A board of directors can greatly benefit the growth of your organization.
A board that works efficiently can not only help you to safeguard the interests of stakeholders, but can also allow you to shift more focus on growing your organization.
Benefits of having a board of directors
In addition to the basic duties that a board member carries out, there are also other benefits they bring that can help the growth of your company. In an effective board of directors, this can include expertise in specific technologies and markets. For your business, this entails:
- Contact with new potential major customers
- Connect to key trading partners
- Connect to key technologies
- More investors
- More syndication partners
- More contacts with greater access to information and other institutions
- More easily find beneficial partnerships
- Attract new stakeholders and talent for business management
- Improve your business strategy development with the addition of more outside expertise
Not only can a board of directors help in the growth of your company, but if the need arises, they can also help with an exit or closing strategy. Including:
- Employee Stock Option Plans (ESOPs)
- Leveraged Buy Outs (LBO)
- Management Buy Out (MBO)
- Succession planning and execution
- Starting over and building a new venture
- And more…
How to form a board of directors
The easiest thing to do would be to choose the people closest to be on the board of directors, such as close family members. Although close ties can establish trust, they can make it harder to ask the tough questions that need to be asked. Which is why many experts recommend that board members are chosen based on the skills and experience they bring to the business.
In today’s environment of heavy regulatory liabilities, a board will be required to always be asking tough questions. This helps to ensure that the company is not violating regulations set by the SEC or other regulations set by the government.
How to maintain a board of directors
Don’t become complacent with your board. They must continuously expand their knowledge of their role in your organization. Schedule appointments throughout the year for board growth and development. Ask them how you can help assist them in areas that they need help with.
Always give praise and recognition to board members for their valuable contributions. Development and recognition lead to better results. Also interview investors (especially those who require board seats before investing) first to find out how they can benefit your business. This can even help fill gaps in management and board teams.
A board of directors along with outside directors can completely change how your company is run. There are tons of organizations that are run similarly, so you too can have a high performing and extremely effective board of directors!