Great Business Matters urges SMEs to build boards earlier

Trusha Lakhani of Great Business Matters is urging growing SMEs to establish working boards before seeking investment or preparing for an exit, giving founders independent scrutiny of their most consequential decisions.

Writing in Elite Business, Lakhani argues that a modest structure — the founder, one or two non-executive directors and sometimes an independent chair — can provide effective oversight without a substantial budget.

What happened

Lakhani challenges the assumption that governance becomes relevant only after a business reaches a certain size. In her assessment, founders taking decisions with substantial financial, legal or strategic implications already face board-level responsibilities, regardless of whether they have established a board.

The gap she identifies is not necessarily a shortage of advice. Some owners have no board, others retain one largely as a procedural exercise, while a third group relies on advisers without defined responsibilities or a consistent process for examining decisions.

Her proposed starting point is a quarterly meeting supported by financial reporting, an agreed agenda and a written record of decisions. The purpose is to make scrutiny routine rather than something arranged only when a difficult issue arises.

The background

Drawing on her experience working at board level, Lakhani says weak board arrangements are a recurring omission in businesses that are otherwise competently run. She presents this as an observation from her work, rather than a finding from a survey of SMEs.

She also reports that founders approaching fundraising or a sale frequently wish they had introduced stronger governance sooner. Although investors often expect board structures, her argument is that the benefits should precede any transaction: preparing for external questioning can change how owners assess their own plans.

For businesses considering outside finance, this distinguishes establishing a board from simply completing an investor's requirements. Lakhani sees regular scrutiny as part of running the business, not just preparing it for a funding process.

What people are saying

Lakhani makes a distinction between access to advisers and oversight by directors. An advisory panel can contribute useful ideas, particularly in a young business, but its members offer guidance when asked and do not carry the fiduciary responsibilities she associates with board membership.

Non-executive directors, by contrast, have a duty of care to the business. They are expected to attend meetings, examine financial information and question management, rather than provide support alone.

She argues that the prospect of having to justify a decision to someone without the founder's personal attachment to it improves preparation. That introduces a different form of accountability from an occasional conversation with a trusted adviser.

The reporting requirement also gives financial records a management purpose beyond bookkeeping and tax compliance: they become evidence against which directors can assess proposed decisions.

What happens next

For founders acting on the argument, Lakhani's proposed approach starts with choosing people who add capabilities the business does not already possess. These could include specialist sector insight, financial or legal knowledge, or experience of operating at the scale the company hopes to reach.

She also values the ability to raise uncomfortable questions that employees or existing colleagues may struggle to ask. An independent chair is an option in her model, rather than an essential appointment for every SME.

For owners preparing for succession or an eventual sale, her recommendation is to introduce that discipline early enough for it to influence how the company develops. The article sets out a governance approach, rather than announcing a programme, implementation deadline or costed service.