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Core Functions of the Board of Directors

holding a positive meetingThroughout the year, but most often in springtime, organisations around the country hold their Annual General Meetings. Amongst other matters, A.G.M.s provide a company’s members with an opportunity to elect the directors that will manage the company on their behalf.

For people who have not undertaken governance training, this post provides a very quick summary of the core functions of a Board of Directors. Broadly speaking, directors are collectively responsible for:

– Ensuring that the company achieves its mission and objectives as agreed by the Board. The mission and objectives should be in line with what is stated in the main and subsidiary objects of the company’s Memorandum of Association.

– Assessing and managing the risks faced by the company. The risks to be managed varies from one company to the next and may be categorised under the headings of strategic, financial, operational, governance, external and compliance risks.

– Monitoring company performance. Directors should be aware of how the company is performing at both an operational and strategic level. Tracking performance indicators, outputs and outcomes provides a means to monitor performance.

– Reviewing internal company controls. All companies should have a well developed set of internal controls to ensure good financial practices and compliance requirements are adhered to.

– Supervising the financial and budgetary planning processes. These processes help boards to make the most of the resources at the company’s disposal.

– Approving contracts, finance and investment in excess of specified thresholds. The approval process helps directors to monitor key financial decisions and contractual obligations of consequence to the company.

– Being accountable to members and external stakeholders. Directors act on behalf of the members and are required to report back to them at the A.G.M. Directors should also be mindful of the need to keep all key stakeholders informed of the company’s progress.

– Ensuring the company is managed appropriately. This is an important function, particularly where operational and management control is carried out by employees or agency staff.

– Meeting regularly as a board (as is appropriate) and working effectively in governing the company. Board members must be able to work as a coherent unit if they are to carry out the functions listed above!

It should also be noted that a Board of Directors must comply with the regulations and compliance requirements as set out in the Companys Acts.

You can learn more about the functions and responsibilities of board membership on CramdenTECH’s BoardPASS Standard training course.

Business Planning for Social Enterprises

As more and more non-profits look to diversify their funding streams, directors and executives are looking at the financial opportunities afforded by social enterprise initiatives. But moving from a grant administration set-up, to one that actively seeks out earned income streams, needs to be carefully planned. Needless to say, traditional business planning has an important role to play in ensuring that sustainable business markets are pursued. Irrespective of the business planning approach used, non-profits should seek to identify and put in place strategies that clearly play to their business strengths.

As an initial first step in the planning process, it can be beneficial for directors and executives to create a “Business Model Canvas” of their proposed social enterprise initiative. The canvas focuses attention on nine core elements, that collectively, impact on the sustainability of an organisation’s business model. Completing the business model canvas in advance of writing a business plan is helpful, as it forces boards and committees to test the assumptions upon which their business model and thinking are based. As a result, a more accurate picture of market opportunities and non-profit competencies and strengths emerge. This in turn enables a business plan to be developed, that selects the specific business strategies that can best help a non-profit to succeed in achieving its social enterprise objectives.

In preparing the business model canvas, boards and executive staff should seek answers to nine key questions:

1. What customer or social problem are your solving?
2. Why will customers buy from you?
3. How will customers access your services or obtain your products?
4. How will you acquire and keep customers?
5. How will you generate cash?
6. What assets do you require?
7. Who are you dependent on to deliver services and produce products?
8. What are the most important activities for the social enterprise to focus on?
9. Where does spend need to be concentrated?

Once directors, trustees and executives have a solid basis to answer each of the nine questions, then they are better equipped to write a business plan that can be successfully executed. The business plan will provide readers with mission critical information with respect to proposed strategy, operations, marketing and finance. Importantly, the business plan will show clearly the sustainable basis upon which the social enterprise is being built. Hence, directors and executives should view the business plan, not just as a planning tool, but also as a significant communications tool in their bid to influence stakeholders!

Business Planning for Social Enterprises presentation slides available at: http://www.slideshare.net/CramdenTECH/business-planning-for-social-enterprises

Why do Business Start-ups Fail?

SONY DSCWhat can we learn from the experiences of promoters whose enterprises have failed? Not nearly as much as going through the experience of business failure ourselves. Business failure can challenge a person’s self esteem, job prospects, family relationships and above all else, confidence to try again. But the flip side of failure is a new found understanding of what it takes to succeed. From failure we can learn what it is that we personally need to do to become a successful entrepreneur.

CramdenTECH shares the following experience based insights. Developing a start-up into a commercially sustainable company requires at least three things:

  • a business model that reflects what clients/customers actually need, rather than what the promoters are interested in delivering
  • a steady flow of cash even when the business is not yet profitable. Hence, the revenues have to keep on growing
  • a network of contacts that can help “open doors” for the promoters and provide them with a little extra “luck” when they need it!

It’s a practical recipe for success and just one perspective from an entrepreneurs journey of lifelong learning!

Competition – Entrepreneur of the Year 2013

Business ModelsIt’s a competition that has been running for 15 years, and once again Ernst & Young are searching for Ireland’s Entrepreneur of the Year 2013. This is an all-island of Ireland competition, with nominees accepted in categories such as emerging industry and international.

To enter the competition, nominees must be founders or owners of companies, which are at least 2 years old. The nominees should also be primarily responsible for the recent performance of their respective businesses. Finally, nominees must own at least 5% of their companies (though publicly listed companies are an exception to this rule.)

If you are interested in entering the competition to find Ireland’s Entrepreneur of the Year 2013, visit http://www.eoy.tv for further details. Good luck!

 

Cultivating Intrapreneurs

Picture4When we think about enterprise innovation, key words like “entrepreneur” and “business start up team” come to mind. But in more established organisations, who leads the business innovation process? The answer is often the company’s “intrapreneurs” i.e. internal entrepreneurs. Richard Branson has commented that such people are required to drive new projects and in particular, to explore new and unexpected business developments.

The key to cultivating intrapreneurs seem to lie in creating the working conditions that enables such people to emerge and thrive. Most importantly, the intrapreneurial mindset thrives when it is given the space and resources it needs to develop new ideas. Google’s 70/20/10 Rule is a case in point. 70% of time is focused on the core job; 20% of time is focused on potential projects; whilst 10% of time may be used to pursue “off the wall” ideas!

The advantages of having a number of intrapreneurs in an organisation may seem obvious. But Andy Birol suggests that there are situations in which becoming a company intrapreneur may not prove effective:

  • When insiders control the organisation and hence preserve the status quo
  • When the pain of changing is greater than the pain of retaining the status quo
  • When the motivation to change is driven by wealth protection rather than the creation of new value

There are lessons to be learned from long established organisations the world over about how to succeed and thrive over time. The role of the intrapreneur would seem to be a key component in that process.