• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to secondary sidebar
  • Skip to footer

Scale FinanceScale Finance Logo, Interim CFO, Part Time CFO Services, Accounting Support, Temporary CFO, Accounting Bookkeeping Services

Interim CFO, Part Time CFO Services, Accounting Support, Temporary CFO, Accounting Bookkeeping Services

Charlotte · Raleigh – Durham · Chapel Hill · Triad · Southern Pines · Coastal Carolina
Closing the GAAP to Scale Your Business
The FINACA Logo
919-230-4667
Scale Finance, LLC, Financing, North Myrtle Beach, SC
  • Home
  • Services
    • CFO & Controller Services
    • Capital Raise Services
    • Business Valuations
    • Mergers & Acquisitions
    • Professional Consultations at No Cost
  • Professionals
    • Partners
    • Charlotte Team
    • Raleigh – Durham – Chapel Hill Team
    • Greensboro-Southern Pines
    • Coastal Carolina Team
  • Client Experience
    • Closed Capital Raise Transactions
    • Closed M&A Transactions
    • Client Endorsements
    • Information Technology
    • Healthcare, Biopharma & Medical Device
    • Services, Energy, Industrial
    • Consumer, Retail, Media
    • Real Estate
    • Private Equity Groups
  • Recent News
  • Knowledge Bank
    • Best Practices in Scaling Companies
    • Entrepreneurial Management Skill- Building
    • Financial Management
    • Mergers & Acquisitions
    • Regulatory Developments
    • Venture Capital
  • Contact Us
    • Charlotte
    • Raleigh – Durham – Chapel Hill
    • Triad – Southern Pines
    • Coastal Carolina
  • Joining Our Firm

How to Recruit a Board of Directors


Source: Firas Raouf, OpenView Partners

One of the turning points in the life of an early stage software company is the creation of a board of directors. Typically, this happens when the company raises its first institutional round of financing. But I see no reason to wait for that event.

When you think about building your board, start with a clear realization of the need. Don’t create a board if you don’t need it. It is more likely that you do need it, but you don’t realize it.  So let’s start by discussing why you need a board.

A board of directors is a vehicle through which you can recruit super talented and experienced individuals who can add value by helping you make key decisions and ensure that you are implementing sound corporate governance. Most founders/CEOs think that a board is something that creates a lot of unnecessary work for them, adds little value, and is manned by individuals who will get in the way of running the company.  That can be true if you recruit bad board members. But if you recruit great board members, you will get great value.

Recruiting a board starts by you realizing that you should recruit a board the way you would recruit employees. Start by defining your needs. One approach is to examine your skill sets as a founder/CEO (for more on that, read Mr. CEO, Would you Hire Yourself?) Then think about the skill sets you lack and where a mentor could help in the role of a board member (for example, if you’re weak in finance, a former CFO would be a good prospect). Then think about your plans for growing the company and the role of a board member in opening strategic partnership doors, whether for funding or business development.

Next, put together a role description. Again, treat hiring a board member like you would treat hiring a senior executive. Putting the role description down on paper will help you hone in on exactly what you’re looking for, and will ease the recruitment process.

Set clear expectations of the role. When recruiting an employee, it’s pretty obvious that it’s a full-time role. But when recruiting a board member, setting your expectations on the time and energy commitment expected in the role is key. There are many people out there who get on boards, but have no time for it, or don’t prioritize the role high enough. You also need to be realistic in your expectations. For expansion stage software companies, a board member should allocate a minimum of one day a month. Four of those days a year are for board meetings. The rest are to be spent with you diving into your operations, or helping you by opening doors and enabling business.

Get help in recruiting. You probably can’t afford to hire a recruiter. But if you can, hire a recruiter. Again, this is a critical role. Recruiters can help you dramatically widen the scope of your search to find the best candidate. In lieu of a recruiter, see if you can find someone experienced to volunteer to help you. Even if it’s your lawyer or accountant. Basically, you need another set of eyes to help you in the process.

Be highly selective. There is nothing more damaging than having a bad board member (same as hiring a bad employee.) A disengaged board member is a waste of your time and energy. A great board member can bring you great value.

Put your board members to work. Board members should add value. But they will only do it when you ask them. Always be looking for the next project for each and every board member. When you run out of things for them to do, it’s time to let them go.

Know when to let one of your board members go, and don’t wait too long to do it. Board members should bring value to you and your company. If they don’t, fire them, and replace them with those who do.  You typically don’t have that option with investor board members (although you may at your next round of financing).  But you certainly do when it comes to management board members (a co-founder that has outlived his/her tenure on the board); or independent board members.

Don’t create anything for the board that doesn’t add value to your business. Many founders/CEOs lament board meetings because they think the meetings suck up their time and bring no value. Well, that is a symptom of a bad board. Fix the board first. One you have a good board, make sure that whatever you create for the board (presentations, dashboard, etc.) are things you already are using for your business.

Expose your board to the guts of the business. Board members can only be helpful if they understand your market, your business and your operations. If you feel the urge to hide things from them, you have a bad board. If you don’t think they would understand your business, you have a bad board. Fire them and then hire the right board. And then open up the guts of your business to them. Have your senior managers walk the board through each function. Expose the issues that you struggle with. Then ask them to help you resolve them. If they can’t, fire them, and find members that can.

I hope this gives you some food for thought. For more, read A Balanced and Cohesive Board and The Board Imperative – Cause no Harm and Chairman of the Board Role and Compensation.

About Scale Finance

Scale Finance LLC (scalefinance.local) provides professional CFO services, Controller solutions, and support in raising capital, or executing other transactions, to growth companies. The firm specializes in cost-effective financial reporting, budgeting and forecasting, implementing controls, other financial management, etc, and provides strategic help for companies raising growth capital or considering M&A/recapitalization opportunities. Most of the firm’s clients are fast-growing technology, healthcare, business services, consumer, and industrial companies that are at various stages of development from start-up to tens of millions in annual revenue. Scale Finance LLC has offices in Charlotte, the Triangle, the Triad, and Wilmington, a team of more than 25 professionals, and serves more than 85 companies throughout the region.

Primary Sidebar

Knowledge Bank

Mitigating Risk for Small Companies – How to Best Leverage Your Attorney

How Small Companies Are Experimenting with Cryptocurrency Applications – Cardano Example

Hiring a Startup CFO – When to Hire a CFO & Why You Need One

Owner Financing of Small Companies – Debt or Equity Considerations

Will Your Merger be Blindsided by Fraud?

Series C & Beyond: How Growth Investing is Different Than Early Stage

5 Rules for an A+ Board Meeting for Investor-backed Companies

Understanding & Using Your Cash Flow Statement

Why Business Valuations are Helpful (& What do they Typically Cost)?

Managing Merchant Fees – Role of Zero Fee Processing

Can Accountants Value a Business?

Personal Guarantees – Should You Grant One?

10 Pieces of Advice When Someone Wants to Buy Your Company

Convertible Note Financing – Payback Time

Due Diligence Fiasco – A Look Back at HP-Autonomy

Applying for Business Loans – Hard Credit Checks

7 Ways a Business Name Generator Can Help Entrepreneurs

Citizenship by Investment Overview

Understanding the True Cost of Employee Turnover

How to Think About Valuation When Raising Venture Capital

Explore the Knowledge Bank…

Secondary Sidebar

Recent News

Scale Finance Closes $20M ABL Financing for TRA

Scale Finance Leads the Successful Sale of Carolina Restoration Services

Scale Finance Advises FX HedgePool on $8M Series A Funding

SF Closes Acquisition of Midwest Outdoor Resorts for Travel Resorts of America

Scale Finance Closes $7 Million Senior Debt Financing for Travel Resorts of America

Scale Finance Advises on Acquisition of Falcone Crawl Space & Structural Repair

Congrats to Payzer for Closing $23 Million Equity Financing

SF Client Headbands of Hope Closes Strategic Growth Investment

SF Assists Semper Investment Company in Acquisition of ACM Removal

SF Client SentryOne Acquired by SolarWinds (NYSE: SWI)

Scale Finance Assists GPM with Acquisition by Netsmart

SF Client Broadstep Behavioral Health Continues National Growth Through Acquisitions

SF Client Impact Financial Systems (IFS) Acquired by iPipeline

Scale Finance Assists TrueLearn with Investment by LLR Partners

Scale Finance Assists Textum Weaving with Investment by Quad-C

Scale Finance Closes Debt Financing for Horizon Eye Care

Scale Finance Closes Acquisition of Horsepower Site Services by MCG Civil

More News…

Footer

Media

Scale Finance Managing Director Dave Gilroy interviewed on WSIC Radio (local Fox affiliate)

/wp-content/uploads/2014/02/David-Gilroy-Interview-Local-Biz-Now-2-7-14.mp3

Entrepreneurial Tips

  • Funding Tips from Scale Finance
  • CIE Life Sciences Panel Discussion
  • Why Use Fractional CFO Services

Sign Up—Finance Bulletin

Monthly insights into corporate finance for entrepreneurial companies

Sending

FINACA is a nationwide network of independent finance and accounting consulting firms focused on delivering exceptional client service.

FINACA is a nationwide network of independent finance and accounting consulting firms focused on delivering exceptional client service.

Return to top of page

Copyright © 2008–2023 Scale Finance, LLC
Securities and offering services through Charles Towne Securities, LLC. Members FINRA and SIPC.