to know that there is a non-executive Board member around who can help keep everyone’s mind on the long-term growth and, of course, the all important exit. 

Many VCs will want, at least at first, to appoint somebody they know and trust as a Non-Executive Director or, particularly if they are significant shareholders, as Chairman.  This isn’t something which should unduly worry executive teams.  All Directors have a duty to further the interests of the company and each of them represents all of the shareholders.  Even if negotiations with your new investor did get a bit confrontational, once they have decided to invest and you have decided to accept their money then everyone is on the same side.

Nonetheless, the corolary is that if you find somebody who is right for the business, as long as they meet the VC’s criteria, there should be no objection to them becoming your new Non-Executive Director or Chairman.

Even if you’re just beginning to think about raising funds, now is the time to find the right person to complement your Board.  A non-executive can bring a wealth of experience and skills to your fundraising efforts as well as making sure that those all important initial approaches to investors are well handled.  Having the right person around will also give considerable confidence to interested investors and may well improve the valuation they place on your business.

Whether you’re just setting out or negotiating with investors, IDsquared can put together a shortlist for your business as soon as we understand what you’re trying to achieve.  All of IDsquared’s Directors work in venture capital so we’re well aware of the subtleties and sensitivities involved; do give us a call or drop us an e-mail.

In good times, day-to-day finances may be less of a concern, but long-term strategic financial decisions are vitally important.  How do you support future growth?  Can you do it purely from income or should you raise more money now, while you have a great story to tell?  If so, how? 

Income may be going up and up but are you absolutely sure why?  Could it be seasonal or the result of a trend you don’t control?  What can you do to put your growth on a stable, predictable and controllable footing?

Your customers love you, that’s great, but do your suppliers?  Even if they do, are they capable of keeping pace with your growth?  What would be the result if you had to switch suppliers tomorrow?  What if your suppliers’ suppliers’ suppliers can’t keep up?

More business means a bigger business.  Are you confident that you’re recruiting the right people for the right price?  Are the systems in place to ensure you stay on top of your numbers?  Do you have the right lawyers, accountants, bankers and insurers now that you’re five times the size you were? 

Now things are going so well, you may want to capitalise on your position.  Should you be buying out some of your earlier investors?  Should you be renegotiating your bank facility (the best time to do it is when you don’t need it!)?  How much should you reinvest in the future of the business and how is this best done?

Most importantly, you know how many factors within a business require careful attention.  You must ensure that however well the sales are going, and however good the bank account looks, you never lose control of what underlies the business itself.

The right Non-Executive Director or Chairman can help you keep all of these things in focus while you make the most of (and enjoy) the growth that you’ve worked so hard to acheive.  If you’d like to see a shortlist of people who may be right for your business then do, please, give us a call or drop us an e-mail.  We’d love to hear how well things are going and do whatever we can to help you keep it heading in the right direction.