Many first-time entrepreneurs have never participated in a formal board meeting. After an initial round of financing, regular board meetings become a reality. Preparing for board meetings can be time consuming and daunting. But with the right planning, board meetings can be invaluable.
Board meetings serve an important corporate law purpose. A board is responsible for the control and management of the company. In exercising that control, board members have fiduciary duties, including the duty of care. The duty of care generally requires directors to exercise good business judgment and to use care and prudence. Board meetings provide an opportunity for directors to make sure that they are reasonably informed about the company, so that they can perform their responsibilities and meet their duties.
In addition to their legal purpose, board meetings also serve a critical business purpose. They provide an opportunity for entrepreneurs to develop their relationship with the directors — to leverage their knowledge, experience, expertise and network. The “informal” portions of a board meeting are often more valuable than the formal portion.
So, how you make the most out of your board meetings? Here are a few suggestions:
- Meet in person. In-person meetings are always more productive than conference calls. If not possible, a video conference should be your second choice. The goal is for all participants to be fully attentive and engaged. Not to mention that in-person meetings provide an opportunity to read body language.
- Survey each board member ahead of time. Do they have preferences as to when and where to meet? Is there a form of board package that they like? Do they want particular management members to make presentations? Board members appreciate meetings that are well organized and in line with their expectations.
- Be prepared. In the early stages of a company’s growth, directors are still forming impressions about management and their ability to execute. You should be able to guide the board through the agenda and meeting slides with confidence and enthusiasm. If you find yourself reading slides or posing open-ended questions for discussion, you’re missing the boat.
- Stay on pace. As with any meeting, the first part of an agenda often takes longer than it should, and the last part of agenda is often rushed. Be realistic about how long each agenda item should take, make note of target timing, and try to stay on pace.
- Go off track. Somewhat contrary to the point above, sometimes a board will hit upon an issue, idea or topic that warrants going off track. It could be a recent development that only one board member knows about. Or, it could be an issue that develops during the course of discussions. It’s important to recognize when you are being side-tracked and when you are on to something worthwhile. As a general rule, if only one board member is talking about something, you are probably side-tracked. If the entire board is talking about it, you should let those conversations proceed.
- Follow up. Each board meeting should have a set of minutes. The minutes should record any formal resolutions that were adopted by the board. They should also document the other topics that were reviewed and discussed, at least in summary fashion. The minutes of a prior meeting are typically reviewed and approved at the next meeting. In addition to the minutes, it is good practice to make a list of all action items that were suggested or agreed upon during the meeting (people to contact, information to obtain, etc.) and then undertake them and report on their progress at the next meeting.
Preparing for a board meeting can be burdensome, but the reward is worth it. At the end of each meeting, each board member should feel comfortable that the member is not only meeting his or her fiduciary duties, but is also making a meaningful contribution to the direction and success of the company. And management should leave the meeting with direction, focus and sometimes even resources that they didn’t have before.