A board of directors might sound like something you would associate with large corporate environments with floor-to-ceiling windows. Yet, while a board of directors is more formal and structured than a board of advisors, it is as crucially important at small growing brands as it is at established companies.
According to The Balance Small Business, “The board of directors operates like an airline pilot at the 30,000-feet level, overseeing everything, seeing the big picture, and changing course when necessary. The executives operate at the 1,000-foot level, while the employees are on the ground.”
But what kind of actual impact, functions, and responsibilities does a board have? What should company founders keep in mind when establishing a board of directors to ensure progress and steady growth?
We asked some of ForceBrands’ Co-Founder and Chief Progress Officer Sean Conner to shed light on the importance of building a board of directors at any stage of growth.
When it comes to building an effective board, it’s important to hire directors who can bring their previous experience to the table and will help set strategic goals through every stage of growth.
“Attracting the right board of directors is critical to a business because you want someone who has had experience sitting on a board before and who can also make sure the business is running and operating effectively long-term and short-term,” Conner says.
That is why it is important to select directors who have a background in developing products or growing ventures in the same category as your company. A board of directors can advise on key senior hires and help with fundraising, too. You can also leverage your board for innovation strategies, ideas or visions for new products, and honest feedback.
Another benefit of a board of directors — which also makes it different from a board of advisors — is that the CEO reports directly to the board of directors. The more a company grows, the more beneficial it is to have a board of directors to ensure it is not being run solely by one person.
Directors on your board should also complement the CEO and the executive team within the company, Conner says. For example, if the CEO or the executive team has a strong background in financial operations, the board of directors should have a solid background in sales and marketing or another field.
A board of directors plays a key role advising the next steps for the business, and setting a more precise plan based on their prior experience. They can suggest what the team should do in stage three to achieve a certain result in stage four; they can forecast difficulties and challenges that might arise as consequences of certain decisions, and suggest the best ways of handling them.
Conner says a board of directors should have experience with short-term growth as well as have experience with companies that have scaled up to nine digits. If the directors only have experience with short-term growth, which can be extremely helpful at the beginning growth stages, their terms on the board should be set up to reflect that.
Overall, a board of directors oversees executives and ensures that all actions are related to the original mission and vision of the company.
Are you interested in building an effective board of directors for your growing brand? Reach out to us at ForceBrands, where we connect companies with world-class talent in the industry.