Guiding lights

Guiding Lights

The benefits of solid advice and good governance for small to medium businesses.

Guiding Lights
<p>Most of us are looking forward to returning to ‘normal’ – ideally with a little more home baking, DIY and working from home than before the crisis.</p> <p>Maybe the new ‘normal’ for your business could also look a bit different – with new tools added to your toolkit and some of the lessons learned from lockdown changing the way you do business.</p> <p>You already have a team backing your business – whether it’s your staff, accountant, lawyer, or business banking partner. But perhaps it’s time to consider injecting some fresh ideas, insights, wider experience and big picture thinking into your business, especially if you want to grow, explore new markets or change direction.</p> <p>That’s where setting up structured governance for your small or medium-sized business might help.</p> <blockquote>The success or failure of your organisations will in turn affect the ability of our country to recover in a weakened global economy. Has there ever been a situation in which the power of good governance was more important?</blockquote> <p style="text-align: center;"><i>Kirsten Patterson, Chief Executive, Institute of Directors (Boardroom, April/May 2020)</i></p>
<h3>What is governance?</h3> <p>Governance is a structured way of thinking about strategic issues for your business, rather than only its operational day-to-day running. Governance can apply to all organisations and companies, including start-ups, small to medium-sized businesses, those focused on achieving high growth, private and listed companies.</p> <h3>Should we have a board?</h3> <p>A board can help your small business grow and develop at a pace that suits you as the owner, either by staying inside the speed limits, or accelerating to full throttle.</p> <p>Many Kiwi businesses have already discovered an advisory board is a valuable and powerful tool for business sustainability and growth.</p> <p>As businesses grow, structured governance through a more formal board of directors across the company might enhance your business’ credibility, accelerate growth, be more profitable, manage risks or give investors in your business more confidence.</p>
<h3 style="text-align: center;">TIP</h3> <p style="text-align: center;">Read how the right crew on board can help shift you into top gear -&nbsp;<a href="https://www.iod.org.nz/resources-and-insights/news-and-articles/the-governance-metaphor/" target="_blank">Driving a better business</a>.</p>
<h3>Is an advisory board right for us?</h3> <p>Most businesses, start-ups and businesses in high growth sectors can benefit from the guidance of an advisory board.</p> <p>An advisory board can provide you with expert advice without the formality or legal obligations associated with a more formal board of directors. This can be used as a business development tool and adjunct to strategic planning.</p> <p>Advisory board members are not directors and owe no duties as directors of the company. They offer advice but have no decision-making powers. An advisory board can provide your business with external expertise, while you retain full powers of control and decision-making.</p> <h3>A flexible first step</h3> <p>An advisory board may be a useful and flexible first step before your business creates a formal board of directors. You might initially appoint two to four people to your advisory board. They bring their specialist, industry, scientific or technical expertise, or they might perform a mentoring function.</p> <p>Some advisory boards meet only occasionally through the year, or whenever you need them. Advisory board members may have been recruited over a cup of coffee or casual drink, sometimes even on a voluntary basis.</p> <p>Clearly establish what you are trying to achieve by establishing an advisory board. Look for people with the right chemistry and mix of skills and confirm expectations of all parties.</p> <h3>Taking the next step</h3> <p>As your company gets bigger, a board of directors will help you make strategic business decisions to ensure and accelerate business success.</p> <p>Members of a structured board of directors have legal, regulatory and ethical duties of responsibility to keep the business financially on track and solvent.</p> <p>Directors set the vision and long-term goals of the organisation - including the strategy to achieve that vision, as well as monitoring its implementation and overseeing risk. They play an important role in ensuring the organisation complies with all necessary legislation and remains financially solvent.</p> <h3>Going in a new direction</h3> <p>A decision to simply keep doing what you’ve been doing, or to change direction might be one of the most critical decisions you make in the near future.</p> <p>There’s no substitute for experience and that’s when you can use your advisory board or board of directors as a sounding board or for guidance.</p> <p>Through the COVID-19 crisis, some Kiwi businesses have made fundamental, market-driven changes in order to stay afloat. Some found they had to rapidly boost their online offerings of goods and services; and companies catering mostly to international tourists have had to pivot to the local market, if they could.</p> <p>Why wait for this crisis to deepen or another to come along before thinking about innovating? The sooner you make the change, the faster you’ll reap the benefits.</p> <p><a href="/content/asb/businesshub/en/businesshub/resources/switch-up-your-thinking.html" target="_self">See how some of our customers are making that change</a></p>
<h2>Need some help?</h2> <p>The Institute of Director’s&nbsp;<a href="https://www.iod.org.nz/services-for-boards/#" target="_blank">Governance Services'</a>&nbsp;team can help you find the right candidates to suit your business or industry.</p> <p>Here’s what you should know about&nbsp;<a href="https://www.iod.org.nz/resources-and-insights/starting-a-board/how-to-set-up-a-board/#" target="_blank">Setting up an advisory board</a>, how it should operate, and what you might pay its members.</p> <p>The&nbsp;<a href="https://www.iod.org.nz/resources-and-insights/guides-and-resources/advisory-board-toolkit/#" target="_blank">Advisory Board Toolkit</a>&nbsp;includes some useful tips, tools and templates.</p> <p>For more information on governance, including useful tools for small businesses, see the&nbsp;<a href="https://www.business.govt.nz/business-performance/governance/governance-overview/" target="_blank">Business.govt.nz governance hub</a></p>