Stengel Solutions: The Door to Business Growth


Ten Tips for Building a Better Corporate Board



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A board of directors is a legal structure that protects and represents the interests of a company’s shareholders. Choosing a good corporate board takes time and energy, but it’s critical to your company’s success: Picking the right team will increase opportunities and reduce problems. Your board helps set your strategic direction, infusing it with valuable expertise that makes your company attractive to investors. 


Choose People With Experience: Certainly, you want people who are well connected. And you want people who make themselves available when you need help. But experience counts. Above all, you want people who have sold, acquired and merged companies as well as taken them public. Recruit directors with expertise in the issues most likely to arise for your company.


Choose People With Diverse Skills: Recruit directors who have critical skill sets and who supplement your knowledge base. Finance and marketing usually fall into this category, but there are many other areas of expertise - such as e-commerce - that may be specifically crucial to your success. In addition, be aware that venture capitalists usually want a board seat in exchange for investing, in order to look after their interests. They can be of substantial value to your company.


Choose People Who Know Your Industry: You want professionals who can speak from experience and provide perspective on industry trends. These are not people who work for your competitors, but rather work in complementary or related fields.


Choose Independent-Minded Directors: A common mistake that entrepreneurs make is to choose board members who are friendly to their cause. While it may be comforting to know these people are likely to side with you no matter how faulty your decision making, you deprive yourself of the opportunity for an honest, independent performance appraisal. An independent board that includes people who aren’t insiders, major investors, company advisers or golf buddies is in the best position to take an unbiased view of the company's performance and that of the CEO. This is exactly what you need if you’re going to be successful.


Choose Outsiders: Boards sometimes need to deal with such sensitive internal issues as the performance of key executives, including the CEO. Other issues they face may be directly related to the future of the company, such as succession, funding or merger/acquisitions. These issues are best handled when the board is able to speak freely. A board with too many representatives from management has to contend with leaks to the staff, politicking and people who have a vested interest in outcomes which may not necessarily be good for the company.


Choose People Who Are Local: Make your life easier by picking board members who are easily accessible. There can be too many logistical problems if your directors have to get on a plane to attend your board meetings: You have to worry about weather in other parts of the country and they have to allocate more time for travel.


Involve Your Board Actively: Although CEOs sometimes view their directors as nuisances, the board is a strategic asset that plays a key role in corporate governance. Outside board members can be effective in evaluating the company's strategy, as no one else is in a position to question the CEO. In addition, qualified board members have a wealth of contacts that the CEO can tap into for potential customers, partners, management-team members or additional investors. Don't hesitate to ask for – and insist upon – directors’ involvement in specific issues. The good ones do their homework before quarterly meetings, talk to managers and employees between meetings, and have a financial stake in the business so they truly represent shareholders’ interests.


Communicate Frequently With Your Board: A board functions best when it is prepared; ill-informed directors don't make the best decisions. Before any board meeting, call all directors and give them a brief overview of the major topics to be covered. If possible, provide all of them with necessary materials for review.

There should be no surprises at a board meeting
- especially bad news. Surprise forces members to react on the spot, without adequate time to reflect upon appropriate alternatives. Directors need to know both the current state of company and any major pending issues, so they have time to think them through.


Listen to Your Board: Sometimes an entrepreneur is so close to an issue, you can’t see the forest for the trees. If the board disagrees with you, remember that  they are not after your job. They are simply doing what is, in their opinion, best for the company and its shareholders. If you treat your board of directors as an adversary, you miss out on the value they can provide. But if you see them as an ally, you'll be able to tap into a significant resource that offers a tremendous payoff to you and your company.


Fire Bad Board Members: Board members must be willing and able to spend the time necessary to help the company; otherwise, they shouldn't be on the board. If you realize you’ve made a bad choice, you'd better be prepared to fix the problem. You guessed it: fire him or her

Prepared by:

Geri Stengel, president of Stengel Solutions, a business strategist.  She can be reached at 212-362-3088 or E-mail

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Contact Geri Stengel at
  212.362.3088 or E-mail

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