7 Tips for Creating a Board of Directors
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Here are 7 tips you must know when creating your board of directors as a small to midsize business, based on suggestions from SME Toolkit.
Look at your existing management and the strengths they bring to the table. Do you have a lot of excellent marketing minds but no one with the know-how to raise capital? Take stock of internal strengths and look for directors that will offset the weaknesses.
Peruse your LinkedIn connections, Facebook friends, and email contact lists for colleagues or friends who may have appropriate skills to bring to your board of directors. Be careful not to lose objectivity though; liking someone is not enough of a reason to give them a seat on your board of directors.
A recent article by Bloomberg noted that "[m]any of the baby-boomer guys who hold the majority of director positions are convinced it’s difficult if not impossible to find qualified candidates of the other gender, according to two new studies, as thousands of eligible women go untapped."
This is clearly a widespread problem and will require organizations to take proactive steps to look outside of what's comfortable in order to promote diverse boards of directors.
What is a manageable size will vary depending on the organization. For smaller companies, directors are usually more involved than those at larger companies who rely a lot on the public image of board members.
There may be times when a board needs to add directors, for example, if your company is planning to go public and requires a larger board to guide through the process, SME Toolkit says.
Remember slide one? Having at least one director who has experience raising capital can be critical for a SMB, even if you don't think you have a need now.
A report by Entrepreneur describes how boards can vary in character: "Some are dominated by a single person with outsized opinions, while others are consensus driven. The best approach for your startup is likely a function of the personality and skill set of the founders and early contributors."
While the article refers to startups, the same could be true for other SMBs.
As a proprietor of a small business, you are probably used to taking control. But with a board of directors, you will need to be ready to make some changes. Directors require frequent updates via regularly scheduled meetings and financial statements.
Coming up with a clear agenda prior to board meetings helps you stay on track and prevent anyone from feeling that you've wasted their time.
As a proprietor of a small business, you are probably used to taking control. But with a board of directors, you will need to be ready to make some changes. Directors require frequent updates via regularly scheduled meetings and financial statements.
Coming up with a clear agenda prior to board meetings helps you stay on track and prevent anyone from feeling that you've wasted their time.
Boards of directors are responsible for performing various duties, including selecting and appointing a chief executive for the organization, as well as ensuring that shareholders get the most out of their investment.
While the role of directors is a critical one, there are some pitfalls, including the fact that many directors who sit on boards hold senior management positions at other firms and may sit on boards of multiple companies, making it difficult for them to do an effective job at ongoing monitoring, according to a recent study.
So what is a company to look for when selecting board members? There are many factors, and those vary depending on the size of the organization. For this slideshow let’s assume you are a small- to midsize business looking to put together a board of directors. Here are 7 tips you must know when creating your board of directors.
If you've been through the process and have any tips to share, please leave a comment.
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