Understanding Microboards

For many sole traders, small partnerships or one-person incorporated private companies, microboards can play an important role as a source of independent advice and critical analysis, which is often otherwise lacking. If you don’t have a conventional board of directors, or the money to employ a phalanx of lawyers and accountants to oversee your business, then a personal sounding board can be a big help.

A good microboard can look at both the big picture items (What’s the business strategy? How are you marketing the firm?) and the small issues which are equally important (How’s the cash flow? Are all records being kept accurately?). It can overcome the limitations of only relying on the micro-entrepreneur’s own intuition and experience to make the business work.

But how do you make the most of your microboard? Here are some tips that can help make your micro-team deliver maximum effectiveness.

Sourcing your board members

The key element in making a microboard work is the calibre of the people you put on it. They don’t all need to be professional advisers. After all, sometimes the most effective members are people with common sense, industry experience, well-developed critical faculties, good networking skills, or the ability to identify a problem or strategic opportunity that others can’t see.

There are numerous sources from which board members can be drawn. One may be a recommendation from the local Business Enterprise Centre (small business advisory centre), or the firm’s existing accountant. Many state governments now fund various business mentoring schemes whose members may be willing to serve. Other potential members can include retired businesspeople who want to stay involved in local enterprises, or even successful industry peers.

A frequent temptation is to rely on personal contacts, friends and family. These can sometimes be effective, but a word of warning is necessary: many family relationships have been permanently destroyed by a falling out over a business issue.

Boards in action

It’s important to get a common understanding from everyone involved in the process about what a microboard can – and cannot – do. Is the board meant to provide general guidance, or specific help in designated matters? What happens if the board members hold one view and disagree strongly with the entrepreneur? Business owners who embark on creating a microboard but fail to explicitly address these basic questions can create confusion, overlap and more problems. For these reasons, it’s a good idea to put down on a page or two some written understanding of roles and responsibilities. There is no need to be overly formal, but committing your ideas to writing is a powerful tool that helps set the basic parameters right from the beginning.

To be effective, the team needs to have an action focus. And it’s no good going to the effort of assembling a group of good advisers and mentors if you don’t use them regularly. The team should ideally meet on a predictable basis, be focused and have a clear agenda, and aim to deliver outcomes and business achievements.

It often pays to have an independent chair: that is, appointing one of the board members to convene and run the meetings, rather than the business owner.

It ensures that meetings will cover all the issues – not just the ones the business owner feels comfortable in dealing with. To make the business work, you often have to face up to the hard questions.

Conclusion

Ultimately, though, it’s important to remember that a microboard is an informal beast. It’s a way of jointly identifying problems, celebrating successes and gathering together ideas, suggestions, ideas or reasonable possibilities that can help the business grow. If you fall into the trap of treating the ideas of your microboard as binding directives, then you’ve essentially created a director relationship and all the legal responsibilities that it entails. That’s usually not the aim of most small business owners, who are really looking for a team who can give practical assistance and access to some better ideas.

Ultimate responsibility still lies with the entrepreneur: after all, a microboard can only ever advise an SME owner. It can’t run the business instead of them.