Why an entrepreneur needs a board

Hi, I'm Dr. Natalie Bititire and today we are talking about why all businesses need a board. I think some entrepreneurs think my business is small, I don't need a board. Those are things for, like, big corporate companies. But the thing is, if you never get used to, like, the governance and the levels or like, understanding why companies have a board, you also never grow to that size. How do you know that your company in the next 10 years, in the next 20 years, can be one of those big corporate companies that you're thinking about now? So I wanted to talk a bit about that. I think at the beginning you don't need to have like a formal board because also a board comes with a lot of legal responsibilities. Like how sometimes you see in Parliament they bring like the board members to answer to, like the decisions that were made in companies. So it's a very serious thing to be put on a board legally. So if you have a small business, what you want to think about is maybe having an advisory board where there's no legal responsibility. It's just people who you respect, who can help you and guide you and hold you accountable and help you make decisions for the business in the best interest of the business. So I would suggest that you look for an advisory board and you put a few people in formal boards. There's usually different fields that you need to have. Like you need a legal person on the board, so someone with a legal background, a company secretary, someone who's going to give you, like, you're allowed to do this, you're not allowed to do this, tell you what's good and bad and what kind of decisions and discussions you're having about legal stuff. Then you also usually have to have a finance background person who can advise you on how healthy the finances are, the reporting structures, what you're doing, how you're making decisions from a financial perspective. And then the other committee members, sorry, the other board members usually come from a variety of industries. It's good if they come from your industry because they can give you better advice and help. And the reason I'm saying committees is like big formal boards, like the big corporate ones have different committees, right? So there's a full board which has many of the people, like 10, 12 people. And then within the board they have different committees that discuss the details of different things, like the HR or the risk or the finance or the strategy. So there's lots of different committees and different board members on each committee. So that's why I was thinking of committees. Just that you understand Overall, but I think when you're starting out, you just need an advisory board and advisory boards don't have committees. So I'm on both types of boards, so I can see the difference. And I understand a bit better because like for Save the Children, I'm on the advisory board. So when we have board meetings, it's all of us together and we get updates on what's going on operationally and we all contribute, ask questions, make suggestions, things like that. Whereas like with Uganda Properties, I'm on the full board and I'm on all the different committees because it's quite a small board. So the same board members on all the committees? I don't know if I'm allowed to say that. Well, let's see. I think it should be fine. So on the different committees you get to discuss the details of things. So in my example with Uganda Properties, for example, the assets and technical committee, we go through all the different, like strategic and technical details about the properties that we're managing. So we don't talk about that in the finance committee, we talk about that in the asset committee so that you have more time to get involved. And each committee has its own board meeting day. I see my dad on his boards, like now he's on the board and he's on some of the different committees as well. And these boards, which are bigger board meetings can take a week because every committee has its own day. Then there's the day in between where all the notes from the committee meetings, all the decisions get written up and then you have the full board meeting. And then once a year you have the AGM which is the annual general meeting where all the shareholders come as well. And then they present everything that's going on. And as a board you're like responsible to be there and make sure that your decisions were accurate and good for the company. I don't want to get too technical, but for entrepreneurs you should really understand these kinds of things because you should honestly aspire to get to that level as a company. Because board members one, Grow your network. Every person on your board doesn't work in your company. You have executive directors and non executive directors. So people who work in the company, like the CEO, come to the board meetings, they're on the board, but they're not the same as a board member who is external to the company. So you want external board members because it expands the network of the company. I was on a board for a marketing company and to such an interesting board because we all came from different backgrounds. But Every board meeting, we would have all made introductions for the company. I suggested this, I introduced you to this person, you could provide services here. So it's really good for the company to have board members that are external because you get access to their networks and board members should be assets to you. They should be helping the company, not just in their advice, but in their network, in their resources. For Save the Children, part of our duty as board members is to help fundraising all over the world. So board members have different duties to the company and it's good for the company to have these board members. So don't always think about it as I don't want outside people knowing what's going on in my company. Also, I'm a big believer in transparency. I think this thing of hiding and keeping stuff to yourself is very old school and it's not very helpful. The more transparent you are with things, the more help you can get, the more feedback you receive, the more opportunities people can suggest you for because they know about your company. Many big companies, you know, when they publish their annual reports, it has all their financials, it has the challenges they face. It has a letter from the CEO, it says all their strategy and plans. They're not hiding things. Yes, you have to report legally. Big companies like that, especially like listed ones, have to have annual reports. But it's a good practice because if you're hiding things from your staff, from your clients, it makes life harder for you as an entrepreneur and it's also harder for you to get through the opportunities later. If you're trying to get a loan from a bank, if you're trying to raise money for a grant, if you're trying to get board members, you're trying to get approved for different bids or different organizations that want to give you long term contracts. Transparency is a good thing. So you need to think about that when you're still small so that you know the path you're on. It's like how we tell entrepreneurs, you have to understand tax and regulation and legal requirements. Even if you're not ready to do it. You know what you're aspiring to get to. The ups, the downs, the costs, the reasons why you need these things. Yes, it sounds fun, like, let me not pay taxes or register my company now. I'll make all the money and keep it. But it closes doors for you later. Later, when you need to get a bank loan or when you want to get a grant and they ask you for audited accounts of three years, you won't be able to do it. Or if they ask you, your company has to have been legally open for at least five years. You won't be able to do it. So you're closing your own doors for yourself because you are not informed. So I'm not saying rush and do these things. I'm saying, understand, arm yourself with the information so that in future you know which decisions you want to make, which direction you want to take. Get some advice. There's so many lawyers. Ask your lawyer friends, most of them, if you take them out for some tea or beer or something, they'll give you this advice for free. So see what makes sense for your company and what direction you're trying to grow into. So the first point I was saying about having a board, is the network super helpful, very useful. Board members come from different spheres of life. Like if you have a legal board member, they can introduce your company to all their loyal friends. If you have someone from finance, for finance, in the different areas in marketing, in hr, in different sectors, in different cities. I'm on a board where we are all from different countries, so we are able to give different advice and knowledge to the company and also give them access to all our networks in our country. So that's my second point. Board members give great advice and this is why you need to be able to respect them. Don't put people on your board just because they look good and they'll never have time for you. They won't show up for meetings, they won't actually be there, they won't read. The board packs the information you send them in advance. Get people who you are asking them for something and they are committing and you trust each other and you're both agreeing to being in alignment about the vision for the company. They are going to take their time, they're going to do everything they can, they're going to think of your company. So you want to make sure you're getting the best kind of advice. I suggest you get board members who are much older than you or much more experienced. Sometimes age doesn't mean experience. So get someone who has been doing what you want them to have been doing, like in their field. Don't get a lawyer who is the first year out of law school. No offense, you know, but you don't really have experience to share. So you can't give good advice because you've not been armed with the information as we are trying to learn. So get board members whose advice you will listen to and you will trust. You trust their judgment. Don't just put them on because you think they'll look good for the board. You can announce, I have this board member. And also, don't start the board until you're really ready to have regular meetings and to provide information up front, because no one can give you good advice if you don't give them the information. Board members can't just show up on the day for the board meeting and say, huh, how's it going? You have to send them information in advance. This is how we did this quarter. These are the financials, this is the strategy, this is the challenges we had. This is the updates so that they can prepare. And they come to the meetings knowledgeable, they've thought about their answers or their suggestions or their questions. I always like, get highlighter and like mark up all my board packs or like different colored pens so I can put questions, comments, suggestions, reminders to myself, like, introduce them to this person. Ask this question, why is this here? Is this an error? Especially when you're on a board and it's like a legally binding one, you have to be on top of your game. So I think those are the main two reasons that you really want a board. And I think those make sense, especially at an advisory level when your company is still small. So even with small startups like my own companies, I have certain people who I go to for help and advice, and that's my advisory board. Sometimes it's formal, like with Mosana. We formally asked everyone who is on our advisory board, please, can we have you on our advisory board? Because also it helped us with raising money. Because in our pitch decks and when we're introducing ourselves to people, we can put a nice slide with advisory board members. And at the time, I was a student, so the team slide, which shows who the company is being run by, we were all students. We don't have experience, we're young. But our advisory board all were like fancy people with more than 10 years experience in different areas. So it gives credibility to the company. It shows that we are being advised by people who know better than us. And it helped us with fundraising. So it's something that can really add on the network and the advice and the credibility. That's the third thing. Because if you have a good, strong board, then outside stakeholders can trust that your decisions are being made with, like, good logic, good ethics, integrity, because they trust the board members. If you're a company that no one knows and you're going to a bank, or you're applying for a public contract, or you're applying for a grant and they see that, oh, this established person has agreed to be on this board. It must mean there's something there. There must be a really good idea, a really good team. That person really believes in this company. Because also as a board member, you don't just say yes to everything. Your time is limited. You have your own jobs, you have your own things, and your reputation is tied to these companies. If any company that you're on a board of, something goes wrong, you are involved in that scandal, it is your problem. Why didn't you know? Why didn't you advise them better? You go down with them sometimes. So board members don't just say yes. So credibility is like another big thing. When you're still starting out the company, you don't need that much credibility. But the advice and the network take you to the next level where you do need the credibility. So you want board members who have high esteem in society. Like, people respect them in their fields. Like, if you have a legal person on your board and other lawyers only say good things about them, that's the kind of board member you want. Oh, yes, that's a very smart lawyer. Always on top of their game. They win all their cases, they give very good advice. They. They have good judgment, things like that. But you don't want a board member, like, who is in marketing and is always in scandals. They're always in the news, in the press. It's negative because then that gets associated to your company as much as they might bring you more press. And they know what they're talking about, they've not managed their reputation well, so it's not helping your credibility. Credibility is a huge thing later. Think of it as your company's reputation. It helps with your customers, it helps with the marketing, it helps with fundraising, it helps with managing. Even the way your own staff see you and treat you. Even though your customers engage with the company and recommend the company. You know, we all have those companies where you're like, the product is good, but dealing with them is so hard. I love that restaurant. The food is great, but the customer service sucks. You don't want people talking about your company like that. Yeah, you know, they do a good service, but, you know, their integrity, I don't know. I wouldn't trust them with this. You don't want those kinds of recommendations. That's why credibility and reputation are so important. So board members can add that and they can advise you on that. The whole point of having a board is not that you just say, okay, thanks for the advice, but I'm not gonna take it. It's not that you're forced to, but it helps you to think, it helps you to understand different things, it helps you to pause. Hmm, maybe this is not the right decision. How do we go about doing this? And board members can be very strategic. Someone asked me recently to help them find board members that are relevant to their new project that they're doing. And they need board members who can lobby for them, who can talk to government, or who can understand how the systems and structures run in a way that they don't. There's added levels of benefit with board members because they are not your employees. So they're not like your responsibility on a day to day, but they work for you essentially because they love the company, they believe in you, they believe in the idea, they believe in what you're doing and so they're out there working for you. All the boards I'm on, I would not recommend a competitor because I agree to be on these boards because I believe in what they're doing. So, so when an opportunity comes, of course I'm going to suggest this I have to disclose, yes, I'm on the board, so I'm conflicted, but that's why I'm explaining because I know the ins and outs of this company and I can trust and recommend them. So you want the network, the advice and the credibility that comes with having a board. It's so helpful. And as an entrepreneur, struggle is different. It's hard. The road is hard, it's long. There's always obstacles. So it's really great to have advisors, it's really great to have people you can call up and say, you know, I'm having this challenge and I don't know how to tackle it. And that person has committed to helping you tackle your, your obstacles. It's like having mentors for the company. Think of it that way and it's something that's useful. Cuz as an entrepreneur you're also growing with your company. So once it gets to the next level, this is a whole new field for you. It's a whole new level, it's a whole new stage. You don't know what to do either. That's why it's helpful to have someone to turn to, to advise you. It's not that they're dictating, it's that they can be of support, they can be of assistance, they can tell you what's happening in that field or new innovations or progressive things, or introduce you to someone who is helpful or sometimes it's just to help you bounce the idea until you know what. This one needs some panel beating. Plus go and do more research. Go and read this report. Go and try with this person. So it's useful to have. It's something we also do in personal stuff. In personal development, there's what's having a personal board. Like your friends or colleagues or mentors in your life who you go to for advice when you're making a big life decision. Should I go to another degree? Should I change jobs? Do I marry this person? There are people who you talk to about these things. It's not the same as your friends who you just. It's a bit lighter. Of course friends are useful, but there are people who you can have these conversations with at a higher level in a more serious tone, in a more formal way. So with a board, especially as a small company, I really do encourage you have an advisory board and you don't even have to meet all the time or as often. That's the thing. Advisory boards are more flexible. You're not like bound legally to do it every quarter and have AGMs and stuff. Maybe just have everyone over for like a long lunch every six months so they know each other and you can talk about the company. We have this new product we're about to launch. This is what it is. What do you guys think? I just need honest feedback and they can tell you and they can ask you questions, pock poc give you some criticism in the best kind of way. They're positive kind. So it's really useful. And I think as entrepreneurs it's something to think about. Like now when I start new companies, I already have like my shortlist. I want this one on the board and this one and this one and this one. Because of their connections in these kinds of fields, their experience and expertise and what they know and how they're going to give me advice. I trust them, I respect them, I will listen to what they say and trust that they have the best intentions of the company at heart. So think about these things and see how to make the most of it. Formal boards do pay people. Some boards pay a retainer which is monthly like a salary, but it's not like a big, it's not like a salary amount. It's like a token fee just so that you're always like available. Some boards pay you per sitting where every time you have a meeting they'll pay you even then it's like a token fee. Some choose either or some do both. So there's lots of different things. You just have to be upfront about these things at the beginning and tell the board members this is a paid, it's not a non paid. There's lots of different options and also it's time consuming. For example, this week I've had three different events for different boards because it's not just about the meetings that you have. It's also come for this event, come for our launch of this, come for this book launch. Introduce us to this person. Networking. This, this person. Our investor is here for dinner. Let's go. So there's so many different things. So you need to be upfront and tell people this is the time commitment that we're asking of you. This is what we will do to show our appreciation. Or if it's not paid, we thank you so much and hopefully one day we'll grow to the point where we can pay you. But we appreciate your advice. And then as an entrepreneur, it's your responsibility to run the board well as the CEO. Make sure you send the board packs in advance. Make sure you give them the notice for the meetings. Oh my God. I was on a board where they used to tell us like two days before the board meeting is, and then two days I had to resign for that board. I was like, you can't disrupt my life like that. Board meetings take the whole day. Two days notice is not enough. And then you're going to rush to send me the board pack. Be organized, start the meetings on time, plan it in a good place where it's quiet, there's refreshments. You have to do what you can because remember, these people are doing you a favor. It's like a mentor. When you take your mentor out for coffee, you know, you have to be flexible in their schedule. Give them notice, come with your questions in advance. So think about this. The board is the mentor for the company and it's there to make sure that you're accountable, you're informed, you're moving in the right direction and you're supported, you. So it's a good thing. So make sure you as an entrepreneur also take that seriously and take your board members seriously, whether it's advisory or proper. Full formal board, I don't know what that one is called. Executive directors board. So make sure that you do that because it's your responsibility, because it's your company. So make the most of that and don't disgruntle like your board members. Don't upset them or be irresponsible and they have to leave. So that would be my advice, I do encourage you start with an advisory board. Even if you meet people one on one and you just say, I really love the advice you give me. If I put together an advisory board for my company, is that something that you would be up to being a part of? We would only have to meet for two hours every six months or something like that. And you get them to like, agree and help you and support you. Because no one is an island, even companies. We all need help and support and advice all the time. So I would highly recommend that if you found that useful, do subscribe. You can find me across social media networks and catch more information. If you found this video useful, be sure to subscribe on my social media channels so you can get more information. I believe in you. I want you to succeed and I'm here to support you.