Creating an Effective Board
A young emerging company on the horizon is nothing more than a sitting duck for the big companies with years and years of experience in the market. What sets one young buck apart from the other is the board of directors that preside over it. Their importance cannot be more emphasized than the fact that for a new company, the board is the guiding light. They are the ones who bring all their experience in the field to this particular company and nurture it.
What qualities do you need in members of the board? The following are essential:
- They have a vested interest in the company. To encourage this, you may offer stock options. In owning a piece of the company, they will be even more driven to want to help the business succeed.
- Dont try to fill up the room. The fewer members on the board, the more they will bring to it. Have you ever witnessed effective conversations when ten or twenty people are involved at once? Probably not.. With four or five people, you will get better results. They will be able to closely work with each other to benefit the company.
- A lot of young companies need to keep changing their business models for the first few years. Try to get members that will help you do that, instead of some venture capitalist that never attends the meetings. Large companies usually only have one business plan that they follow for many years. Advantage that a new start up company has is the ability to adapt to the new technologies and standards out. In addition, by changing their business plan every couple of years, they will help their business grow.
- Try to avoid hiring venture capitalists for the job. They are more interested in setting up the company and then once the IPOs come out, they usually are content and are not overly concerned about the growth of the company. They want to sell it and go on with life. Members of the board usually accept a job not solely for the money but for the thrill that comes with the establishment of a new company. This concern for your company and its growth and success makes board members more attractive to companies than venture capitalists. In talking with potential board members, try to find out about their motives for joining the board.
- Hire members that are ready to embrace some work at the company. They should be prepared and able to help you run the company on a day-to-day basis, thus getting involved with the operations of the business. They may even help you with hiring other people. Do not accept members who just want to sit in their chairs and argue all day. Active participation from the board members is essential, especially with a young company.
- Try to speak up at meeting with members and see what their reactions are. You need to get members who are not afraid to ask tough questions about the operations of the company. Dialogues between the management and members of the board are crucial to the success of the company. Advise from the members of the board will help you run the company better because they are most likely experienced in this arena and they know the mistakes that can be made as well as how to avoid them.
With so many companies emerging each year and only one out of five surviving onto the next year, its imperative to hire creative and extremely professional board members to ensure the survival of your company. Retaining successful and qualified board members is definitely not an easy task these days. People are no longer as willing to risk losing their comfortable and stable job for one thats fate has yet to be decided. However, by making a good presentation to potential members and showing them the benefits of joining your company, you will be able to make a good case for yourself.