Peggy Wallace, Managing Partner of Golden SeedsMay 23, 2019
When you’re trying to get your startup off the ground, it can be all too easy to get caught up in those immediate day-to-day tasks — important and not-so-important. What should your sales strategy look like? How will you ship your product to meet a deadline? Where will you put the table in the conference room?
With so much work that’s pressing, it can be easy to lose sight of big-picture items that might not seem so time sensitive, but ultimately can ensure that your company is successful. One of the most important of these challenges is choosing your board and making the most of it.
Enlisting a strong board of directors is one of the most important things you can do to help your company succeed. Your board members often have a large contacts list and can introduce you to other investors and influencers or potential customers. They have a deep talent of experience to share in areas from sales, strategy and finance to social media, marketing and public relations. And let’s face it, they’re often people who would be too expensive — or generally unavailable — for you to hire outright.
How do you select a board that will provide all these benefits?
Here are four things that we’ve found are critical to keep in mind when designing and recruiting a board that’ll help your company achieve its goals.
Your board could include members of your company and investors (if you have them). That only makes sense, after all, as you all have a vested interest in how the company performs. In fact, these two groups should make up the majority of your board.
It’s important, however, to include at least one director who is independent. They have no relationship with your company — monetary or otherwise — so they can be completely objective.
For this role, try to find someone whose areas of expertise expand your company’s strengths and provide depth where you might be a little short. Often the independent director is someone with vast industry knowledge and high-level operational experience. Beyond that, think of characteristics that match anyone you would want to work with: trustworthy and well-respected in their industry, a person who fits with your company’s goals and culture.
By now, this shouldn’t come as a shock: diversity within executive teams, including boards, leads to better financial performance. But don’t take our word for it. McKinsey’s groundbreaking delivering through diversity research shows that companies in the top quartile of diversity, measured by gender, cultural and ethnic criteria, outperformed other companies in financial metrics like profitability and likelihood of outperforming margins.
As you’re choosing the best people for your board, keep these stats in mind. Having representation parity brings different viewpoints and different ideas, which ultimately leads to better financial performance.
You’re hoping the relationship you have with your board members is a long, mutually beneficial one. Creating strong, productive working relationships and maintaining them will go a long way toward making your company successful.
This means open, candid, and regular communication. Determine how often you’ll meet as a board — startups often choose monthly or bi-monthly meetings in the beginning and move to quarterly meetings later — but make sure you keep board members updated on changes and new information between meetings to avoid surprises and build those relationships.
Your goal is to get the maximum return on your investment for your investors. Your equity holders’ financial reward is dependent on a successful exit, so be sure to focus on the end-game.
Make it a point to align with your board members as much as possible throughout the life of the company. Achieving this alignment may mean accepting advice based on the experience of board members who have steered companies through difficult marketplaces. This isn’t always easy. It may require changes that don’t match your vision, a shift in funding priorities or even a change in management. But the goal is that this alignment will help lead to optimum return.
A strong board will appreciate your goals and help you reach them, but you need to make board members a priority. Listen to their advice, use them as a sounding board and value their support.
Learn more about how women entrepreneurs are achieving success with Golden Seeds.