A strong, cohesive board will help drive your business forward. Here’s how to assemble a winning team.
The role and make up of boards, advisory boards and non-executive directors is different today compared to a decade ago. Just as different these days is how they interact with the founder and executive team.
It’s an especially interesting issue for early stage businesses – those that have perhaps completed their first institutional fund raise or possibly a large angel round.
These businesses typically have younger founders, perhaps from non-traditional business backgrounds and the relationship around the board table needs to be given some thought.
Here’s my checklist for an early stage business assembling a board:
1. Optimum size
If it’s the first formal board for a high growth business, you want to ensure that the board has the ability to make decisions quickly which means keeping it relatively small and nimble.
One arrangement I think works nicely: the founders, an individual representing investors and one other, who has deep industry experience and who may well take the role of chairman.
Think of the board like you would your top team. You need to understand the founders’ strengths and gaps. These might be industry knowledge, a rolodex of contacts or the “been there done that” experience of having scaled a successful business before. Then look for individuals to fill those gaps (that includes from your investors).
Most institutional investors will want a board seat. If that’s the case, then ideally you want a partner from the investment firm who has been through it all before, so they can bring their practical experience.
3. Board meetings
From personal experience, I know it’s very easy for boards to quickly fall into the habit of checks, balances and corporate governance.
Apart from the obvious loss of not having valuable strategic debate, the more industry-orientated people around the table tend to find they are unable to add much value and you risk them disengaging.
That’s a waste when they have the potential to add huge amounts of value. Ensuring your board meetings are well run – with time for genuine strategic discussion – will help to mitigate this.
4. Meeting outside the formal board meetings
It’s often overlooked but you need to build ‘extracurricular’ relationships with your board members. In many cases you’ll get more from them during more casual one-to-one meetings over a coffee or beer than at formal board meetings.
As a start-up founder, you’ll have a huge amount going on – but make the time in your diary and you’ll reap the rewards.
5. Advisory boards
Founders and CEOs are often inundated with offers of help from people, who seemingly can all add value. However, they can’t all be on the main board.
Creating advisory boards works well here. Yes, they do take time to manage, but can be hugely beneficial to the business – whether that’s from an industry knowledge perspective, or for strategic advice and good contacts.
Keeping your advisory board separate from your main board will enable you to keep the conversation focused solely on strategic topics. Let the main board take care of the governance issues.