As your business grows, you may seek additional input and support from others outside of your company. If you’ve reached that point, it might be beneficial for you to consider starting a Board. Whether it’s an Advisory Board or a Board of Directors, having the experience and insight of a well-rounded group of individuals can help you take your small business to heights you couldn’t have realized on your own.
The Difference Between the Two
There are two kinds of Boards you can consider developing: an Advisory Board or a Board of Directors. An Advisory Board includes a panel of people that have experience that can help guide you to making decisions for your company. A Board of Directors takes that one step further and has the power to vote on those decisions. If you incorporate your business, you’re required to have a Board of Directors, though you may not hold more than the required number of meetings. If you have shareholders you’ll also need a Board of Directors, as they’re the body that act in the interest of the shareholders.
How to Cultivate a Fabulous Board
Whichever type of Board you want to develop, here are a few ground rules to get started.
Start by determining what you hope to achieve with your Board. We’ve already covered the situations where you’re required to set up a Board of Directors, but if you want an Advisory Board (and you can certainly have both), you need a purpose and direction. Maybe you want to take your private company public, and want the right people on your team to guide you to success. Or maybe you want to enter a new industry that you know little about. Having experts in that field on your Board can help you navigate that transition.
Next, get the right people on board. (Pun. Get it?) Aim to find people with experience different than the rest of your Advisory Board or Board of Directors so you have a balanced panel. For example, you might invite one accountant to help with the financial side, one industry expert, a marketer, and a strategist. If you can find a well-known industry leader willing to participate, that’ll be great PR for your company.
You want to set expectations early so that potential members know what’s expected of them. How often will you meet? Will they be required to participate in email or phone call conversations between in-person meetings?
Then, set compensation. Board members are often shareholders, so they get compensated partially or completely in stock. For Advisory Board members, you might only pay for meals in meetings, or you might offer a stipend for their time. Remember: they are giving you some of their valuable time, so consider a fair and appealing compensation plan.
Developing Relationships Over Time
You may only meet with your Board once a quarter or once a year, so make sure to maintain communications throughout the year so they feel in touch with your business. Send a monthly newsletter updating them on what’s happening at your company. Check in with a phone call or coffee date occasionally. Ask if there’s anything you can do to help them. It’s important to make this a reciprocal relationship so they want to stay on your Board for years to come.