Do you want to recruit to your Board of Directors? It’s a valid question since many entrepreneurs simply say no.
Who to recruit to your Board of Directors:
- Decide where you like to be in 4 to 6 years. Find experiences that are ahead of you.
- Consider adding competences to the Board of Directors. What do you need?
- People dynamics is important, you need to find a great personal fit.
- Add the most needed competences, don’t make the Board of Directors too large.
- Each investor is not entitled to a seat on the Board. Money is not everything.
- An external Chairman can be helpful if you need someone to co-lead with yourself.
Lack of priority, not seeing the need or wanting to retain sole control are common causes not to recruit. Assuming you have decided to add external resources to your Board of Directors, who shall you recruit?
Experience – decide where you like to be in 4 to 6 years
Consider where you want your business to be in 4-6 years when you recruit to your Board of Directors. Find experiences that are ahead of you.
If sales have just recently taken off, you might like to add a Board Member with experience to scale operations. Once your operation is in place you might like to add a Board Member with sourcing experience.
Businesses go through different stages of development. Look ahead. Decide where you like to be in 4 to 6 years when you recruit to your Board of Directors.
Competences you shall recruit to your Board of Directors
Consider adding competences to the Board of Directors. To do that, you shall also decide what you like the Board of Directors to do.
Many small businesses use their Board Members as semi-operational resources also in between Board meetings. Temporarily assistance in certain tasks can be a good way to get things going without disturbing sales or product development.
I have work with founders that find great relieves in using me as a kind of inhouse get going assistant. It can be to study a new market or to manage and document the business plan process.
Functional roles that the founder lack experience within can be areas where to recruit to your Board of Directors. For example financing, recruitment, leadership, manufacturing or sourcing.
Consider people dynamics
People dynamics is important, you need to find a great personal fit. A member of your Board of Directors is like a close employee. You will spend a lot of time together.
It very common that one or two closely associated Board Members act as trustful speaking partners. You need to connect on a personal basis to have a meaningful professional relationship.
How many persons to recruit to your Board of Directors?
You shall be selective when you recruit to your Board of Directors. There is no need to build a large group of people around you, unless they truly contribute to the business.
One or two external Board Members is often a good start, depending of what experiences and competences you look for. With a maturing business and a years of working together you may add one or two additional Board Members.
In general, I would advise you to be on the low side when you recruit to your Board of Directors.
Is each investor entitled to a seat on the Board of Directors?
Money is not everything, each investor is not entitled to a seat on the Board of Directors.
Running your business is your main concern, not reporting to or engaging with your Board of Directors.
“I have been on the Board of Directors in startups where venture capital investors insist of a seat on the Board of Dirctors but assign a junior analyst to fill the seat. This is not to contribute to the business, it’s all about reporting and control. Avoid this.”
Investors are a necessity with regards to funding, not a milestone by itself. Look for smart money, meaning investors that you connect with and that add competences you seek for.
Investors shall only be entitled to a seat on the Board of Directors if they contribute to your business. It’s also important that they have time to work with you. That they show up.
Is an external chairman something you need to recruit to your board?
An external Chairman can be helpful if you need someone to co-lead with yourself.
If you as the founder is an operational person you may consider an external Chairman. That would be someone to discuss with in confidence. Someone that help you make your decisions. A kind of partner in crime without necessarily being a co-owner of your business.
Final thoughts on who to recruit to your Board of Directors
You know you have the wrong Board Members once you feel that you need to book a Board meeting, because it was a while ago. I hope this blog post help you in your consideration who to recruit to your Board of Directors.
Make your board composition right when you recruit to your Board of Directors. Do not engage family and friends only. A great board composition makes for fantastic resources, at relatively low cost.
Good luck in building your Board of Directors.