BGF Talent Network

The expertise of management teams is at the core of the way the BGF does business. As well as partnering with some of the UK’s most ambitious SME management teams, we are building an external Talent Network specifically to develop relationships with a broad range of experienced business leaders from across the corporate spectrum who can offer valued executive and nonexecutive support.

Already, we have introduced 19 non-exec chairman and four other non-exec directors to companies we have invested in. These directors come from a wide range of backgrounds, but their common link is a commitment and drive to encourage and help great small and medium sized businesses with ambition to grow.

What is it that attracts you to working with small and medium-sized businesses?

Their dynamism. They’ve often got management teams that are more focussed on the business opportunities than getting drawn into bureaucracy and the politics of a large group. I look for SMEs who are still in the growth phase of their development.

What is it that makes a particular business or a particular management team stand out for you?

What attracts me is either a sector that offers fresh growth opportunities; or if the sector is mature, then a business that has got something special; some sort of ‘disruptive technology’ or an edge that can set them apart. As far as the management team is concerned, I’m looking for commitment, energy and openness to external involvement. An awful lot of management teams don’t understand or want any form of non-executive involvement in their companies. I’m looking for the team that says, “Yes, I’d really like somebody with me because this is the first time I’ve driven the business above X size, and somebody who’s been there before – possibly several times – can help me.”

What do you think that they really need from the nonexecutive and how would you see that evolving as the business develops?

A one word answer would be “structure”. Structure makes for proper action plans, targets and KPIs – the discipline that you’d expect from a well-run business. But at the same time, you need to ensure that structure doesn’t stifle the very creativity or entrepreneurialism that created the company initially. It’s a very careful balance.

Hopefully you are also bringing something additional to the party, whether it be experience of a particular sector or a new activity, for example exporting for the first time. In these cases a non-exec who’s been there and done it before can be invaluable.

What would you see as the main challenges of working with smaller businesses from a Non-Exec perspective?

Three things: attracting talent, building a sustainable customer base, and securing funding. Generally the smaller the company, the more difficult it is to attract talent at a senior level. Really good people tend to migrate towards larger companies. They look at SMEs and see more risks, and possibly less immediate rewards. This is a real challenge. Secondly, small companies are more vulnerable. Larger companies will generally have a broader customer base. For some SMEs, losing a single major customer can be almost terminal.

Finally, I would say finance. Most SMEs are independently financed and life is never as straightforward and as simple as everybody would like. So an SME that hits a few headwinds in the marketplace or loses a customer can suddenly face huge challenges so far as keeping the cash flowing and the business solvent.

Are there particular qualities that you feel that are important for an SME non-exec?

Yes, but whether I’ve got them or not, others will have to judge! For me it is about empathy, understanding what drives the guys and where they’re going. Management need to know that you’re part of the team or you may never really find out what is going on at the heart of the business. You need to be able to bring professionalism where it is needed; but make sure that you don’t smother the company.

You need to be approachable, but you can never forget that you are also the independent director on the Board and therefore you must retain that independence of thought and deed. Chameleon qualities can be useful.

Do you think that it’s helpful from an experience perspective for a non-executive to bear some battle scars of their own?

Of course. Young management teams often don’t really understand what the role of a non-exec is, and it’s our job to explain. In this life you earn respect, you don’t just get it because you’ve got the name Chairman or non-exec on your business card.

What makes real impact is being able to say I have been there; I raised money; I’ve worked with third party investors; I’ve been in a small business’ I’ve also been in a large business; I understand what it’s like when your customer doesn’t pay you and he’s late; I understand when the bank is getting shirty.

How can a CEO get the most out of the relationship?

Firstly, be open-minded; see this person as a potentially valuable addition to your team, rather than being an imposition. Secondly, get to know each other. Get to know each other as people, but also get to know what the non-exec’s key skills and qualities are so that you know where they can make most impact. Lastly, don’t be afraid to ask questions. Some entrepreneurs are very good at it, but others think they’ve got to have the answer to everything. They don’t and a non-exec is there to help find the right one.

What sort of time commitment should a management team expect from a non-executive?

I don’t think there’s a simple answer in terms of days or months a year. I think that era’s been and gone. It’s about what each individual business needs. At the extreme, last year I spent 120 odd days in one of my businesses – a turnaround situation. It was about half my capacity for the year and a big commitment. At the other end of the spectrum, it may be a couple of days a month in the business, one of which is a Board Meeting; but time can also usefully be spent on phones and emails, meeting customers and suppliers, mentoring the management team. On average, I probably spend about four days a month in each of the businesses that I support, but it really does ebb and flow. It also tends to be front and back loaded. At the beginning, you need to invest time in getting to know the people and the business and finding out what makes it tick. Also, helping the business get to know you. I want to know the whole team, not just the Board so it’s important to spend time physically within the business. It is also often more involved as the company moves towards a sale or exit.

What would you say is critical for the Board to work together really effectively?

We can’t be friends all the time, that’s for sure. However the chemistry between management and the non-exec, the way that they interact and the mutual respect that they have will ultimately determine how effective the Board can be. As far as Board Meetings are concerned, I think efficacy depends on three key things. The professionalism of the person who’s chairing the meeting, the way the agenda is structured, and the CEO feeling that real progress has been made. He or she is my number one audience.

The Board pack is important – what goes in and what doesn’t. But it needs to be reviewed and challenged from time to time. Sure, there are things that always stay on the agenda, but you need to try and ensure that the discussion is kept alive and appropriate. Don’t get stuck in a rut.

What do you think are the biggest obstacles holding back SMEs?

Three things: Nervousness or lack of confidence in the outside world; the huge gulf between being national and being international; and access to working capital. Going from national to international is a big step for any company and many entrepreneurs are intimidated because they haven’t done it before. Directors will often build up a business to a certain size and then stop. They accept the status quo. They may feel that stepping from being a national business to an international business is just not for them, or a bridge too far. This is a critical moment. You either say: ‘Well okay, this is as far as we’re going to take this business with this team; we can keep it ticking over, or perhaps now’s the time to exit and sell.’ Or you can say: ‘This is an opportunity for the taking; let’s strengthen the Board; lets bring in people who feel comfortable doing overseas business; and let’s put a plan in place to make the leap.’ These are precisely the situations where a non-exec can make a real contribution to an SME, as well as personally benefiting from a highly rewarding and stimulating experience.