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How to Set Up a Board of Directors

Your board of directors is one of the most important parts of your organization. What ever kind of investments you want to make or organization you want to run, a great board of directors will make better decisions and generate greater success. It can be hard to get your board of directors set up, but if you follow a couple of important tips, you’ll be much more likely to succeed.

1. Diversify

It is tempting for many organizations to put their investors on the board and be done with it. However, your investors may not be a good representation of your market. 

Investors should represent where your organization is now and where it will be in the future if everything goes as planned. Sometimes the best place for an investor is on the sideline, making an income from their investment.

2. Make Long-Term Plans

Any organization that is planning for short-term income is unlikely to succeed in the short-term or the long-term. Your board’s commitment to the long-term health of your organization will be apparent in every decision that is made. 

Be sure that, from the beginning, you are choosing a board that is committed to the long-term health of the organization. Anyone who just wants to turn over a quick income shouldn’t be considered for the board. While its perfectly fine for an investor to hope for a substantial and rapid turnover on their investment, this is not a quality that you want in a board member.

3. Limit Expectations

Too often when a board is set up, the expectation is that the members will remain there indefinitely. However, a board should change along with the organization. 

As markets and goals change and grow, the board should represent those emerging areas. Therefore, you should make sure that everybody you consider for a board position knows that it may not be permanent. 

Cultivate your organization’s culture and be transparent and truthful about the role of the board to ensure that there are no hard feelings when positions change.

4. Don’t Have Too Many Board Members

Every member of your board should be chosen strategically. Around half a dozen board members is usually right, and smaller organizations may thrive with as few as four. 

There are some obvious benefits of fewer board members, such as the fact that fewer people who have to agree makes decision-making easier. However, what may be more important about having a limited board is that it enables every person in the room to serve a specific function to make a good decisions for your organization. Fewer people mean more responsibility for each one, which may mean better decision-making.

5. Pick a Great Chairman

You may have to compromise a seat or two on your board for your biggest investors or people who are very important to the organization, but one seat that should not be compromised is the Chairman. It should not be your Chairman’s first time being a Chairman if you expect them to excel. A new Chairman can certainly do a great job as they learn, but for a chairman to propel your organization into success, they should have experience doing exactly that in the past.

6. Don’t Pick the Obvious

When you are considering individuals that may be a good fit for the board of your organization, there are surely a couple of people who pop into your mind because they are actively seeking out board seats. 

They may well be the people who initiated conversations about forming a board and who are sitting in on early conversations about forming a board of directors. However, anyone who really wants a board seat may be more likely to have their own interests and investments in mind rather than the long-term growth of the organization. 

Instead, pick people who are not looking for board seats, but who are very committed to their position in the organization. You may have to convince them to take the position, but these individuals are more likely to serve well and keep the interest of your organization in mind at all times.

7. Nurture Good Communication

Don’t allow the sort of culture that makes meetings drag-on about irrelevant information, causes competition between board members, or otherwise results in distractions from the overall goal of making good decisions for the organization. 

Good communication should be straightforward, goal-centered, and brief. If your meetings are dragging, you’re probably not doing a good job to manage communication between board members.

How to Set up a Successful Board of Directors

Setting up a Board of Directors doesn’t have to be hard, but it should be done carefully if you want your organization to succeed. The best boards have the health of the organization in mind, not their own investment. They will be made up of people who are wise, thoughtful, and love the organization that they serve.


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