Why a Board of Directors?

This week i2E is featuring a series of posts from guest blogger Bill Botts, who is an i2E Entrepreneur-in-Residence from Henderson, Nevada.  Bill will be in Oklahoma City on Thursday, March 3, to deliver a workshop on Corporate Governance for Entrepreneurs.

 

Why would a private company want a board of directors?  The reasons are numerous why a majority of outside directors is desirable in even small private corporations.

I’ve boiled them down to a top 10 that should give all entrepreneurs a reason to consider putting together a strong board with a majority of outside directors:

  1. Provides ALL shareholders with representation — common, option holders, outside shareholders and investors
  2. Provides visibility and transparence through independent outside directors
  3. Provides the CEO with outside resources who are committed to helping the company, with different experiences than possessed by executive team
  4. Provides board level oversight relative to policy, financial activities and audits, financings and corporate strategy
  5. Foundation for the start of Corporate Governance program
  6. Brings executive experiences by others to the company independent of the company’s CEO and executive staff — been there done that resource
  7. Opens the door to business contacts that the company’s executive team may lack, including potential new investors and Venture Capital firms
  8. Brings potential access to new employees to which the executive team may not have access
  9. First step on the road to Sarbanes-Oxley compliance in the case of a future IPO or acquisition by a public company
  10. Provides a sophisticated and mature mage of the company by suppliers including D&O insurers, general insurance providers, bankers, business partners and others
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