Presidents have their cabinets and staffs. Queens have their courtiers and ministers. As an entrepreneur, you have, well, yourself and maybe a co-founder or two. That’s why a board of directors -- a panel of supportive seasoned pros with experience navigating the entrepreneurial world and the industry you’re in -- can be such a great help. They can give you deep experience, independent oversight, a connection to new talent and customers, and a much needed reality check -- on your business plans and on yourself as a leader.
The only problem is that boards take some work on your part if they are to live up to their potential. Here are five things you need to do to make a board work for you.
Tell Them Everything; Ask Them Anything
In order to be effective, the directors need to understand your business: its strategy, target markets, value proposition, customers and leads, product roadmap, job openings, internal challenges ... in short, the works. Chances are that one of your directors has some connection or prior experience that can help you. But they can’t help unless you make sure they know what you’re up to and the issues you’re facing. The more frequently you give updates and ask for advice -- even if by informal emails -- the more likely your directors will be up to speed when a chance encounter occurs that can help your business.
Demand Objectivity, Even When It Hurts
Invite your board to give you objective and critical judgments, and then -- and this is important -- don’t be defensive when they do. A board of yes men is of no value to you, so let the directors challenge you in board meetings and allow them to outvote you even if you happen to be the majority shareholder and company owner. Set guidelines requiring at least annual, if not semi-annual, assessment of your performance, then actively solicit these reviews.
Lift the Financial Kimono Frequently and Consistently
If your board does not receive timely financial information in a consistent format from period to period, you are essentially asking them to guide you in the dark. Ask your directors what they expect and agree up front on what will be in the monthly or quarterly reporting package. Too many CEOs report financial or sales pipeline information in different formats each month, which results in directors wasting time trying to connect the dots from the prior period. Make sure to give your CFO the independence to serve the board as well as yourself.
Let the Directors Meet Your Team
Being a good director requires a lot of information, beyond standard board meetings and certainly beyond what you can reasonably provide directors by yourself. Take, for example, the task of evaluating you, which obviously requires candid feedback from people who are not you. So you have to let your directors establish relationships with managers and others outside the boardroom. If you really want to make the most of your board, you have to integrate your directors into the company, rather than insulate them from it. Face it: This is not easy, especially if you’re the controlling type (and what entrepreneur isn’t?) or if you’re insecure about keeping your job (no comment).
Let the Directors Talk to Your Team
In addition to getting feedback from others, your directors should also provide feedback to others within the business. If one director is strong in sales or business development, use that network to generate leads for the sales team. If another excels in finance, hook that director up with your CFO. If some directors have technical backgrounds, engage them with the product team. You might have to pay the directors extra, but if you leverage your directors' unique expertise and connections for the company’s benefit, everybody wins.
Co-authored with Rob Adams, Managing Partner of NextStage Capital Management, a seed and early stage venture capital firm investing in the mid-Atlantic.