The board is responsible for the overall direction of the company and will help you make important decisions, so it is key to get people who are engaged and have a good track record. As the founder(s), you will be on the board, along with (most likely) your investors. After this, you will be able to invite several other individuals to sit on the board – try to make this an odd number so there are no ties during voting. Here are some tips on putting together a board:
Do your research
Much like you want to screen the companies/individuals who invest in your business, you also need to screen potential members of your board. Look out for what other businesses they are involved in, and whether there may be potential conflicts of interest; ask those businesses about how engaged the person is.
Find advisors in your market
Board members are typically busy with other projects, and will tire of traveling long distances to attend meetings. So, make sure the board is made up of people who are near your target market, and who will be able to allocate reasonable amounts of time to your start-up.
Focus on the value-add
The board members should have a tangible value-add to your business. As one investor put it, board members should add value in one of two ways: deep industry experience in your sector, or deep functional experience in an area crucial to your business (e.g., sales, finance, or operations).
Take advice seriously
Being humble and taking feedback and constructive criticism is key to keeping the board on your side. It is also a quality of successful entrepreneurs. One board member said that one of his key responsibilities is to question everything the founder thinks and does – as his or her employees may not feel comfortable questioning their boss.
For earlier stage businesses that have not received funding, a board of advisors could also play the role of the board. It pushes the founder to be accountable to external parties while giving much needed advice and guidance. The process of getting a board of advisors is similar to the one of getting a formal board.