There are virtually no limits to the benefits that an effective and committed Board of Directors can bring to a startup company.
Contacts, mentoring, and expertise — the right Board can deliver on all of these when the entrepreneur does his or her part.
Most first time entrepreneurs haven’t served on or worked with a board. It takes time and focus to figure out how to get the most out of this dance.
- Learn how to choose the right members and motivate them before you start. The best experience will be gained by working directly with a board, but there are things an entrepreneur can do ahead of time. Start by talking with other entrepreneurs about what they’ve learned from working with their boards. Then talk to a board member or two and ask their advice about what works and doesn’t work.
- Creating a small advisory board is a great way to gain experience. Consider asking a trusted professor or a contact from your industry. A service provider who has a track record of working with startup companies might be interest. So might a potential customer. When it comes time to create a formal board, you may decide that you would like one or more of them to join your
- Board participation isn’t a time for friends and family. You want neutral, unbiased advice from your advisory and formal boards. There are plenty of other opportunities to get advice and mentoring from your buddies and relatives. Don’t load up your board with these folks — no matter how capable and well intended they are.
- Seek board members with relevant experience and skills that fill in your gaps. Look for individuals who have served on Boards of other startup companies. Large company board experience isn’t relevant. Well-managed large companies don’t run out of cash. However, cash flow is the highest risk problem a startup faces. You want the advice and mentoring of someone who understands what it’s like to be stretching to make the next payroll date or to pay a third party to complete that all important next module application code.
- Find members who will make active board participation a priority. Serving on your company’s board doesn’t have to be the most important thing in their lives, but you do want members who will attend meetings and be available over the phone, and sometimes in person, to engage with you on problems and opportunities, and who will readily open their contact file to help you gain access to experts and customers.
- Pay close attention to the investors on your board. Angels and VCs will almost always take a board seat or two as a condition of investment. They will carry the company’s story and results back to other investors. Investors invest in management teams first, ideas second. Most startup companies need follow-on rounds. Investor board members can be very influential. Enough said.
- Find your own individual balance between CEO leadership and coachability. Leaders listen. An entrepreneur isn’t obligated to act on every piece of advice or suggestion that the Board of Directors makes — but it’s smart to pay attention and to take extra time to understand, especially when you don’t agree. Sometimes entrepreneurs don’t know what they don’t know. Better to learn in the privacy of a one-on-one discussion than in front of a customer.
- For more tips, visit this INC. list of resources on this topic.
Last, but certainly not least, being an entrepreneur can be lonely. Talking through challenges with trusted board members helps.