A family business should consider setting up a Board of Directors when it reaches a certain size, complexity, and stage of development. Here are some factors to consider:
1. Size and complexity: As a family business grows in size and complexity, it becomes more challenging to manage. A Board of Directors can provide guidance and oversight to help navigate these challenges.
2. Stage of development: If the family business is in its early stages, it may not be necessary to have a formal Board of Directors. However, as the business grows and becomes more established, a Board of Directors can provide valuable input and help ensure long-term success.
3. Ownership structure: If the family business has multiple owners or shareholders, a Board of Directors can help ensure that all interests are represented and that decisions are made in the best interest of the business.
4. Strategic planning: A Board of Directors can help with strategic planning and ensure that the family business is on the right track for long-term growth and success.
5. Succession planning: If the family business is planning for succession, a Board of Directors can provide guidance and help ensure a smooth transition.
In summary, a family business should consider setting up a Board of Directors when it reaches a certain size, complexity, and stage of development. The board can provide guidance and oversight, ensure all interests are represented, assist with strategic and succession planning, and help ensure long-term success.
This blog is part of a six-part series. Check out the other blogs here:
1. When Should a Family Business Set Up a Board of Directors?
2. When Should a Family Business Set up a Family Council?
3. How Do You Establish a Family Council?
4. What Is a Sample Agenda for a Family Council Meeting?
5. How to Benchmark Pay Rates in a Family Business
6. What is a Succession Planning Roadmap for a Small Family Business?
I hope this blog gave you some insights on setting up a board of directors for your family business. If you need guidance along the path, give me a call! I’d love to help coach you through a plan that works for you. Book a call.
Also, make sure to check out our recent episode of The Disruptive Successor Show!
Episode 115 – Boards of Directors and Family Councils with Jonathan Goldhill
