How do we form a board?

I am starting a company with two business partners and we are looking to form a board. However, we have no idea what roles to assign or even how the board structure should best work. What would you advise?

The company’s board has many legal and strategic reasons to exist, which this discussion doesn’t cover.

I’m going to focus instead on its strategic importance in helping you run your business as well as you can.

Your board should contain independent directors who are not part of your management team, as well as founders. This means that the management team has a board to report to, who should hold them accountable both for the P&L and for following the strategy laid out in the company’s business plan.

Ideally, external board members should be chosen for their expertise in the specific disciplines the company needs to excel in to succeed. Typically these include finance, marketing and strategy but could include others, depending on the business you’re in.

I think it’s a good idea to have monthly board meetings, given how fast things happen in start-ups. This gets you used to the disciplines of reporting on progress in a formal way each month, and should enable the board to become familiar with the business quickly.

Crucially, it also helps to identify and analyse any problems or opportunities fast. In the early stages of a company, understanding where to focus is really important. If monthly is too tough then at least eight a year makes sense to me — any less and you’re running the risk of getting off track.

Recruiting external directors can be challenging, particularly if cash is tight. If you have external investors they can be great board members, and often have financial and strategic skills. Otherwise it makes sense to approach either people you know, or contacts of people you know. Sometimes it can be worth offering some equity in the company for individuals you think can really make a difference, or a mix of some equity and some cash payment. It’s also possible that you might be able to persuade these people to help you informally to begin with, in some kind of advisory role, as you get established. Take all the help you can get!