Most small businesses and startups have found it increasingly difficult to relate with their Boards of Directors and to a large extent, most their investors. Some board members that we have spoken to have often aired a measure of discontent with their management team over issues ranging from cash flow management, incoherent strategy, poor execution of strategic goals etc. In extreme cases, this leads to clashes between management teams and the board and has cost some CEO/Founders their jobs.
So, how can small businesses work better with their board. Here are a few tips you can use.
Get the right board members – This is more of a “prevention is better than cure” approach. In the initial stages of sourcing for investors and partners, it is critical to find like-minded people who key into your goal, strategy and work ethos in order to make interaction as smooth as possible. AS much as is possible, try to create a board that understands your business model thoroughly and what you are trying to achieve with the business. Don’t fall into the trap of picking the first set of investors that come by without properly assessing them. After all, they assessed you too.
Introduce them to a 5 year plan ASAP – Give your board members what you hope will be your 5-year strategic plan for the business. This is a very important step you must take as soon as possible, preferable during the inaugural board meeting. Why this is important is that for the investors and/or directors, it gives everyone an opportunity to understand the strategy and methods to be used in executing the plan. If any are uncomfortable with it, they can voice their concerns early enough to see whether the board is right for them or not. As for the CEO, you can have a bird’s eye view of how the board members communicate with each other and with you. If necessary, you can quickly weed out potential troublemakers.
Give short but concise reports- One mistake most founders often do is trying too much to impress their board. During board meetings, or management reports they send bulky slides that quite frankly no one has time to read. Never make your slides more than 15 and let it tell a story that’s in line with your 5 year plan. Use a lot of graphics, pictures speak louder than words.
Ensure periodic updates keep everybody up to speed– Information bridges divide like no other, so you must communicate frequently with your board members, particularly your Chairman. By giving them a monthly report of not more than 5 slides or pages, you let them in into some of your major achievements and challenges during the month. This makes it easy for board meetings to go more smoothly.
Stick to the rules – Most founders can sometimes be fixated with exerting control over the business. After all, the business is truly their vision and most startups businesses can’t survive without their founders. If you are a stickler for control, then have that entered in your Memorandum and Articles of Association, MEMAT. Your MEMAT is the documents that outlines how your company is governed. It also protects you from undue interference
Corporate Governance – This needs no introduction. Most companies today, however big or small, are expected to instill governance rules in their business. Try and get a lawyer to draft one for you and get your board to approve it. It also helps protect you from undue interference from your board and gives you something to refer to in case one of them steps out of line.
Provide checks and balances – I have seen some founders call then self MD/CEO/Executive Chairman. This is not a good way to manage your business. If you want your business to be a legacy and survive long after you are gone, then it is important that you allow for checks and balances. Let there be a clear delineation of responsibilities and a mechanism that subjects everybody’s actions to the scrutiny of others. This enhances transparency, honesty and improved communication.
Prudence – An investor once told me he saw someone he just invested in fly business class with him. This is as bad as it gets. You must always appear to be prudent and in control of your budget. Board members are always in love with revenue growth that is not just driven by aggressive marketing but by cutting cost too. Let them understand that you are not using their funds to bankroll your own luxurious lifestyle. In fact, let them see that you are making sacrifices as well to cut costs and grow revenue.
Never lie to you board – If there is one rule you must imbibe from day one, it is to never lie to your board. It will always come out one day, and the day it does, you can kiss your board bye-bye. A breach of trust is quite frankly the beginning of the end for you.
Give other members of your team access – You must not be the only face of the company, after all two heads are better than one. Give other members of your management team access to your board and you should also invite them to board meetings even if it is to observe. It not only enhances your image to the public but also makes the other members feel important and part of the project. This, in turn, will keep them engaged and supportive of your business ideas.