Going into a startup, founders have a lot to worry about. Startups have an incredibly high failure rate—a whopping 90%—because of the unique and vast range of challenges their founders face. Founders may not have many solutions to get through those obstacles and often end up learning the harder (and more painful) way to do things, especially when they are going at it for the first time.
It can be challenging for startups to prioritize which fire to address first, the next best steps to take or how to make decisions based on experience without that experience to work with. This challenge is the reason establishing a board should be at the top of that priority list. When startups prioritize founding a board with both inside and outside members, they increase their chances of success.
Startups Get A Panel Of Counselors
Every company must have a board of directors, but it can be as simple as a board of one, the founders themselves and stay that way until the company grows. Smaller companies, from startup to mid-range, generally form their board with the owners, partners and other inside members of their company’s C-suite, but they may not take the initiative to look for outside perspectives.
Few founders and entrepreneurs consider the matter of board composition with much care, but a well-cultivated board of inside and outside perspectives can be a company’s main predictor of success. Accelerate startup growth by bringing in outside strategies and a broad range of diversity and experience. With more people who have “been there, done that” to advise in times of trouble, a founder has a better chance of overcoming the broad range of hurdles in their way with much less pain for their company.
Board Members Get An Exciting Opportunity
For an executive, joining a startup board can be much more exciting than the board of a long-standing organization. Often, startups come with more everyday action, giving board members many opportunities to feel the effect of their role. The leadership of a startup company is more willing to listen to advice on its growth and future direction than a larger company with more voices in the mix.
A member of a startup’s board has the potential to make an immediate difference and with a much greater impact. The changes they implement will come to fruition quicker and with less red tape to cut through. Startups are also more willing to use their board as mentors than larger companies, allowing members to achieve a higher level of leadership that adds to their overall gain in experience.
Perform A Board Self-Evaluation
For all existing members on the board of a startup, perform a self-evaluation: an honest reflection of each member’s character competencies. Go deep. Ask about their expectations of other future board members, how they regard a board member’s core responsibilities, and the personal characteristics they think members should have. The more we know what we are looking for in serving on a board, the sooner we can put that into place for growing a board with new members moving forward.
This will also help to have a clear understanding of each member’s strengths and weaknesses. No one person is a master of all trades and knowing where we have room to improve leaves that space open to learning. Consider the gaps in existing member skillsets and prioritize those gaps based on the company’s needs. The biggest need in expertise for your board is the first type of advisor you might want to look for to bring on.
Where And When To Start
For a startup first beginning to build its board, begin with advisors. A board of advisors has more flexibility to assemble and disassemble on demand for targeted purposes. Less legal liability allows them to meet more frequently and more readily to offer advice. Founders can work with advisors for a year or two and use them to advance the best candidates from advisor to the director and build the company’s official board.
When interviewing executives for board roles, give them the same self-evaluation process as existing members. Start with a simple interview to find the handful of people who seem like a great fit. Then, go deeper.
Draw out what excites candidates about being on your particular board and the reason they think they should be involved. See how much research they did to understand the company, what they like about it, and how their passions fit in. Find out what they might be able to bring to the table and if this fits in with your company goals.
Learn about their past board experience and how effective they were in that role. Pose scenarios where conflicts or other issues bring up differing opinions on the board and ask how they would handle that. Even without past board experience, a candidate may still be valuable on a board. A CMO with years of leadership in marketing or a CFO with financial expertise brings a lot to the table if the current board lacks these skillsets.
For startups looking to beat the odds, create a board early. Those who wait until a crisis is already upon them and causing chaos will find themselves with little time or attention to dedicate to choosing the best people for the job. Having a board for advice before problems come up gives startups a better chance to get through them unscathed. Fill expertise gaps, expand your company with outside perspectives and build a board that will guide your startup to be among the 10% that make it to success.