The members of your board are responsible for major decisions on how your business is run - and could be responsible for its failure if they don't carry out their responsibilities effectively. Directors can be held responsible for allowing the company to trade whilst insolvent, for wrongful trading and may face personal liability if the company fails to comply with key legislation.
- Consider appointing several directors – even if you are only obliged to appoint one - who can bring a range of skills and personalities to bring different perspectives and expertise to board decisions.
- Aim for a balance of executive and non-executive directors. Executive directors have day-to-day involvement in the business. Non-executive directors typically offer less frequent advice, but they will be impartial and unaffected by office politics.
- Implement a robust induction process for new directors to bring them up to speed on the company background, its structure, finances and business strategy and its articles of association - the company's rules on how it should be run.
- Appoint a chairperson who understands the business, commands respect from other members and listens to them.
- Consider if your board members are doing a good job. If there is any friction between members, a reluctance to change things or a failure to act, it might be time to make a change. Weigh up if it's worth bringing in someone with new skills or experience.
- Look at the issues facing your business – for example, if you're struggling financially find someone with a background in finance. If you don't know anybody suitable, you could advertise in relevant trade journals.
- Make sure directors are briefed before board meetings and receive board papers in good time, so that they have a grasp of the issues before they are discussed. Board papers should include the agenda, minutes of the previous meeting and management accounts.
- Ensure your board is aware of key objectives. It should agree on business strategies, monitor financial performance against the firm's budget, and ensure the company is compliant with legislation. If the board fails to meet these objectives, reconsider who sits on it and how it's run.
- Make use of board members outside of the board meeting. They should be available to help with reports, business plans and management accounts, as they have an in-depth understanding of the company. Seek their advice on key decisions such as restructuring.
- Hold regular meetings, but be prepared to call additional meetings in times of difficulty or growth. Legally, you must hold a board meeting if any director requests one.