What has been the company's journey in terms of governance?
Essentially for the first couple years that we were in business we didn't know what good governance was beyond agreeing on an annual strategy that often wasn't looked at again for 12 months. Although we had a sound strategy and a good business plan, that got pushed aside as the directors of the business just rolled up their sleeves and got involved in every aspect of the business to ensure we survived, and had some cashflow and happy customers.
After a couple years, though, we got some advice that we needed to set aside at least a few hours a month to track ourselves against our annual strategic targets. It was challenging to set aside the time, given we were still focused on selling, implementing and supporting customers. So, to be honest, even those monthly 'must-do' strategic actions that we put in place for ourselves as directors were often left undone if we were busy.
After this, we shifted to a new way of doing things, which I wish we'd done right from the start. We started having regular coffee meetings with someone from outside the business and called them board meetings. We eventually made the person an independent director of our company. This was incredibly beneficial, because it forced us once a month to step outside the day-to-day of the business and be accountable to someone else and our own strategic targets. Things got done.
We eventually shifted to a board structure, with the board made up of two executive directors who run the daily business, and two independent directors, with one nominated as chairman. This is what I consider the real thing - real governance and accountability, with a designated strategy and budgets signed off by the board every six months, and reviewed monthly.
Can you tell me about your independent directors?
Our directors are awesome. I believe the value of this kind of governance really depends on who you have on board and how they contribute to challenging your ideas. As well as being incredibly switched-on individuals, our independent directors have different skills: one is an experienced, energetic and creative business guru; the other is an expert with a successful track record on the exact same path we want to take our business.
What motivated you to keep pushing forward on your governance journey?
For us it was really about the need to step out of the day-to-day and work on the business rather than in it. It's been about tracking our progress against the big-picture goals rather than always getting caught in that 'I'm so incredibly busy running the business' mentality.
Also, we wanted sound advice to develop and challenge our whole strategy. We've made some big calls in recent years that have thankfully paid off for us. When we were without a good a governance team, we talked about these kinds of decisions but didn't act on them as readily - especially those tough decisions about things like our people, products or entering or leaving markets.
What impact has your governance structure had on the business?
Surprisingly, it's had a huge impact on our company culture. With a strong board on your side you feel more confident to make the calls you need to make, and you become a better leader along the way.
We also don't pay lip service to strategy anymore, and we start every team meeting by outlining both our strategic goals for the year, and our values as a team. Our values are something we consider as the 'must have' characteristics of our business and our team. For a long time I felt they were a bit of a waste of time; I felt like it was a bunch of corporate speak. But now I think they're almost more important than our strategic goals, because we don't budge on our values and I think this makes a cool company to work for.
Lastly, what advice would you have for other small business owners considering instituting some form of governance in their operations?
Institute board meetings from day one of your startup, and bring in at least one non-executive board member. A few coffees a month is all that cost us initially, and we got immense value from it. There are tonnes of people out there willing to help, and being held to account to your monthly targets and actions by someone else is very different to working to your own strategic planning.
I'd also advise getting the right mix of personalities on board. As with any creative process, when you're shaping a company there are often no rights or wrongs, and intuition, trust, and a willingness to take risks together play a big part. So you need a team around you that you can fully trust and be 100% honest with.
Coming up in Small Business: Running your own business can be all-consuming, but if you're not physically in shape it can be harder to keep up. So what are some of the different things small business owners do to keep themselves well - and what effect does that have on their business? If you've got a good story to tell, drop me a note: email@example.com.