Following the sale of my company Cake in 2017 and working with the acquiring company for a couple of years, I left the business and began thinking about what I was going to do for the next 25 years of my career. I was trying to work out what would keep me interested, what would get me out of bed in the mornings and get me excited.
I’ve always considered starting a new company, which I have now done, but the first thing I decided to do after leaving the company that acquired Cake was to work as a non-exec director with a couple of companies that had reached out to me.
What makes a good non-exec?
When I started thinking about the reasons why they’d reached out to me, I realised they were also the qualifications I think you need to be a non-exec director. Over the last 17 years or so, I’ve grown a company from nothing, which you’ll know if you’ve read any of my previous blogs. I built a software engineering company (Cake) and saw that through to a reasonably significant sale. The experience I gained along the way is something that I believe other entrepreneurs can benefit from. I might be able to help them avoid the mistakes I made, or I might just be able to help them get to their goal more quickly.
Ultimately, I believe this is what a non-exec is there to do, to help another business grow and achieve its goals more quickly. I’ve explained in a previous blog the importance of having a non-exec in your business, and how we can help you. In this blog, I’m going to focus on what you should look for in a company if you’d like to become a non-exec and how you can find the right organisations to partner with.
Search for similarities
Much of what a non-exec can bring to a business is their experience, so looking for companies that are on a similar path to your previous business (or businesses) is a good place to begin.
To give you an example, I’m a non-exec (now Chairman) for a marketing company that used to supply Cake with marketing and branding services. They felt that they were in a very similar position to where Cake was about seven years ago, in that they have got lots of experience in their industry, they have some really good people working for them and they have some really good clients.
They aren’t a huge company but they are working with bigger clients than a company of that size normally would, which is a really good springboard for high growth. I’ve experienced that because Cake was in exactly the same place.
As a result, I’ve already been able to work with them to look at the various things that we did to build a platform for growth. That started with winning the additional business and having the capacity to continue to grow – in other words, having a very robust marketing plan. I’m also helping this company build a smart and capable senior team.
It is also very important for a business to build their senior team ahead of growth so that when it does begin to grow, it can cope with it and stay ahead of the curve. This is something that we did pretty well at Cake. We marketed ourselves in quite a unique way, which I’ve talked about in several previous blogs, and we put together a very smart and capable senior team to enable us to manage our growth. Using my experience at Cake, I’ve been working with this marketing company to form a plan to do the same.
Getting a business ready for acquisition
As a non-exec, you can also help other companies get ready for acquisition. If a company you’re working with is aiming to be acquired in three to four years, you can help them get all their ducks lined up so that when due diligence happens as part of an acquisition, the acquiring company finds nothing wrong with the way the company has been run.
I can share my experience of an acquisition at Cake; things like having three to five years worth of board meeting notes, strategy meeting notes, monthly management accounts, annual account details and weekly cash flows available. A company’s HR systems need to be really robust and up to date, and the whole system infrastructure is not only fit for purpose but also ready to scale.
As an entrepreneur who has successfully gone through this process, I’m ideally placed to help another business that aims to be acquired on their journey to that goal.
Keeping your knowledge current
As a non-exec, you can’t just rely on your experiences in business, because things change and develop, particularly where technology is concerned.
For example, I would expect companies who are looking to grow quickly to be using very robust software as a service application’s. At Cake, we used Xero as our accounting system, Harvest for our HR system, GitHub as our source code repository, Jira as a project management system, Google Apps as our main communication software and Zoom for our video conferencing and quite a few more.
We adopted all of those technologies and made ourselves very efficient. As a non-exec, that’s something I’m looking for in the companies I work with. But I think a good non-exec also has to have a handle on what’s happening in the future. That means I spend a reasonable amount of my money and time making sure that I’m always up to date with technologies that are coming out in two or three years’ time so that I can advise the companies I’m working with to be aware of them or start thinking about adopting them. These technologies may also be a threat to their business, so again something they need to be aware of to begin mitigating that risk. This is about getting ahead of the curve.
My belief is that most companies will be tech companies or tech-led companies by 2030. If they are not they will either be incredibly niche or really struggling.
Understand the value you can bring
As a non-exec, you bring your badges and scars from running your own company to the companies you’re working with. I’ve talked about some of my personal badges and scars from my years with Cake in previous blogs. The scars are particularly relevant as a non-exec because you can share the things that didn’t go well and probably help the companies you’re working with to avoid those pitfalls as well.
If you’re a good non-exec, there is so much value you can add to a company and they will save considerably more in money and benefits than they’ll ever pay for your assistance as a non-exec.
Considering what you will get out of the partnership is just as important as looking at the value you can bring to a business. For example, our non-exec believed in the business and we recognised how important he was to our development that he bought a shareholding in the company.
Know you can go the distance
As a non-exec, it’s important that you are going to be around to support the companies you’re working with for the long term. You have to commit to being with each business for the duration of their journey because there’s no point in only going part way with them.
This is why it’s important to make sure that you’re aligned with the journey that a company is embarking on. I mentioned that at Cake our non-exec became a shareholder, but this wasn’t a step we took until we’d been working together for at least six months. It’s important to spend a good six to 12 months working with any business to ensure that you get on with the entrepreneur and the senior team before you commit to taking the relationship further.
How to decide which companies to work with as a non-exec
Once you’ve got a certain amount of experience having been on your own journey with at least one organisation, you might be considering becoming a non-exec to help other businesses. There are a few things to look for in potential companies to engage with.
If you can work with a company that you already know, that’s always helpful because there’s less of a learning curve for you and you’re already invested in that company.
However, if you don’t already know the company in question, it’s important that the journey they’re going to go on, the one that you’re going to be supporting them through, aligns with your journey as an entrepreneur.
There are even platforms that match non-execs with companies who are looking for someone with your specific skills and experience so if you’re not sure where to begin I’d recommend doing a quick Google search because there are plenty of sites out there offering this service.
When you’re looking for companies to work with, the biggest thing for me is that you get on with the entrepreneur and also the senior team. If you don’t get on with them, or there’s no chemistry there, then it’s advisable to look elsewhere.
After that, I think the next most important thing is that your experience aligns with the direction this company is going in. You want to be sure that you have the relevant experience to add significant value to the company. You’ll need to have several conversations with the entrepreneur to understand what their vision is, where they want to get to and how quickly they want to get there.
I would also advise having conversations up-front about the expectations on both sides so that there are no misunderstandings further down the line. These are the ‘what’s in it for both of us’ conversations and it’s important to have those early on, because you don’t want to spend six months working with a company on the expectation that you’ll be able to buy into it or will be gifted shares at some point, only to discover the entrepreneur has other expectations.
In this relationship, there has to be a win-win. It’s important to be clear about what you’re looking to get out of the relationship and to know that the company and entrepreneur you’re going to be working with is willing to offer you what you’re looking for. That might mean you have to go on a few dates before you commit to the relationship, but this process will be more than worth it when you find the right match for your experience and skills where you can add value and help another business grow.