Forming a board offers business owners access to valuable insights and guidance. In fact, a board of advisors — senior, well-connected professionals who take personal interest in your success — can be one of the most valuable resources any business owner has.
“Companies now are competing with everyone, everywhere, and for everything,” says Susan Stautberg, chair and CEO of the Women Corporate Directors Foundation. You don’t just need a strategy — you need people who can help make your strategy work.”
Serving on someone else’s board offers the chance to share your knowledge to help another company.
There are personal benefits as well. Board service allows you to examine what other business owners and managers are doing right — or wrong. In addition, it can expand your network, enhance your reputation as a leader and build your resume to serve on larger company boards.
To prepare for anticipated openings, consider serving on boards of directors for smaller public companies, less formal boards of advisors for entrepreneurial companies or nonprofit boards.
While there is no secret formula for being asked to serve, leadership experience clearly matters.
The more prominent you are in your field or industry, the more attractive your professional profile becomes. The fact that you have been on an advisory board shows you are in the game.
And smaller-board service may provide a segue to more prominent board positions.
Directorship
While advisors oblige themselves to serve the best interests of the company they advise, there are even greater demands on directors. Directorships are typically paid positions that come with formal board votes on major company decisions and fiduciary responsibilities. If the company encounters financial or legal troubles, directors may be held accountable for their decisions and oversight. But the extra responsibilities can be rewarding.
Time Commitment
While any form of board service can be a great experience, be sure to understand the time commitment before signing on. Public company board members, for example, can spend up to 250 hours annually preparing for and attending meetings. Learn what is entailed and compare that against your other responsibilities, such as keeping your own business on track and having some time for a personal life.
Beyond the time commitment, keep in mind the one thing that is most difficult to recover: YOUR REPUTATION.
Regardless of the institution, ask questions, review numbers and speak with senior management and other directors at length before accepting the offer. The more aligned you feel to the mission at hand, the better positioned you will be to serve.
Advisory Boards
Advisory boards are mainly there to give you advice. Since advisors do not vote, you are free to take or leave their recommendations. You can structure an advisory board any way you want, have as many members and meet as frequently or infrequently as you like. In some cases, a board of advisors serves as a stepping stone to what may become a formal board of directors as the company grows.
Because there are so few rules, getting the most out of your board of advisors means taking the time to create a structure, and thinking carefully about who will serve and what you want to achieve. These steps can help you create a board that becomes your key to success.
Strategic Input
Beyond strategic input, advisors may introduce you to potential clients and other influential people they have gotten to know over the years. The more well-connected advisors are the more the chances that these are people know who can open doors for you and your company. Advisors may even help you fill key staff positions.
Seek Diverse Skills
Look for senior people with a mix of experiences. Depending on your company, that may include someone with a strong marketing background, another with great accounting skills and others with technical prowess and distribution expertise.
Do not be afraid to aim high. Look for all-stars, proven leaders whom you have read about or admired from afar. The worst they can do is decline, and you might be surprised at how many leap at the opportunity to take part in an exciting young company.
“You can find Fortune 500 directors on private boards. They’ve had success in their careers, and they believe in giving back.” - Fortune Magazine
Advisors VS Directors Boards
Boards of advisors differ from their more formal counterparts, boards of directors.
While both involve senior people providing high-level guidance, directors have legal, fiduciary responsibilities and voting rights in key decisions, such as naming top managers.
If you take your company public, a formal board of directors is a must. And some private companies have boards of directors, often comprising investors who want a direct say in management in exchange for their equity stake.
Comments