Why do so many people think having a board applies to public companies only? Having one is actually more important for a startup. External directors could be the difference between make or break for a new company.
Nowadays when as many companies are set up as go bankrupt it’s essential to be surrounded by competent people that can steer you in the right direction. Let’s face it, nobody is an expert on all areas essential to successfully run a company. An entrepreneur may for instance not be the ideal person to handle finance and accounting.
Behave like a Fortune 500 company
Why should only listed companies have boards of directors? Time to go against the flow and behave like your company was a Fortune 500 company. There are no rules that prohibit a startup from appointing a board of external directors. Even if you are the only investor in the company, a board will benefit you tremendously.
You can’t do everything yourself
Frequently someone who just started a company has it all in their head and feel confident they know what they are doing. Well, do they? Reality is that some do and some do not. So it’s definitely worth while looking at the benefits of having a board of directors to make the company develop as intended.
Advantages of appointing external directors to your board
- Larger network giving you access to competent people you don’t yet know
- Different perspectives
- Wider knowledge base facilitating decisions
- External know-how is a huge asset
If you invite a lawyer to sit on your board, you have a legal expert with knowledge of and interest in your company succeeding. Far better than hiring a lawyer charging per hour for his services.
How to carry out board meetings
To begin with, having 4-6 board meetings a year should be sufficient. Make sure you let the members of the board know which issues will be discussed well in advance. That way they are prepared, which facilitate constructive discussions and enable appropriate decisions to be taken. Take notes of everything said and decisions taken, write protocols and distribute to all members. That will make people think before they venture an opinion and also facilitate follow up of decisions taken.
What’s wrong with being unconventional? Doing things the conventional way may result in failure. So like a Fortune 500 company, get the advantage of external directors that will be assets to your company. The difference between doing things on your own and having a board will be huge. Provided of course that you chose people that are able to and interested in contributing to developing your business. What will motivate them? Well, I leave that question up to you. If you can’t come up with an answer, maybe you should think twice about setting up a company?
Picrure: Ed Uthman