By Kathryn Keefer
In the midst of creating products, finding customers and investors, and closing sales, founders rarely think about adding a board of directors to their companies, unless the specific corporate structure requires it. However, a board of directors or an advisory board, no matter how small, can play a key role in building, advancing and growing a business. The board is responsible for ensuring a startup’s commitment to their mission and goals. Without this important feature, a business may struggle to succeed.
Key Roles & Responsibilities of a Board
For many startups, the board of directors or advisors oversee all or most of the company’s decisions and ensure they align with the company's main goals. This might include hiring and firing, overseeing company finances, and determining the best business strategy. (It is important to note that startups that incorporate as C Corporations or S Corporations legally must have a statutory board of directors.)
Oftentimes, board members and advisors serve as the communicators and advocates for a new startup, working hard to foster relationships that can help grow the business. They can form new collaborations or utilize existing relationships, either for financial or strategic purposes. Board members cultivate relationships inside and outside of the company in order to grow the startup from all aspects.
When It’s Time to Form a Board
A startup should have a board of directors or an advisory board as early as possible, even if its members only include the founder or co-founders. A board is the startup’s foundation and can be instrumental to company growth. Some startups wait until they receive the first round of funding to add outside individuals as advisors or board members. However, most startups should include these individuals early on, even if it is just one or two people. Answering when to form a board of directors is easy, but figuring out what that board should look like is slightly more complicated.
Next week we continue this discussion with who should comprise a startup's board.