A non-executive director or NED is a director that sits on the board of a company but is not involved in the day to day operations of the company. Their main role is to help with operational requirements and budgets as well as providing advice and experience.

Cash-constrained startups may feel that hiring a NED is an unnecessary expense, but many NEDs are financially secure and are often looking for a new challenge. Others may provide their services in exchange for equity. So what a NED can bring to your startup and why you should consider hiring one?

They can act as a ‘sounding board’

Whether you are a sole founder or a small team, a NED can offer an independent voice and perspective. This can be useful when conflicts arise or if you just simply need a sounding board over difficult decisions. They are also likely to keep a cool head during times of crisis.

They bring influential contacts

Experienced NEDs usually come with a background of working with a variety of different people and businesses and should be able to use their own network to help expand yours. For businesses that are fundraising or are seeking to penetrate new markets, these personal referrals can be invaluable.

They can bridge gaps in experience

Depending on the sector or industry that your business operates in, you may have a requirement for additional expertise such as operations, finance or legal. Appointing a NED who already has skills in a particular area can help bridge knowledge gaps without the need to seek external advice which could be more costly.

Please let me know about your own experiences of hiring a NED and what value they have bought to your business in the comments below.