Q4 is kicking off for many businesses right now. For many businesses this time is consumed by the final push to make the year’s financial goals, dust off those grand initiatives from earlier in the year and take care of end of year tasks like board meetings. When you think about your board meeting, do you think of it as an obligation or an opportunity to improve your business?
Many privately held businesses are owned and managed by the same people, and they often have a small board of directors (2-5 people). Many times, the directors are the primary shareholders, friends and family of the primary shareholders, plus an attorney or a financial expert. That make up can be a perfectly good board of directors, but sometimes that is not enough to truly help the business improve. Shareholders must assess from time to time whether their board of directors are an asset to the business. Are they adding value to the business as directors?
In a three-part series of articles, we will cover some best practices to get more out of your board of directors. Your board can be one of you biggest assets when the board has a clear purpose (Part 1), has the right skills and experience (Part 2), and is run effectively (Part 3).
Part 1: The Board’s Purpose
It is common in most small and medium sized businesses for primary shareholders to wear many hats for the business. Many times, the small or medium sized business has one primary shareholder who is also its president, and one of its directors. While you may be that person filling multiple roles, it is important to keep in mind the distinct purpose of each of your roles.
It is your role as a member of the board of directors to set the strategic vision for the business. You and your fellow directors need to set aside time to evaluate your business strategy, the alignment of initiatives, projects, messaging, and metrics. The board must assess what is working, what is not working, and decide what pivots need to be made for the business to be sustainably successful.
Choosing the Leaders to Execute the Strategic Plan
After you and your fellow board members set the strategic plan for the business, your next key responsibility is to choose the people to execute the strategic plan. The people you choose are the officers of the business (e.g. the president, vice presidents, etc.). As the president, you and your fellow officers feed the board the relevant data, market intelligence, and practical realities so the board can define a realistic strategy. The officers build the buy in to the board’s strategy among the employees, customers, and vendors, and then the officers lead the strategic execution.
Is the Business still the Right Investment for You?
Once the strategic decisions and leadership decisions are made, then as the primary shareholder you decide if you are willing to invest your money in that recipe.
It is vital that shareholders, executive leaders, and directors take the time regularly to assess each of those aspects.
- Is this the right strategy for the business?
- Is this the right executive leadership team for this strategy?
- Is this the right investment?
You may be the primary shareholder, manager and director, but you do not have to evaluate these questions alone. Turn to your board of directors. Make them an asset for you that helps you discern these questions and more. Make your board help set the strategy. Make your board help evaluate your leadership team. Make your board help you make the right investment decisions. Make sure you have an effective board with experience, skills, connections, and insights to add value to your business.
In part 2 of our series we will outline how to create an effective board of directors that will help ease your burdens and help set the best strategic vision for your business.