As an SME, do you think you need a board of directors in your business? No? Maybe keep reading.
Shareholders and a board of directors are not mutually exclusive for large companies and corporations. As an SME, you will reach a point where you need to focus on growing the business or the company’s day-to-day running.
A board can help to guide you in the right direction, with the correct procedures in place. Shareholders are there to evaluate the performance of a board of directors.
Founders or Founding Shareholders
Many businesses can start with one person heading up the company. They are considered the founding shareholders or owners. If there is more than one partner involved in the business, they need a partnership agreement. They will be responsible for appointing any future board members.
What about an advisory board?
It can be the first step for a small business. These advisors can be family members, trusted friends, or even existing shareholders who want to see the company succeed. They do work for free and offer their advice for the company’s benefit, not for remuneration. They can be formalised into a board at a later stage.
A corporate board
If you do get big enough to need to appoint a board of directors, your board will be a formal entity that needs to guide the strategy of the business. They are also legally responsible for the compliance of the business. The board will hire a company CEO and senior management. They have the right to hire and fire management as they see fit.
If you are looking to grow your business, consider the benefits of appointing a board of directors. A variety of skills and personalities is good for the company, as long as they all have the same vision.
It is not about appointing your friends, but people with the skills and foresight to grow and develop the company into an asset of value.
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