Generally, board meetings of early stage companies tend to resemble staff meetings. There are too many people in the room and much of the discussion is around operational issues—from signing a new lease to branding and logo discussions.
While many companies have limited staff during their first year, they should only have a free pass for the first 6-7 months, max. After this period, critical mass is established and it’s time for the CEO and the company to evolve; board meetings shouldn’t be operational. Rather, they should focus on the overall strategic direction of the company.
Seems obvious, right? While every founder and CEO of an early stage company starts with the best intentions of moving forward, sometimes they get into the early stage company slump and never evolve their board meeting.
The board primarily serves four main functions: corporate governance; strategic counsel to the CEO; an outside perspective on strategy and management capabilities; and, most important, responsibility for the hiring and firing of the CEO.
When you have the board’s attention, it’s important to keep the meetings focused and strategic.
Here’s my playbook for early stage board meetings:
How Often Should I Run Board Meetings?
For the first two years or so, board meetings should be once per month. After this initial phase, they should occur every six weeks, and eventually work towards five or six meetings per year. If the number of strategic issues is high and rapidly evolving, the once-a-month cadence should continue until the environment settles down a bit.
How Long Should Board Meetings Be?
Meetings should be a minimum of two hours and a maximum of three hours. If there is truly too much to cover in one three hour chunk, a very effective strategy is to have an afternoon meeting with a working dinner the night before. If you do need more time, it’s not only appropriate but it’s encouraged that you check in with your board outside of the meeting to give them a heads up on what will be covered or topics of concern.
It’s best not to have heavy presentations during dinner. Try teeing up important strategic issues, and then having an interactive discussion during the meal. The dinner provides great context for the Board heading into the actual meeting.
How Many Members Should Early Stage Boards Have?
In the early stages, I suggest a minimum of three people and a maximum of five board members. Two is too few, while three is only getting to critical mass. When the number climbs above five, the meeting loses its effectiveness. The number will increase as the company moves into maturity and operations become more complex. When the company prepares for an IPO, it’s common to have 7-9 board members so that you can create board committees.
How to Create an Effective Board Meeting Agenda
Keep Board presentations concise, meaty, and focused on the most important issues. The presentation itself should be the meat. A discussion topic should be no more than 10 slides. Background information should be included in an appendix. You can also have a few short memos for the board members as a pre-read. Make sure you distribute the materials well in advance of the meeting (ideally a week), ask your board members to prepare by reading it, and take the materials as read when the meeting occurs.
When there are important decisions to be made, present the options considered, and then present management’s recommendation and rationale. Try to constrain the discussion to relevant threads rather than vague topics or blue sky brainstorming. If there is information that does not require a decision, but is for the Board’s information only, say so beforehand.
Early Stage Board Meeting Agenda Guideline
1. The CEO should begin with a closed session to preview the meeting and key issues with the board.
2. Review of key performance indicators that define the health of the business.
3. General review of the various aspects of the business focusing on the most important (typically sales, development, strategic partnerships, competition, important industry developments).
4. Deep dive on one particular functional area or issue (e.g. competition, marketing and positioning, operations, etc).
5. Financial review.
6. CEO closing: a quick review of what was just presented, key issues facing the business, important items management is focusing on, and what to expect by the next meeting. This is as much for the rest of the management team as it is for the Board and represents management's commitment to the Board.
7. Closed session to discuss board business or meeting review with the CEO. At this point the CEO should review what the 3-4 key issues facing the business are (i.e. what keeps him/her up at night). This is also a good time for the CEO to review the upcoming period and 90-day goals. I like seeing this on paper. It assures that the CEO and Board are completely aligned on how resources and energy are being applied.
8. Finally, a private session for the outside directors to discuss any outstanding issues and decide upon what feedback they should provide to the CEO. A spokesperson should be chosen to deliver the feedback following the closed meeting.
3 Tips To Build Early Stage Board Meeting Hygiene
1. Start on time, end on time. Set an expectation that punctuality is important and that you respect everyone's time.
2. Manage the meeting to a schedule and stay on it. Leave time for substantive discussion on topics. A frequent mistake I see is agendas that are overly packed with topics and leave no room for discussion or interaction. However, when it's time to move along, move the meeting along.
3. Minimize time on administrative matters. These matters can easily fill an entire agenda if you let it. I like keeping all administrative matters and board business to the end of the meeting before the private session. It gives a nice breaking point to excuse the rest of the management and tends to keep time for administrative matters to a minimum.
You might be wondering, “how am I really supposed to cover everything I need? How am I supposed to share everything that is happening in the business?” Well, you’re not supposed to share everything; the board and these meetings should be viewed as a resource for you, the CEO. These meetings will provide valuable insight from outsiders and will help drive the strategic direction of the company, not the day-to-day decisions that must be made.
Remember, the board is there to help you. By focusing on the strategic direction of the company, you’ll help yourself and your company.