- February 16, 2017
- Posted by: Vinh Van Lam
- Category: Business Tips, Entrepreneur, investor, Start up
With start-ups popping up in their hundreds across the globe, it would be easy to get carried away and commit investment, time and energy on a variety of them without carrying out the necessary research.
Equally, you may well be tempted to become a Board member who can contribute with ideas, experiences, contacts and resources, all of which can help generate business growth.
Before you jump into the mix and get carried away with the excitement of a start-up, there are a number of questions that need to be asked as becoming a board member carries legal and financial responsibilities:
Define the most difficult situation the Board has faced?
This is primarily aimed at how the company has been run to date. Listen carefully how the Board dealt with that difficult episode, how they contributed with ideas and resources to implement a solution. Or did they expect the entrepreneur to deal with it all alone?
Company performance compared to its business plan?
This will help you understand where the gaps might lie and how the founder intends to get things back on track. If there is a significant performance gap, find out what the situation is?
Any overdue debt to employees, suppliers, or the Government?
Board members are always wanting to focus on growth and profits, but the downside is that they rarely want to talk about the debts, the crises and the threat of legal action. So finding these problems out will give you a measure of what may lie ahead. If you don’t have the stomach for it, then thank the entrepreneur for the interest, but walk away.
Who will replace the entrepreneur one day?
One question that scuttles the founder is what will happen when they are no longer on the scene. Asking this question even if it is an unpleasant one, will give you a guide as to whether the entrepreneur is really in for the long-haul. Evaluating who really holds the keys to the business – the entrepreneur or the Board – gives a guide to who leads. Also ask whether there is a no. 2 to the founder. If there isn’t then there could be a coup from Board members.
Put me in touch with the most influential Board member
If you are sold on joining the Board, then you will have to get to know the other members. But focus primarily on the main Board member and see if their thoughts on the business correlate with the entrepreneur. During these conversations, you should see whether the entrepreneur’s responses to the previous questions are aligned with the Board’s perspectives. Commitment shouldn’t be taken lightly, so think long and hard before committing to becoming a Board member.
If you know about an interesting real life story of how a start-up’s Board of Directors dealt with challenging circumstances then in touch with us at ArtSHINE industries.