Board Has Great Value If You Accept Advice And Are Honest
A board of directors is an important business tool for public and private companies, as well as nonprofits.
After all, a board’s collective focus is on building strategic value for the organization, big or small.
Some of the benefits of creating a board of directors for a small business include:
Creates accountability, requiring the business owner/leadership team to make commitments regularly and gauge performance against those commitments.
Serves as an objective view – a sanity check for recommendations or decisions.
Access to the networks of board members
Access to expertise that the business may not have.
May create a mentoring relationship.
Acts as an extended leadership team.
Shows investors you understand the importance of leadership.
Creates the habit requiring you periodically to step back and look at your business or business model more strategically.
To get the best results from your board, understand how your business can benefit from a board and make sure you are willing to listen to and accept the advice of others.
Before creating a board:
Determine who from the business will attend board meetings, considering the benefit of internal alignment, the ability to be totally honest and the cost to the business of his or her attendance.
Review your company’s operating agreement, as it may have conditions to be considered.
Determine the type of board. Will it have advisory or governing capacity? Will it be more strategic or operational? If you don’t have a strategic plan, it’s difficult for the board to advise you strategically. Consider using strategic planning as a way to launch your board.
Determine meeting frequency (monthly/weekly, how much time away from the business can you afford, how can you not afford to?).
Define the length of meeting, stick to it, start by allocating an hour.
Define the number and type of people and keep the board as small and as diverse as possible.
Select someone in the business or on the board to create the agenda, facilitate the meeting and take and distribute notes.
Notes don’t need to capture the conversation. They are intended to capture decisions with associated rationale and action items.
Create an information sheet to discuss roles, responsibilities, time commitments, dates/times of meeting, expectations outside of meetings and pay.
Discuss terms. Some use one-year terms, which tend to be shortsighted depending on the frequency of meetings. Remember, it takes several meetings for board members to become familiar with each other and create a working dynamic.
Are you ready to work with a board?
If you don’t have good financial reporting, focus on that before creating a board – that’s one of the first things a board wants to see.
Are you ready to be totally honest?
Are you ready to listen to others?
Are you ready to accept responsibility for your role in your existing business situation?
Are you willing to make and honor commitments?
If you are a family owned business, you may have more than one type of board – a family board for family and a nonfamily board.
If you are not ready to work hard, listen to advice from others, be honest with board members and others that attend from the company, don’t start.
Starting prematurely won’t bring the results you expect and may make things worse.
You’ve done all your preparation and are ready to go, so now you need to select board members.
Look for those willing to debate and share knowledge, those with a breadth of expertise who cover many functional areas.
Consider a business owner in a like industry, seek diversity, industry experts and experience you know you will need in the future