A board of directors can help jumpstart a business that needs to become more competitive.
Owning your own business means being the master of your destiny. Many people get into the liquid waste hauling and portable sanitation industries for that reason alone. So if you like making your own decisions, why in the world would you consider hiring a board of directors? The main reason is that even though you make all the decisions, you don’t always have all the answers.
There are many places to turn to when you need advice on tough business questions, including the Portable Sanitation Association International, the Small Business Association, your lawyer and/or your accountant. Sometimes the best perspective on your question will come from experienced local business people who you can hire and keep available on your board.
What’s more, if you run a business with one or more partners or family members, a board can provide an impartial voice to help find consensus and resolution when not everyone agrees.
While it’s estimated that less than 15 percent of family businesses use a board of directors, the trend appears to be growing because considerable benefits outweigh the costs of a board.
Who Needs a Board?
A board of directors provides stability for any business undergoing significant change or mergers. It helps break deadlocks in companies that have internal competing interests, such as partners or family members who don’t always see eye-to-eye, or competing business segments such as septic or portable restroom service. And a board can help jumpstart a business that needs to become more competitive.
Rapidly growing companies or those preparing for growth may also benefit from the wisdom and experience of a board of directors, since growth often brings growing pains that need to be addressed.
Organizing a board
The first step in organizing a board of directors is to decide what you expect the board to accomplish and how you think they should go about it. Start by developing a mission statement that gives you — the owner, your partners, key managers, and the board members a specific outline of roles, responsibilities and expectations. Here are some roles you might expect your board to serve:
• Meet quarterly and review operating issues.
• Provide independent advice to owners or managers with consultation available as issues arise.
• Bring specific knowledge and/or experience that the company may currently be lacking.
• Provide an independent point of view to help resolve disagreements among partners, family members or key management figures.
• Suggest ideas to enhance operations, marketing, management style and growth strategies.
• Review critical financial data and record-keeping.
Appoint the board
Generally, the best people to appoint to a board are those who have experience related to your business and opinions you would trust. It is also important to find people with varied backgrounds to bring their own perspectives to discussions.
Many times executives who have retired are looking for a place to make a continuing contribution to business, without making a huge commitment of time. Ideally, for a portable sanitation company, you would look for people who would have some insights from your customers’ point of view. Look for former construction managers, builders, former local government officials or event planners. Also consider marketing executives or sales professionals who can provide insights into developing your market profile or selling to new customers. If you know anyone who formerly owned a portable sanitation business, they could be a great resource to tap.
Avoid appointing your fishing buddies, close relatives or people who want to grow their own business through more business with your company, such as your lawyer, banker or accountant. A useful board will provide unbiased opinions, not a rubber stamp to your ideas.
If you don’t know anyone who fits your criteria, try asking at the local Chamber of Commerce or SBA office if they know anyone who might be interested in assuming a position on your board. One very resourceful group is SCORE, formerly the Service Corps of Retired Executives, which is made up of active business managers and retired executives who consult as volunteers.
Interview appointees thoroughly. Find out about their work background. Ask them challenging questions to see how they respond. If candidates impress you with their thoughtfulness, they’re probably a good choice.
Here are some other attributes to look for:
• Wisdom and intelligence.
• A well-respected reputation in the business community.
• Experience in one or more areas of value to your company.
• Compatibility with other board members and company leaders.
• Proven ability to lead and generate new ideas.
• Enthusiasm and sincerity.
Put It in Writing
Once you have found suitable board members, it is time to structure an agreement with them. The matter of payment can be negotiated on an individual basis. You might decide on an hourly rate, a monthly retainer that pays a fixed amount each month, or a combination of the two.
Be sure to have your lawyer draw up a contract that includes a confidentiality agreement with a non-compete clause. Your board members will necessarily learn a lot about how you run your business, so you wouldn’t want them talking to your competition or starting their own sanitation business across town.
Your First Meeting
Once you bring your board together for the first meeting, you’ll want to have a firm agenda of topics in place. You’ll find as you begin to work through issues facing your company, the fresh thinking of your board will be invaluable. You’ll see why most large corporations rely heavily on their boards. And you’ll wonder how you ever managed your business without one.
