If you run a business that has strategic challenges to address, or if you are looking to raise it to the next level, where can you turn for advice? The answer may be appointing a Non-Executive Director or Strategic Advisor. Even very successful businesses can benefit from an external independent view to help make better strategic choices and challenge established thinking.
What can a Virtual Non-Executive Director do for your business?
Every business has a different mix of challenges and opportunities at a given point in time and often the owners or management feel their business is unique and difficult for an “outsider” to understand. To an extent that may be true, however, a VNED’s experience of the dynamics of multiple businesses and transferable knowledge of best practice from other markets is proven to bring significant benefits to management decision making.
The have developed a Virtual Non-Executive Director (VNED) service that offers Managing Directors and business owners the same independent view and strategic advice without the complexity of shareholdings, appointing legal directors and director’s service agreements.
To provide a working example of what a Virtual Non-Executive Director can do, here is a recent case study.
While working with an ambitious and already successful service provider to the construction industry, a strategic review identified several areas that could be improved to enable further growth and profitability. The identified issues, improvement opportunities and solutions implemented included:
- Financial Management
The VNED helped to highlight that the existing financial management information did not effectively allow the measurement of project performance, did not provide accurate profit reporting and did not allow proper control and optimising of substantial purchasing. In addition, cash flow forecasting was disconnected from the reality of major projects. Financial processes did not prevent occasional invoicing errors that resulted in delayed payments in contract stage payments. The solution was to recommend the appointment of an experienced Part Time Finance Director and to help select an appropriate person. This allowed the financial function and processes to be restructured, enhanced and made significantly more robust. In six months, this resulted in business improvements and significant ROI.
- Evaluating New Business Division Plans
A potential new business division with a complimentary service delivery was critically reviewed. The business plan was found to have flawed assumptions – the new business stream would be likely to have substantially lower margins than the core business and would be unlikely to generate the suggested cross selling benefits. The investment was redirected to enhance the approach to wining larger projects for the core business with great success.
- Review and Restructuring of Management Responsibilities
Rapid growth of the business put strains on the existing management team and pulled the Managing Director to be involved in more operational issues. This meant less time focussing on strategic opportunities and important high level business development. A review of the way the business was managed resulted in a restructuring of some responsibilities, increased empowerment and additional resources.
- Business Information Management Improvements
Part of the issue was less than optimal information flows between Estimating, Project Management and Accounting. A rapid review of potential software solutions was carried out and a quick to implement and low cost solution that integrated the existing estimating system with new project management modules and the Sage Accounting system was deployed. The result was substantially more effective and harmonious performance from the management team and the MD got his strategic time back.
How to choose a VNED or Strategic Advisor?
Knowing the strategic needs of the business is a good starting point – this may need a review to properly establish. An appropriate Virtual Non-Executive Director should be able to compliment the existing experience in the business. In addition, the VNED needs to gel with the “personality” of the Managing Director and the management team.
It is usually not necessary to engage a VNED that comes directly from the same market sector and often it can be beneficial not to. A good VNED will be able to understand the business dynamics and challenge the status quo in a positive way.
Particularly for smaller businesses, it is important to appoint a VNED that will be very flexible in the level of their engagement to suit the needs of the business.
Contact Gordon Carmichael to discuss how a Virtual Non-Executive Director can benefit your business. The service is charged on a monthly retainer basis with no long term commitment and flexibility on the time required.
Gordon Carmichael is an experienced business advisor and strategy consultant who works with business owners and directors that are serious about achieving more with their business. He has managed successful businesses from small to £250m in a number of different industries and brings independent thinking with no baggage or vested interests. He is financially literate, he understands modern marketing, people dynamics, the benefits of technology, effective business planning and business operations.