Building a team for sustainable growth is one of the biggest challenges that a CEO/Founder of a fast growing SME faces. Directorbank’s James Searby shares his insight.
As a business grows, so too does the need to evolve the Board. At the helm of a far bigger and more complex ship, the Founder/CEO’s ability to manage all facets of the day-to-day operations of the business will become increasingly challenging.
With this greater complexity comes the need for additional support, and unless a talented Senior Management Team (SMT) is developed or recruited, this can become a major barrier to growth.
A strong SMT which has the ability and experience to help the business continue along its growth trajectory is essential. By ensuring diversity of experience, expertise and ambition, the Founder/CEO is able to free up more of their time to focus on management, strategy and those crucial decisions surrounding emerging priorities, opportunities and challenges.
What value can a Chair bring to an owner-managed growth business?
A Chair can add immense value to a growing business. They will provide strategic support and experience built over many years of successes and failures and will act as an invaluable sounding board for the Founder/CEO as they focus on the next stage of growth. They will promote top-level discussion, maintain management team cohesion, and focus the board on the most important aspects of future growth.
They will be someone who shares the Founder/CEO’s vision for growth – a confidant and a mentor who can offer support when most needed. They will be a seasoned expert, possibly with deep sector knowledge and certainly with situational experience. They will bring the gravitas to counsel and critique board decision making, and will objectively challenge the Founder/CEO in a way they might not have been challenged before.
Essentially, a valuable Chair is someone who has been through the entrepreneurial journey already and has trodden the path which the Founder/CEO aspires to follow. They have well-earned empathy with the challenges faced by owned-managed growth businesses and, if there is external funding, they will have the knowledge to act as the cornerstone between investor and management.
Good chemistry is crucial and the trust and respect between Chair and Founder/CEO is imperative to their working relationship.
The importance of recruiting a well-rounded CFO
As a company scales and the need for a more commercial finance function grows, the FD role must move beyond cash control. What has worked in the past is unlikely to be the best approach for the future.
The Founder/CEO needs to ask: ‘Are the right capabilities in place to strategically support our growth plans? Do I have the commercial finance visibility to make informed decisions going forward?’
If the business is looking for external funding to provide financial firepower to unlock future growth opportunities then a bean counter will not suffice. A well-rounded and robust CFO is likely to tick the box on many of the below attributes:
- Leadership of a growing finance function
- Rigorous reporting and rolling forecasts
- Commercial finance and data to enable strategic decisions
- M&A, due diligence and integration
- Return On Investment forecasting
- Growth-oriented mind-set
- Excellent communicator
- Expertise in raising capital to provide funds for investment
- Reporting requirements for external funders
Building the Senior Management Team
As a business evolves and the team deepens, success becomes even more dependent on the functional aspects of the business firing on all cylinders. The Founder/CEO cannot oversee it all and more trust must be given to the core team. In preparation, thought should be given to:
- Identifying those employees with the skills and mind-set to lead teams of the future, and ensuring their interests are aligned to those of the business.
- Considering further recruitment to develop the core team including Chief Operating Officer, Sales Director and CTO to name but a few. Incentive schemes need to be agreed to align the SMT and lock them in through the next stage of growth. This can be in the form of equity or LTIPs
- With a considered, strategic approach to Board relations and senior management development, the Founder/CEO can ensure the business is better positioned and prepared for further growth, whilst freeing up more of their time to really focus on those crucial elements essential to future prosperity and success.
For more information, contact James Searby on 0113 297 8000/020 7255 7940 or at j.searby@directorbank.com