Building Your Board of Directors

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When you’re launching a new corporation, you’ll continually learn as you go—and by building a qualified Board of Directors, you can gain access to support and mentorship, and avoid many of the missteps that you may otherwise make without such guidance.

Many company presidents credit their business’ Boards of Directors for helping them recognize market opportunities, find the right employees, cut unnecessary costs, and build priceless industry connections. But how can you put an effective board together? Here are a few strategies for success:

  • Seek out business leaders with complementary knowledge and skills among your current group of peers.
    By the time you’ve decided to build a business, you’ve probably already developed an extensive network of contacts in the business world, whether they work in the same industry as you or not. As you launch your company, this is the time to tap into those connections: Review your contacts’ bios on LinkedIn to get a better sense of their skills, and contact a few who have strengths that you lack. For instance, you may excel in marketing, but don’t have a strong background in finance, so a friend who serves as CFO could be an ideal candidate for your board. Put together a “dream team” of five to 10 contacts (or friends of friends) to reach out to, who each have skills in different areas of business.

 

  • Come up with a set of expectations for each party.

Before asking your contacts to join your board, it’s important to specify exactly what they will be committing to. For instance, do you hope to have board meetings quarterly, or as often as biweekly? Do you anticipate that each board member will tap into his or her own personal networks to help you drive business? And, importantly, what is the incentive for each Director? In some cases, particularly if you have hopes for an eventual public offering, company stock may be a good reward; in others, it’s more appropriate to offer cash compensation, which could range from anywhere from $100 to $1,000 or more per meeting. Some may be willing to serve without compensation as an act of good will, but it’s important to set expectations from the start.

 

  • Set an agenda for each meeting.

When requesting a meeting with your Board of Directors, it’s important to prepare in advance and set specific goals for the meeting, so that you’re not wasting your directors’ time. For each meeting, set a specific discussion topic: For instance, “How can we increase sales by 20% over the next quarter?” In order to receive helpful guidance, you’ll need to give your directors access to your company’s financial data and sales history—so you may want them to sign a non-disclosure agreement as a part of their orientation. 

It may also be helpful to come up with a set of more specific questions for each director to answer over the course of the meeting. It is also important to record the discussion at each meeting, either through written minutes or an audio recording.

 

By putting time and care into creating an experienced Board of Directors, and ensuring that each meeting focuses on a topic specific to your business’ growth, you’ll gain the benefits of your directors’ experience and wisdom to help you quickly scale your own company.

More By Kathryn Hawkins
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