Is your company using a board of directors or outside advice? If not, why not?
Why aren’t you using this valuable tool?
Here are three things to think about in response to some common objections we see to having a board of directors. This might give you reasons why you may actually want a board of directors. A lot of value can be created here.
#1 We are too small. A lot of companies feel like they’re too small to have a board of directors. They feel they don’t have enough operations and they’re not big enough. A properly functioning board of directors, whether it’s a formal board set up by an LLC agreement or corporation documents, or an advisory board, can provide valuable outside frames of reference, can help you look at the situations with a critical eye, and question management’s thinking. A board can also act as a networking tool to help the company know more people.
#2 We can’t afford it. A board of directors doesn’t have to be expensive. Depending on how it’s structured, a board can be set up with nominal or no payment. It’s simply a matter of putting time and effort into the structure and process.
#3 It’s too complicated. Setting up a board of directors can be very simple. It doesn’t have to be a difficult exercise. You don’t have to have the perfect board. Having a working board with a different point of view and expressing different ideas to contribute to the business can be extremely valuable. There’s lots of different ways to put the board together, and there’s no right or wrong answer.
We think that most companies would benefit from having a board of directors, from having that outside point of view, from having thoughts from different areas of business and having checks and balances. We don’t think there’s a time that it’s too early to do a board of directors. We think the board should probably increase in diversity and complexity with time, but a simple foundation of a board can be set-up early in the company. We think most companies would derive a lot of benefit from having alternate points of view in their business lives.
Have you used a board of directors? What’s keeping you from implementing this strategy? What are your thoughts on boards? Share with us in the comments below.
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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. This article should not be treated as legal advice to any person or entity. Freeimages.com/photographer nick cowie.
About the Author
Shawn McBride is the Chief Innovation Officer at McBride For Business, LLC. His signature keynote, The 3 Laws of Empowerment (www.rshawnmcbridelive.com), gives audiences an entertaining look at how they can prepare, plan and protect themselves. You can reach R. Shawn McBride at firstname.lastname@example.org or (214) 418-0258.
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