We work with many high growth SMEs, from family owned to PE backed and often we see them reach a point where their growth begins to slow despite strong demand, a successful product range or service, and having a highly talented workforce. We are called in when the owner wants to know the reasons behind this challenge. Often, we see that the reason for this lies in changing market conditions, access to capital, or increased competition.
Our question to the owner is, ‘do you also need to consider your leadership structure that helped build your business in the first place, and whether it is now the right one to scale the business for the future?’.
For Founders, this can be an uncomfortable question as the qualities and expertise that created the business are often very personal, raising an important question for a growing organisation. What expertise do we currently lack?
Most Founders can quickly identify the strengths that built their business, but fewer spend time considering where the business may have blind spots, or which challenges require experience or skills they simply are yet to acquire in their business.
The answer is not always hiring more people. Often, it starts with building the right board.
The founder paradox
Founders are typically successful because they are fast, decisive, heavily involved, and comfortable taking control. In the early years, these traits are invaluable; decisions happen quickly and problems are solved immediately.
However, as organisations grow, this central command approach can lead to decision bottlenecks where strategic decisions get delayed by operational challenges.
Many SMEs reach this point without recognising that the issue is not capability. It is capacity. The business has outgrown its leadership model.
Your first Board doesn’t need to look like a PLC Board; many successful boards start small. This might mean appointing a single Non-Executive Director, establishing an Advisory board, bringing in an independent Chair, or appointing a sector specialist. The objective is adding capabilities that the organisation does not currently possess.
Founders naturally recruit people they know. People they trust. People they have worked with before. There is comfort in familiarity. There is also risk.
The purpose of a board is not validation. It is perspective.
The most effective board members are often those with different perspectives that ask the difficult questions, challenge assumptions and bring experiences from different sectors, organisations and situations.
It creates better decisions. Particularly during periods of growth and change.
Phase one: founder-led growth
In most early-stage businesses, leadership is informal. At this stage, the Board often consists of a mentor or former colleagues who provide occasional advice when needed. It is flexible and inexpensive.
However, there are limitations too. There can be little accountability or formal responsibility, and no vested interest. Availability may be inconsistent and commitment can vary depending on their own priorities.
Perhaps most dangerously, there is a question of whether there is an adequate breadth of experience to create constructive challenge. Questions around market expansion, succession planning, acquisitions, governance, risk and long-term growth require a different type of conversation. This can be when independent leadership input becomes invaluable.
Case study 1: the founder who wants succession
We worked with a Founder who had built their £12m manufacturing business from scratch. Every major decision landed on their desk; sales approvals. recruitment. pricing. customer complaints, new contracts etc., The business was growing, but they hadn't taken a proper holiday in five years.
Lesson: Your business doesn't stop growing because you've run out of opportunities. Sometimes it stops growing because everything still depends on you. Appointing two external Non-Exec Directors gave this Founder space to breathe and plan.
Phase two: growth creates complexity
As organisations scale, complexity increases - more employees, more customers, more stakeholders, increased regulation and compliance, more operational risk.
And yet for the Founder everything still comes back to them. Decisions take longer. Managers require more support.
The business is succeeding, but leadership capacity is stretched. This can be when organisations realise they need broader expertise, greater challenge, more structured decision-making, and less reliance on one person.
The next question is what type of board is needed to support this?
Advisory Board
An advisory board provides guidance, experience and external perspective. It has no formal legal authority and does not make binding decisions on behalf of the company. Instead, it acts as a sounding board. A well-structured advisory board can help Founders test strategy, challenge assumptions, and gain access to expertise without introducing significant governance complexity.
Formal Board
A formal board carries legal responsibilities and governance obligations. Directors have statutory duties and play a defined role in overseeing the business, its strategy and its performance. As organisations mature, attract investment, or prepare for significant growth, a formal board structure often supports the increased complexity of the organisation.
Case study 2: the strategic board build
Our client was at a pivotal point in their growth and wanted more clarity on direction of travel and formality on board direction. We worked with them to bring in multiple Non-Exec Directors to build their first formal Board, replacing their previous informal network of advisors with a formal governance driven Board. Our work also included the governance aspect, board papers, setting meetings, MOU's, JD's and accountability. New Board members were handpicked for their skills in IT transformation, regulatory management, operational complexity, services delivery, business growth, and customer services. Given the sensitivity of the environment our client operates within, sector expertise built high profile leadership and sharpened the organisation’s influence in cross-sector decision-making.
Lesson: A formal Board with clear objectives with agreed and minuted Board meetings and strategy sessions, can help you move from being Founder-led and operationally focused, to being strategically governed, sustainable, and accountable.
Phase three: leadership maturity
As a scaling business continues to mature, so too does its leadership model.
Clear distinctions begin to emerge between operational management and strategic Board input, and the most successful scaling businesses quickly understand this distinction between effective operational management and how the board contributes to strategic vision setting and priorities.
When this distinction emerges, Founders gain a sounding board which can help prepare the organisation for a future that is not wholly dependent on their own presence.
Case study 3: family manufacturing group - Group MD role
For our second-generation family-owned Client, the decision to establish a more mature Board was not about adding bureaucracy, but about creating the governance, challenge and strategic oversight needed to support their long-term growth. As the organisation expanded in scale and complexity, relying solely on the experience and judgement of a close-knit leadership team became increasingly limiting.
We worked with the family to introduce a more formal Board structure, the business gained access to independent perspectives, stronger accountability, broader commercial expertise and a clearer separation between ownership and management. This helped ensure that strategic decisions were tested rigorously, risks were better understood, and future opportunities could be assessed through a wider lens.
Lesson: Governance should evolve alongside organisational maturity. A well-constructed Board can preserve the strengths and values that made a family business successful while providing the objectivity, expertise and succession planning needed for the next phase of development.
Final thoughts
At its best, a Board exists to ensure the business has access to the experience, challenge and strategic perspective needed for its next stage of growth.
For many SME founders, the real question is not whether they need a Board; it is about a board structure that works for future growth and having clear, transparent processes and structures.
Introducing the right board structure, whether through Non-Executive Directors, an Advisory Board, or a formal Board, can provide the independent challenge, expertise and governance needed to support sustainable growth.
At Moon Executive Search, we help ambitious organisations build boards that are fit for the future. Whether appointing your first Non-Executive Director, establishing an Advisory Board, recruiting an independent Chair, or building a fully constituted Board, we work with founders, owners and leadership teams to identify the expertise, challenge and governance needed to support sustainable growth and long-term success.
Contact us today to see how our Leadership Team can support your growth plans.