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:
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.