This is the sixth part of an occasional series on building tech businesses.
You’ve started the business and registered a company. You’re proud to be agile, making swift decisions and disrupting old practices. You don’t want grey haired outsiders telling you what to do. Why even consider having a board?
When we started Yarris Technologies we actually didn’t consider the option of not having a board. As a corporate lawyer I just assumed that every good business had a board.
However there is a valid debate about whether to have a board or not.
You may see it as a disadvantage to pay for external board members, abide by various formalities and submit to the monthly ritual of board paper preparation, meetings and minutes. More importantly you may not want the feedback that comes with a board and you certainly don’t want to lose control of your business.
If you want to run your business strictly for your own benefit and not be answerable to anyone else, then a board is not for you.
However, if you want to attract external investors one day, to do everything in your power to grow the business, get a network of influential advisers who can introduce opportunities, add to the credibility of the business, provide an independent view of risk, and have access to greater experience for difficult strategic decisions then a board is the answer.
There is plenty of evidence to show that companies are more likely to prosper if they observe the principles of good governance, and in my experience a board structure is the best way to achieve that.
Modern corporate governance rules have been refined and proven over many hundreds of years. The first joint stock companies were formed in the reign of Queen Elizabeth 1, over 400 years ago and the principles of best board practice are now quite clear.
At Yarris Technologies our board has been invaluable.
As we strove to grow past the startup phase our board was instrumental in helping us build organisational strength and stability into the business. In the 2001 tech crash it is doubtful we would have survived without the guidance of our then chair, a very experienced investment banker. Also, we find the monthly board meetings are a great chance to take time out and review the business from a higher level and debate issues that may not have occurred to management.
We have a small board of four, three being independent non-executives, and we find that size efficient and manageable. We have been fortunate to always have had experienced directors with good business brains, strong financial acumen and industry expertise. They bring valuable additional skills and experience to the business.
- On all the boards I have served on I observed the important effect of the chair. They set the tone for the board, the CEO and the culture.
- The most important job of the chair is to appoint or replace the CEO.
- It is vital that the CEO and chair work well together and trust each other. The chair is the sternest critic of the CEO in private and the greatest supporter of the CEO in public.
- There are so many other issues that could be considered eg how to attract directors to your board, how to manage the board agenda, whether directors should hold shares, how to keep the debate strategic and not operational and the rotation of members. All good questions for later maybe.