An often under-used resource during the establishment process, and in some cases completely forgotten, is the Board.
No one knows a company better than the owners. This is how it is, almost without exceptions, in small or medium- sized companies and this is also the way it should be. However, our experience indicates that very few ownership groups hold the much-needed mix of expertise and background required in order to have a successful foreign establishment. The risks are, at best, both delays and hard-earned lessons.
Members should not be a part of the Board - they should work in the Board! The Board shall in particular be a future-oriented decision-making forum. The time has past when the particular appointment was primarily perceived as an honorary task and members were able to just show up without being well-prepared.
A professional executive member wants to help to make decisions which in turn requires thorough documentation of the management. Of course, there may be situations where the owner and executive members have different point of views, but the question is if the owners just want people to agree with them.
Common requirements sections for members prior to foreign establishmentsVery often, there is no real profile of requirements for the Board members, according to us. Typically in the recruitment process of staff, there are a number of criteria in regards to experience and skills. When it comes to the Board, there are often not the same thought-out requirements and expectations.
One of our customers had about 80% of sales abroad, as well as some production. The company saw the need to complement the Board with particular strategic marketing and sales planning. With the right members, they got advice with priorities by markets and customer groups.
The “right thing first” was a priority. Increased sales and profitability contributed significantly to the value creation which was in line with the owners' planned exit over a few years.
In the case of service companies, the challenges may be different such as maintain the corporate culture, recruiting the right staff and understanding the local culture.
Checklist for owners facing a foreign establishment:
Have the owners, in writing, expressed their goals and expectations of the Board? Factors that may be involved in owner directives:
- The company's economic area, offerings, customers, values
- The turnover and profit targets
- Access to expansion capital
- Expansion pace
- Time perspective of ownership
Does the current Board have necessary competence to realize the owners will? Common areas concerned:
- Experience of internationalization in service or product companies
- Establishment Forms
- Sales Organization
- National Culture as well as protect the intern-culture of the company
- Funding, sales and/or market experience
Start todayWith all operational and more "urgent" issues to deal with as business owners, it is easy to down prioritize the owner- and the Board´s work. Finally, if I should give one single advice: - Start today! There is a lot to gain from it.