This week, Small Business editor Caitlyn Sykes talks to business owners about their firms' governance structures.
Matthew and Melanie Bennett are startup entrepreneurs about to launch Nibblish, a subscription service that delivers healthy snacks.
When and why did you bring on another director for your startup?
We brought on our director, Don Souloglou, as soon as we felt we were investment ready, which was about a year ago. At that stage we didn't have the money to pay someone, so we felt we could only attract someone by giving them the opportunity to invest in the business, which he did. Our mindset would be a little different now because we've realised there are lots of capable potential directors out there looking to build a portfolio. On a formal or informal basis, I think we'd find some help now without needing to pay anyone cash, or offer an equity stake.
In terms of our reasons for looking for another director, they were very much linked to the ambitions we have for the business. The link between businesses that are successful and businesses that have assistance at a governance level is really clear, because having a great team around you will always give you a better solution than if you go it alone.
What in particular were you looking for in that director/shareholder?
We had some specific skills we wanted to attract, like marketing and food operations experience, which filled some of our gaps. But ultimately, we wanted someone who had been there and done it before. Having someone on board who has seen the challenges we've faced before has been invaluable as we've developed the business. For example, we developed a biodegradable courier bag and another custom plastic punnet for our product and had delays with both. Our director, as well as our informal advisors, provided a calming influence when things like that happened and let us know those delays were usual in a process like that.
How did you go about finding your advisors?
We just did a lot of leg work. We identified some directors of similar types of businesses and reached out to them. We also looked at senior executives in businesses that offered some synergies. We picked up the phone to lots of people and had a lot of coffees. At that stage, we were looking for investor directors and some people could invest and others couldn't. Everyone we spoke to was happy to have a conversation though, and were interested in the business so we actually gained a lot of information and ideas through that process. Two or three of those people have gone on to be informal advisors to us as well and over time they've added huge value to the business without ever wanting reward.
We did take some informal references on the person who invested in the business but ultimately, you have to go with your gut instinct. You have to ask yourself not only if you can work with this person, but also if you'd be happy for them to suggest you could be doing something better than you're doing it now.
Once you had Don on board, what were some of your learnings about working with another director?
Nibblish is a a subscription service that delivers healthy snacks.
In many ways, it's like a marriage. You give and take, and push back on things that are important to you and let things slide that aren't so much. Above all, you need to be honest and invest time in making it work. You need to get to know them and work out how they operate and how you can get the best out of them. This became really crucial when we got right to the point of production on our packaging and I asked for a total rethink. It wasn't right and didn't get our business across in the right way and we had an open chat about this. What I thought was going to be a tough conversation was incredibly easy and supportive. We reworked the packaging in no time and came up with something fantastic together. Our relationship allowed that to happen because we'd created a strong team in the months that preceded what was a big issue.
Don has actually since taken on another commitment that means he can no longer be a director of the company, although he's retained his shareholding, and we're hoping to bring on some other governance.
What kind of people are you looking for?
Well, Nibblish is a brand-led business and we don't have that background so someone with those skills is going to be key for us. Over the short to medium term, we'd also look for people with ANZ FMCG experience, and over the longer term, experience taking a business into Asian markets. However, we're also open to people from left field who will challenge us and our ways of doing things. We're also looking for a bit of additional investment, so someone that ticks a number of boxes for us is going to be attractive. But above all, the person has to believe in the business and our ideas about doing business in an ethical way and supporting Kiwis who need some help.
