Strategic Planning in the Small Business

Unit

6

HO 6-5

(Continued)

formative

months

and years.

A board is not

a panacea waiting

to solve

some major

crisis or

deal

with one-time

problem. Consultants,

turn-around

artist, and

leveraged

buy-out experts

are

better equipped

to handle

emergencies

than a proposed

start-up board.

A few

of the more

common board

objectives include

assisting

with policy

and long-term

strategies,

provid'

an independent

audit, and

developing

succession plans

and maintaining

management

continuity.

Others

include providing

some specialized

expertise,

or even arbitrating

feuding family

members.

I have personally

assisted one

or more boards

with each

of the above

goals,

but there are,

of course,

endless possibilities

for other

goals that a

board could address.

Other factors

which need to

be addressed

early on include

the size of

the board as

well

as the mix of

inside and outside

directors.

Board size

should be kept

very small

at first, both

for manageability

as well

as to allow

for future flexibility

should other

directors

be desired later.

As

few as five and

no more than

seven is

a good start-up

number. Regarding

insiders

and

outsiders,

some

consultants,

including Leon

Danco (Danco

and Jonovic,

1981), have

advocated

the use of strictly

outsiders.

I do not subscribe

to this

view, and believe

strongly that

a mix of

inside and

outside directors

is usually

best. Outsiders

bring many

strengths

to the board,

including

(but not

limited to) objectivity,

independent

assessments,

broad experience,

and

their

own networks

of information

and contacts.

Insiders, however,

also can

bring much

to the board,

including

(but not limited

to) superior knowledge

of the

firm's affairs,

technology,

and industry,

immediate

availability,

comprehension

of needs

attitudes

firm's

the

and

of the

various

stakeholders,

and

dedication to

the firm's success.

Together,

this mix of

insider knowledge

and

sensitivity

combined

with outsider

objectivity

and experience

creates a

synergistic

atmosphere

needed for

a strong board.

Once

board objectives

and directors

are chosen,

however,

there remains

much work to

be done before

a board could

be expected

to help a small

business.

Time and effort

must be

done before a

board could

be expected

to help a small

business.

Time and effort

must be

invested to

recruit, education,

and train

the directors.

Insiders need

to learn how

to become

generalists, rather

than specialists.

Outsiders

need to

become familiar

with the basic

affairs,

products,

people,

and philosophy

of the firm.

Together,

the board

members need

time to

become a team,

rather than

a group of talented

individuals.

Of

course, the owner/manager

also has much

his new

to learn about

role as board

feunder

and leader.

Issues such

as board organization

and

structure, running

effective

meetings,

record

keeping,

indemnification,

and board

communication

all will

need to be learned

and

become part

of his regular

routine.

The last,

but not the

least important

step, is assessment.

Simply

put, after all

the time,

energy
and money
have been
invested, is the
board worth it?
Were the objectives
accomplished?

If not,
why?

All of this

is, of 'course,

easier said

than done.

not

We should

underestimate

the

difficulties
and complexities
involved
with creating
an effective
board. The
rewards over
the

long
term, however,
can be great,
if the management
makes
a commitment
and implements
the

board
process with
logic, tenacity,
and follow through.

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