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“Have you asked your board members for help?” I asked. She sighed, “It’s hard to get a return phone call.” This occurs all too often. An entrepreneur excitedly creates a board with high-profile people, believing their personal brands will lend their new organization credibility. While that can happen, I’ve seen too many cases where these influential people are now on your board, but just aren’t helpful. They are busy and you aren’t their priority.
It can also impact your ability later to grow your board because no one is going to join a board if they sense dysfunction or apathy within the existing board.
There are two points to unpack on creating a board as an entrepreneur, when to create the board, and who should be a board member.
Many entrepreneurs jump the gun and create their outside board too early. A board of directors is accountable to the shareholders to ensure the company has the right strategy, the right team to execute the strategy, and effective execution to deliver good returns to the shareholders while practicing strong corporate governance. When you are starting your business, you are the majority shareholder. So frankly, you don’t need external board members right away.
You and your cofounders can be the initial board. You need to create the business first. The skills and experience you want on your board will evolve as the business develops. Don’t lock yourself in by adding board members too early. It’s hard to ask them to step off when your needs change... If you want credibility and help and in a formal way, ask people to be advisors.
Once you’ve actually created a business and raised some funding, investors may require a seat on your board. Many times, this is the catalyst for adding external board members. It’s important to have an independent board member as well as the investors on your board. Who should that be? Think about the industry or even technical expertise that would be beneficial to you. Consider people who are well connected in the markets you are targeting. People who have built companies or significant enterprises can provide helpful counsel as you build your organization.
You want a person who understands governance, brings skills or experience that will be helpful to you in building the business, someone you trust and who cares about you. You want this person to have a vested interest in your success. This doesn’t mean this board member will blindly agree with everything you want. But using these criteria will increase the likelihood that they will be there to support you and help the business over time.
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