Michelle Rodger: Get the strongest support on board or prepare to sink

STARTING and growing a business can be challenging, exhausting, frustrating, stressful, emotional, educational, inspirational and fun. But it can also be filled with self-doubt, uncertainty and a realisation that there are huge gaps in knowledge of how to start and grow a business.

This is where a strong board of directors comes in. A hand-picked team of specialists or experts, brought in to broaden the experience required to secure and scale the organisation. At least that's the theory.

In reality, while having a solid, efficient and experienced board is the thing to have, it's often not what you actually end up with.

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Choosing a board at the outset can be fraught with difficulty, and business founders regularly find themselves appointing co-founders, friends, family or the employees in the organisation, who seem to have some suitable experience in sales, marketing or operations.

So when do you need to appoint a board, and how do you choose the key participants?

David Watt, executive director of the Institute of Directors. is a real enthusiast for boards - or, more particularly, non-executive directors - as soon as the business builds some momentum. He says there's no set timing, it's down to growth and ambition, and he suggests a company should appoint a board when it has gone beyond local operational scope and scale, and needs to be more strategic. This is when other views, advice and support will move it on to a different level.

"The outside strategic view is vital," says Watt, "There are no set skill types required, but a critical and analytical eye is vital.

"It's key not to just choose friends and contacts, but to look outside for a fresh perspective. The board should be diverse in terms of interests, experience, background, gender and skills - the last thing you want is 'group think' with everyone the same. Some feel this is where the banks went wrong."

Tony Banks is founder and chairman of the Balhousie Care Group. He launched the business in 1991 and since then he has expanded from that one 31-bedroomed original property to 22 care homes providing residential care to more than 800 residents and employing almost 900 staff.

Banks didn't have a board at the outset, it was very much a one-location, one-man band, and he focused on controlling everything to ensure the business would survive though the very difficult early stages. He did have individuals he turned to for advice, but he didn't appoint a board until four years ago.

Banks, who appeared on Channel 4's Secret Millionaire programme, now chairs his own board, and also sits on the boards of the Entrepreneurial Exchange and Combat Stress Scotland.

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His advice is to choose your board very carefully. Interview them, get other board members to interview them, let them attend a couple of meetings. Make sure they fit socially and culturally with the company and other directors. And crucially, give them a contract for a fixed term and a "job" description that outlines expectations.

Banks believes each board member must have clear talents and be able to add value to your firm. A key role is governance of the business and formulating and driving the strategy.

But they must also be prepared to question decisions and they must act as a check and a balance on the key post holders and decision-makers. It's also important to recognise that the company will most likely outgrow people along the way, Banks says.

"I have lost people as the company has grown. This was due to a number of reasons, some of them common. Individuals not fitting culturally as the company grew, and corporate culture and governance started to sneak in. Others plateaued and could not up their game."

But remember it's a two-way street. The board is there to support the chairman and/or chief executive but he or she also needs to support and understand them. He or she must be strong and prepared to fight their corner when required to do so, but also be prepared to change direction as well.

Whatever the make-up of your board, large or small, male or female, the difference between an effective board and a board in disarray will be the difference between the success and failure of your organisation. So choose wisely, listen carefully, engage constantly and reward fairly.