- Source link: https://www.forbes.com/sites/martinzwilling/2015/06/30/mistakes-to-avoid-with-a-startup-board-of-directors/#5e42ef1656fd
- TL;DR: This article does a good job at outlining why having a board is important and warning of some common mistakes
- How helpful?: 5/5
- Topic Tags: Board of directors, governance
- Relevant questions addressed:
- Why should my company have a BoD?
- What are some things to look out for when establishing a BoD?
- Summary bullet points
- Most entrepreneurs avoid setting up a BoD until a VC initiates that process
- BoD can be a great way for an early startup to enlist outside expertise
- Common mistakes with Boards
- Too many or too few members
- Three to five members to start
- Too many are difficult to schedule and manage. Less than three is not a board
- Avoiding outside independent directors
- Outside members provide really important context outside of people who are totally steeped in the day-to-day activity of the company
- Expecting the board to always support management
- Primary purpose behind the board is to represent the interests of stakeholders and be the “boss” of the CEO
- Having the wrong management representation
- Want to have, at maximum, two managers on the board
- Board dominated by insiders/family members with little biz experience is not effective
- Maintaining little diversity
- Business environment is quickly diversifying, so homogenous board will be insulating
- Failing to establish adequate structure
- Board needs playbook to establish roles and responsibilities
- Board should meet at minimum of four times a year
- More often for critical issues
- Lacking commitment/trust in board decisions
- Culture of trust and respect must be set from the beginning
- Constantly arguing board will kill the company
- If the company isn’t ready for a formal BoD, start with an advisory board
- Group of mentors w/ industry knowledge