With our ongoing series 'Why Build an Effective Board For Your Company?,' this article focuses on important topic #2: When To Create your Board.
To first cut to the chase, the simple answer is:
"The earlier the better!"
You may have to move somewhat out of your comfort zone with this decision, but it will be well worth it.
IBG advocates the formation of a Board at any stage of a business - from the one person startup to the established, mature company. The earlier the better. Removing yourself from the 'go-it-alone' rigamarole and infusing focus into the strategic aspects of your business can reap huge rewards. Early stage companies may want to first consider building a Board of Advisors instead of a Board of Directors as in most cases it offers more flexibility for the long term without sacrificing the critical guidance, insight and experience needed now. It also offers a chance to 'try out' individuals for future consideration when you are ready to build your Board of Directors. The importance of every person of your Board team being the perfect fit cannot be stressed enough. Take the time to fully assess potential team members to avoid false starts which waste time and effort.
Most companies aspire to be the next household name, so if you intend on raising capital or going public, forming a Board now gives you the opportunity to hone your team before your capital raise or IPO. This also positively influences potential investor situations and builds respect.
When will you consider building your Board?
Continue to keep an eye out for our ongoing series on the important focus areas you need to be thinking about in order to build an effective board for your company. Also, see the previous newsletter focusing on topic #1: 'Why Create Your Board?'
Mark A. Pfister
Chairman & CEO