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The Importance of a Board of Directors
Why a Board of Directors Is the Best Catalyst for Business Growth
Have you ever wondered what triggers an average company to take off and reach successful levels of operation? One of the most important factors is forming a Board of Directors.
For many business owners, especially those who founded and run family businesses, creating a Board of Directors is not easy, because by design it gives board members the legal authority to make decisions, even against the CEO if they consider it necessary.
HOW A BOARD IS STRUCTURED
An Advisory Board or Board of Directors is made up of independent members who, each in their own area of expertise, advise the CEO on topics such as:
Marketing
Sales strategy
Supply chain strategy
Production strategy
Legal strategy
And any other area a growing company truly needs to move forward
A SHIFT IN THE OWNER’S MINDSET
This is not easy, and not because of forming the board itself, but because of the change in mindset it requires from the owner. It is not easy to hear feedback about improvements that could be made, mistakes that have cost money, or ideas that were proposed in the past and turned down.
A good advisor can also help you recognize the right moment to act on that feedback.
A BOARD IS MORE THAN A FORMALITY
This happens very often, and it’s true that having a board looks impressive. However, if a Board of Directors is formed just to check a box and show that you run a serious company, but its members only review results and applaud the good news, you are definitely missing out. You’re not taking advantage of people who, regardless of any personal ties you may have with them, are willing to give you feedback that could be extremely valuable.
Throughout this process, the key player is the founder. What truly makes the difference in getting value from an advisory board is the owner’s willingness to recognize the need for advisors who weigh in on the business, to set pride aside, and, above all, to welcome their feedback and act on it.
This is what sets apart the companies that evolve from those that stand still. A Board of Directors is a powerful tool to propel a company and earn it a place among the best in its industry. Owners who have reached that level recognize that their big leap came from changing their mindset as leaders and surrounding themselves, at key moments, with experts who guided them through the toughest stretches toward success.