No matter the industry, all strong businesses have one thing in common: a rock solid board of directors to steer the company’s growth through a challenging and ever-changing corporate landscape.
Operating behind the scenes, the board has two critical roles: makes decisions on behalf of stockholders with the good of the company in mind, and advising the CEO. Here are some tips to help you build a great board of directors that will not only guide the company, but also signal to investors that you are committed to success:
Don’t wait until you need to raise capital to put together a strong board of directors. Having this in place from the very beginning signals to investors that you are serious about success and value the opinions of those who have led successful businesses before. These board members can then help guide you through that first round of raising capital—particularly useful if you’ve never do so before.
Longtime entrepreneur and venture capitalist Brad Feld advocates for creating a board early on in a useful Wall Street Journal article: “While you’ll often get advice to just have a ‘board of advisers’ at the beginning, I’ve found that the formality of a board of directors is helpful to the entrepreneur by creating an additional level of commitment from the directors.”
One of the benefits of having a board is having diversity of experience and perspective. When globalization and shifting demographics come into play, a board cannot be homogenous. You want to choose board members who excel in areas where you may personally feel less adept, and consider those too who have proven track records of success in the global market.
If product design or marketing aren’t your main strengths, find board members who have excelled in these areas. You also want members with experience raising capital, going through an IPO, and scaling a business. Play to your strengths by filling the board to cover your weaknesses.
Think Long Term
Where do you want your business to be 6 months from now? How about one year from now? Rather than filling your board with investors whose main experience has been with early stage startups, seek out trusted advisors who have experience scaling long term growth. They will help keep you focused on the big picture goals of your business.
Fine Tune As You Go
Change is inevitable when it comes to launching a business. From a shifting industry landscape to refining your own vision for your company’s growth, you want to make sure your board is keeping pace with any changes. As your company grows, so too should your board of directors. You may identify an area where you could still use guidance, be in product development or accounting. Look to add a board member with this specific expertise from your growing network of business connections.
As the board grows in members, the individual stake and voting power of each member declines, so you want to make sure every member has a vested interest in your company’s continued growth and success. Sometimes an initial board member may prove to be not the best fit as you refine your company vision over time, and that’s fine. Your board is not simply along for the ride—they are actively helping to steer the ship. Always remember that you are the captain, though. And every captain needs a great crew.