In this age of increasing focus on corporate governance, a good board of directors is essential even for small private companies. In addition to providing governance oversight, a strong, experienced board can be your advisors and mentors, can extend your sales force, can provide access to capital and can keep you out of trouble.

You must select and recruit the right board members. You need to identify the types of skills or expertise and external relationships that you or others at your company lack. A good board will provide that expertise and those relationships, greatly expanding the capabilities of your company.

There are four basic steps to forming and taking advantage of a good board:

1. Determine the role and responsibilities that you would like your board of directors to play and document that role in your corporate bylaws
2. Identify and recruit board members with the skills and relationships your company lacks
3. Use board meetings to advance strategic issues, not to provide an update on the business
4. Keep your board members actively engaged in the business between board meetings

Action Steps
The best contacts and resources to help you get it done

Get an overview of good corporate governance and how boards function

A good board of directors can greatly enhance a company's chance of success, but only if you know how to effectively take advantage of your directors' limited time.

I recommend: Smallbusinessnotes.com and businesslink.com provides good overviews of governance and board guidelines for small growing companies.

Set specific roles and responsibilities for your board

Once you've decided to form a board, you must determine what specific issues or problems you want the board to have authority over. Then have those powers incorporated into your company's bylaws.

I recommend: Myworktools.com provides easy to use templates that allow you to create your own corporate bylaws.

Recruit board members with skills and relationships you may be missing

The best place to start recruiting is through your own network. There are also several online resources for locating potential directors or experts with particular skills.

I recommend: For good business networking and to find potential directors with specific skills and relationships, Linkedin and ZoomInfo can help. PartnerCom, which creates and manages turnkey advisory boards, also conducts executive searches for corporate directors through membership in various organizations, networking, research and its past board and advisory committee placements.

Determine what, if any, compensation will be required to engage your directors

Being a good board member requires the commitment of time and energy. While some directors will serve for free (investor board members, partners, etc), independent outside board members should receive some form of compensation as either cash or equity.

I recommend: For guidelines on director compensation, see Directorsandboards.com and Equilar Board Compensation Guidelines.

Run your board meetings professionally and make them strategic

Your board members are probably busy with other businesses and commitments. Value their time. Start and end meetings on time. Cover matters of strategic importance to the company in board meetings. Use email and regular weekly or monthly communication to cover normal updates.

I recommend: Board Tool Kit has examples of sample board meeting agendas and packages.

Consider alternatives to having your own board

Informal advisory and peer group 'boards' can also help provide strategic direction for a small business that doesn't have its own captive board.

I recommend: The Alternative Board, President's Resource Organization, Vistage International (formerly called The Executive Committee) and Renaissance Executive Forums all bring together owners of privately held businesses in monthly meetings to solve challenges and seize opportunities. All have locations nationwide. Check for groups in your area.

A good board makes you look good

I've followed this advice and have been lucky enough to develop a very supportive and valuable board at Business.com

I recommend: Business.com Board of Directors

Tips & Tactics

Helpful advice for making the most of this Guide

• •  If you are a small company, your board should have 3-5 members, including yourself. More and it is impossible to schedule regular meetings
• •  Get people on your board who are smarter than you. They will help you succeed.
• •  Boards are not for friends, unless they have the specific skills or relationships you lack.
• •  Always under promise and over deliver to your board and your investors.
• •  If a board member isn't attending board meetings or develops interests that are counter or conflicting with your company, remove him from your board.
• •  Always give your board the bad news as soon as you get it. That way you make them part of the solution