Small Business: Governance journeys

From left: Simon Arcus, Lesley Kennedy and Steve O'Connor.

This week, Small Business editor Caitlyn Sykes talks to business owners about their firms' governance structures.

Too often, business owners head down the wrong path when filling a governance role, reckons Simon Arcus, by shoulder-tapping someone already attached to their business like their lawyer or accountant.

"But I think people need to look more widely," says the CEO and manager of the Institute of Directors, "because you want an independent director who will come in with fresh eyes and make you sit up and think." You need to find a person "who will rattle the cage", he says.

And owners should think more widely about what governance is, because different structures work for businesses at different stages in the growth cycle.

"Right at the beginning you're looking at that business mentor market and a lot of people offer that service for free. Then you may get to a point when you know you need to make changes but you want to retain control of the business, so you may get an advisory board. Then the next stage — a full board — is when you know you want to take your business to the world and build it into something really big."

Lesley Kennedy is chief executive and a director of Maven, a Wellington-based strategy and operations consultancy.

Maven brought on an experienced director as its first independent chairman in 2004, who helped teach them about what governance entailed, as well as offering strategic advice and support.

Five years later — as the company was looking to diversify into new markets, including offshore — they brought on a new chairman to help them implement their international strategy. Around the same time they altered the makeup of their board of five to include two independent directors.

"To me good governance is about getting the right people with the right capabilities, skills and style around the board table to enable you to drive your strategy forward, just as you would when selecting your management team. As the business grows and changes you need different skills and capabilities, and that's true with governance as with any other aspect of your business."

Steve O'Connor is chief executive of startup electricity retailer Flick Electric, and is a previous CEO of Wellington startup incubator Creative HQ.

O'Connor reached out to Flick's now-chairman Marcel van den Assum, who he knew through his work at Creative HQ, early in 2014 before the company launched in market in August last year. Flick's board now also includes former Meridian Energy executive Matthew Jansen, and investors Mike Carter and Trevor Dickinson and Dr Julian Elder.

O'Connor's says owners need to be open — both personally, and about their business — to get the most out of a board, because good directors will not always share their views. But he also says good governance can provide one of a business' biggest opportunities.

"People don't often talk about governance in that way, but if you really invest in it up front and in the ongoing aspects of getting it right it can seriously make your business."

Coming up in Small Business: German Unity Day is on its way, so I'll be looking at some of the opportunities being explored by New Zealand small businesses with German connections. If you've got a story to share, drop me a note at
nzhsmallbusiness@gmail.com.