SMEs are urged to consider non-execs

Feb 17 2010 by Peter McCusker, The Journal

AS businesses across the North East region plan for economic recovery, a Newcastle-based corporate finance expert is calling on those SMEs which are beginning to see an uplift in sales to take full advantage and consider appointing a non-executive director.

Angela Toner, partner at Baker Tilly Corporate Finance, believes that though small to medium-sized businesses are not obliged to appoint a non-exec, having someone independent on board who has been through the process of managing growth could be crucial over the next 12 to 18 months.

She said: “A non executive director can provide many commercial benefits. A lot of SMEs are family-owned and you can’t expect a board of such a firm to cover all the bases in terms of skills.

“It’s not just skills and contacts in the sector that they can bring to the table, non-execs are independent and will bring a fresh set of eyes. “

Ms Toner points out that for those businesses taking the plunge, choice is crucial.

“You’d be surprised how many companies appoint someone that they know. This completely misses the point, however, and can be counterproductive. Absolute impartiality is a must.

“Industry expertise is vital as is a strong character. You certainly don’t want someone who will agree to everything.

“They need to have a great deal of gravitas and have the ability to be listened to – even though the existing board may not agree with what is being said.

“There is no point appointing a non-executive director if you’re not prepared to be honest with them from the beginning.

“These advisers are often paid very well to improve businesses. Hiding information from them would be like lying to the doctor about where it hurts.”