In the beginning, your business most likely comprises you, a good idea and a lot of hard work and perseverance.
As you succeed and grow your business, you will soon discover it could benefit from the direction and guidance of other professionals. It probably would not take you long to make a list of areas where some seasoned advice outside your realm of knowledge and experience may be of value to you.
If you find yourself updating that list a lot, it might be time to consider creating either an advisory panel or a board of directors for your company. Whatever you choose depends on your situation. Established companies that are growth-oriented and/or have outside investors are more likely to need a formal board of directors, which will have defined legal responsibilities, foremost among them representing a corporation’s shareholders.
If your company is still in its early stages, an advisory board may be more appropriate. This is a more flexible arrangement to gain management advice without the formal structure or legal binding of an official board of directors. An advisory board can provide independent advice and counsel to you and your management team.
Whichever board is the best option for your company, the skills, expertise and experience those advisers or directors have will provide tremendous value guiding your company.
If you’re ready to create a board for your company, either a formal board of directors or an informational advisory group, the following tips will help you create a great board to guide you and your business to increased growth and prosperity.
- Give your board a mission. Decide what it is you want your board to do. Developing strategy, introducing key resources such as financing or prospective customers and positioning are most prevalent
- Identify the skills you need. Pick members who will complement, contrast and contribute differently. Get experienced, practical, plugged-in people for your board
- Decide when and where they will meet. The preferred schedule is monthly, but you can do it quarterly if you provide complete written updates to members on a monthly basis
- Determine board member compensation. This will vary based on the size of your company
- Set the rules. For a board of directors, bylaws that outline procedure are a must. You can use a similar organization as a model
Once you’ve determined the mission and role of you board, it’s time to find members who will fill those seats. If you have no previous experience with a board, consider assigning the task to an experienced adviser who does, especially if they have experience in human resources.
As you fill the positions on our board, consider:
- Develop a candidate profile. The best board members become personal coaches and confidants. Seek those who like this role and are good at it
- Asking others for suggestions. Solicit names from your attorney, banker, accountant or other professional advisers. Your local chapter of The Executive Committee, or TEC, is also a great source of suggestions for finding great board members
- Looking for those with the skills you need. A healthy board includes a legal expert, an accountant, marketing professional and a financial adviser. Other good candidates are successful entrepreneurs from different industries who can look at your business with a fresh eye
- Sharing your vision and goals. Take time to talk with prospective advisers. You’re looking for individuals who can challenge you and help your business grow
- Seeking out those who like a challenge. Great board members need the challenge of making a difference. Constantly provide a challenge in your own unique way
Assembling your board is just the beginning of the process. To realize the value it can contribute, you as the CEO must set a long-range agenda and keep board members informed of company activity on a regular basis. Give them time to prepare, and in turn they will provide you with expertise, objective opinions and sound advice.
Not only can they provide counsel about the company’s performance and plans, one additional benefit of a board that represents a wide range of skills and experience is having a group of local centers of influence acting as ambassadors for your company.
As your advisors or directors become engaged and committed to the success of your company they will inevitably promote your company and create opportunities with prospects that you may not have known or had access to.
Steven R Barry is assistant vice president of commercial banking at First National Bank-Fox Valley.