Forming a board… It’s what the best performing companies do once they take on outside investors. Board members can provide useful feedback, help to focus the founding team, and provide a network of contacts.
Unfortunately, many companies don’t get financing–because they don’t get any of the above. They don’t get the feedback they need, especially around priorities.
Sometimes, the founders lack focus to the point where they don’t even get to the point of company formation. They get caught in a sea of too many problems, too many opportunities, without a good idea of what to do first to coalese their ideas into a single vision.
A lot of friends and potential founders come to me with tons of ideas, or none at all, or half of one–but with the will and drive to create something, making it all extremely frustrating for them. What do they do first? How do they pick out their idea?
It’s hard for me to get too involved, because committing time to help is a slippery slope. For advisors, there’s a real gap between one coffee and joining the company. You want to help, but your time is limited.
That’s how board participation can help an advisor scale. You’re on the hook for a finite amount of meetings and the meetings are structured in such a way to prioritize the discussions that create the most impact on the company.
So why wait until you have a company to set up a board?
Most people have a fair number of people willing to help, but they get stuck in trying to figure out how to get the most help out of them.
Setting up a simple board before you’ve even got a company can help you get into the practice of collecting feedback and getting nudged back into focus. Going through the discipline of being accountable for your time, setting and sticking to goals and simply talking through problems with others can bring clarity to chaos.
I’d recommend that if you’re going to get something off the ground, there are three people worth talking to on a monthly basis in person, with maybe a bi-weekly, midway checkpoint in between.
First off, you want someone who is generally knowledgable about business–someone the dollars and cents are going to make sense to. They should understand concepts like profitability, contribution margin, time value of money, opportunity cost, etc–so they can help anchor the conversation around high impact financial opportunities and cost effective ways to take advantage of them.
Second, you want to talk to someone who understands the problem set you’re going after–an industry expert. Who is going to help point you in the right of who to talk to, or who can speak from the perspective of the customer? Sometimes, just knowing who might have tried similar ideas before can be helpful to guide your research.
Third, I’d seek the honesty of a peer–someone on your level who you can trust to tell you when you’re going down the wrong path, someone who can relate to what you’re going through and provide emotional support as well.
Over time, you’ll create a real board of directors composed of investors looking out for their fiduciary interests–but for now, when you’re in the stage of turning a spark into reality, a board before the board can take you a long way.