8 tips for starting to build your first board of directors

30 May 8 tips for starting to build your first board of directors

When I was starting Farmer’s Fridge, building a board of directors was last on my list of things to do. As we pursued our mission to make fresh healthy food as accessible as a candy bar, I was dealing with more urgent tasks like staffing, generating revenue, and making salads. On top of that, I, like many first-time founders, didn’t really know the function of the board. As soon as I took outside capital, however, building a board quickly moved to the top of my to-do list. I soon learned that an engaged board can really help a company take flight by bringing the next level of financial discipline and strategic thinking that every company needs to succeed.

Keep in mind that building a great board does not happen overnight, and I had a lot to learn along the way. I got up to speed through conversations with mentors, reading lots of books and articles, and gleaning lessons from early board meetings that did not go as well as I wanted. Here is a cheat sheet that hopefully will help you do it faster than I did.

• Know the role: Your board of directors exists to help your company. They should be your company’s biggest fans, your teammates, and most honest critics. Their job is to make sure shareholders are represented and to set structure for employees to successfully run the business. These formal activities include things like setting the rules of governance, making sure the financials are accurate, and signing off on compensation. In addition, the board will spend a lot of time advising on strategy and helping you build a great business, especially in the early days.
• Build a basket: Forming your board is an excellent opportunity to build out areas of expertise that your employees may not have. For example, Farmer’s Fridge is part consumer packaged goods company, part quick-service restaurant, and part data technology business. When I built our board, I looked for members who could bring expertise in each of these areas. I actually built out a matrix with all the skills needed, researched who would check each of those boxes, and sourced our board and investors against that list. I think of it as similar to building a sports team: You need defensive players, offensive players, maybe a goalie.
• Dream team: The individuals that make up your board send a strong external signal about your company. In my experience, a great board is diverse and filled with people whose values you personally respect. It was important for me to seek perspectives from people who have had different professional and personal experiences to add to the vision I had for Farmer’s Fridge. This thinking also extends to the tenure of professional experience. If you’re a young, first-time founder, you will want to add board members with many years of experience and founders that are just ahead of you on their journey. This mix will help you get the perspective that only comes with years of experience and balance it out against the unique challenges that face an early stage business.
• Culture is key: Don’t overlook culture, working styles, and shared values when making your selections. Not only should board members fit into your company culture, but they will also help shape it. At Farmer’s Fridge, we are data driven, we play to win, and we are humble, with a mentality to not take ourselves too seriously—so I screened for those same qualities when having initial conversations. I interviewed one potential board member who kept telling me all the things we should be doing based on their previous experience, but without referencing any data or having the humility to consider talking to the team to get the context behind the current process. I would not accept that from a member of our team, so it was not a fit for our board either.
• Set expectations early: Be as upfront as you can about what you expect from your board members. For our board, I let them know that I will need them to be involved beyond the quarterly board meetings in order to be successful. I am looking for our board members to inspire our employees and be an accessible resource, often doing regular calls with key members of the team to help them think through things in real time. I also encourage two-way communication. For example, I got feedback in the early years that I need to keep the meetings tight and on-track, while referencing the same data each quarter to make it easier to track our progress. Each board member also has their own preferred communication style and key metrics they track. I consistently work with each of them to maximize getting what we both need, while optimizing to avoid wasting valuable time that we can otherwise use to run the business.
• It’s about the people: Ideally, the make-up of your board won’t change that often, so it’s important to choose people who challenge you, but also who you enjoy spending time with. One of my investors told me to think about the people you want to see at weddings and funerals—people you want to have in your corner for the good and the bad that life brings. Your board of directors will help you run your business, but especially in the early years, your business and life tend to bleed together quite a bit, so choosing people you trust and whose company you enjoy makes the journey that much easier.
• Build your roadmap: Just as your internal team will change based on the needs of the company over time, your board composition and governance will continue to evolve as the company grows. Just keep in mind that this is normal, and you can make it easier by thinking it through ahead of time. For example, set terms on independent directors so that everyone naturally re-evaluates every couple of years. Work with a corporate attorney that specializes in corporate governance to help you think about stage-appropriate governance and how it will change as the administrative duties of the board grow.
• Results matter: At one point early on, I was confiding in one of my board members about managing another member’s expectations. Their advice was simple: People can always heckle you from the sidelines, but what matters is the score on the board. In other words, focus on performing at your absolute best and meeting the expectations you agreed to with your board. The rest will take care of itself.

Building our board has been one of the biggest learning curves I’ve been on as an entrepreneur, and I’m so thankful for the skillful guidance of our board at Farmer’s Fridge. We have navigated some very difficult times, such as giving us the time we needed to adapt to a global pandemic and the consistent support and guidance to build a very unique and thriving business. And yes, making sure you recognize and thank your board for the commitment they make to your success is one last tip.

Source: Fast Company