If you have been a reader of our blog, you know we suggest that sometimes people should use a Board of Directors in an emerging company. It can be a good way to get outside influence and to diversify the management and control of your business. It can allow the business to grow.
Questions we frequently get from emerging companies are “How should my Board work? How does it happen? Do we have to have strict quarterly meetings?” The answer depends on you, and your business culture. You have choices. You can be strict, and run your Board of Directors formally, or you can be informal and use it as a periodic sounding board.
The best results I have seen are with Boards that are well-informed. This means getting the information to the board members so that they can read and review it. This might require a monthly conference call, or a quarterly in-person meeting, or some combination thereof.
A functioning Board of Directors needs to have an ongoing conversation, multiple parties involved, with different viewpoints from people who are familiar with the company’s needs and objectives. There are many options as far as frequency, level of detail, and formality. The particular way it is done does not really matter. You can do what is right for your company.
Compensation for the Board of Directors is also up to the company. Some companies have volunteers on their Board, members who want to help the company grow. Of course, some companies pay their Board members for their service. A good deal of commitment is required from members because they are giving up their time and energy to help the company. Make sure that they are seeing it as a fair value for their time. This might be monetary or some other benefit.
Have you been hesitant in implementing a Board of Directors? What is keeping you from bringing this valuable tool into your business? Have you had good or bad experience with a Board? What might you do differently in the future? Join us in the comments below, and let us know.
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This posting is intended to be a tool to familiarize readers with some of the issues discussed herein. This is not meant to be a comprehensive discussion and additional details should be discussed with your attorneys, accountants, consultants, bankers and other business planners who can provide advice for your circumstances. Each case is unique. Past results do not guarantee future outcomes. This article should not be treated as legal advice to any person or entity. Freeimages.com/photographer Gideon Geldenhuys.
About the Author
R. Shawn McBride is the Chief Innovation Officer at McBride For Business, LLC. His signature keynote, The 3 Laws of Empowerment, gives audiences an entertaining look at how they can prepare, plan and protect themselves. You can email R. Shawn McBride or (214) 418-0258.