Could having a Board enable you selling your company one day
A common topic we have with new clients relates to whether they could benefit from having a board. The short answer is yes, the long answer is it depends on the specific needs that you and your business have.
First let’s differentiate between the two types of Boards. The greatest difference is the Board of Directors is set up legally for your company and directors have a legal/fiduciary responsibility to represent all shareholders. An Advisory Board has little to no legal connection, the members just serve at your pleasure and just offer advice that you do with what you want. A Board of Directors will have a direct say on many company matters and their decisions/voting is binding. A Board of Advisors is simply there to offer guidance, no requirement to include them in any voting of business matters.
The vast majority of small to mid-sized privately owned businesses can definitely benefit from getting more external inputs. Too often they become insulated in their bigger picture thinking and could benefit from having access to advisors of various experience and technical expertise to help them plan their future. So our recommendation in most cases is for an owner to think about these questions in deciding if a Board of some type can help them build company worth:
- In knowing how to build the company worth of my business, could I benefit from more regular external inputs or am I getting enough quality inputs already?
- Where in my business do I feel like I’m lacking expertise and could benefit from an external advisor or advisors?
- Am I open to an advisor or a group of advisors challenging me or am I not open to this outside influence?
- Do I want to share decision making with members of a Board or do I just want advice and I’ll make the decision?
- What experience and skill sets do you and your operating team lack and you’re looking to get from a board? i.e.: acumen and experience in finance, sales, marketing, technology, HR, IT, legal, tax, mergers & acquisitions, etc).
- Do I need multiple advisors or could I just benefit from having one to help me address a specific gap me or my company has?
Most small to mid-sized privately held company owners/CEO’s can benefit most from an advisory board or at least one new advisor. Going the Board of Directors route would be overkill for most.
Bottom line is this. Having a person or people to help offer tactical and strategic advice can add great company worth. Think about who you have around you today helping you with great strategic questions and great advice based on their experience…if you can benefit from this then perhaps a new advisor or a Board of Advisors is right for you.