Why Having A Board Of Directors May Be The Worst Mistake A Start-up Or Small Business Can Make OR To Board Or Not To Board? That Is The Question... I got into a lengthy back and forth with a prospective client recently that prompted this article. He agreed his business could do with some outside help i.e. a business coach or consultant. He cant afford to pay too much because the business doesnt have an exceptional amount of cash stashed away. So, I made him what Don Corleone (The Godfather) would have called An offer he simply couldnt resist. He got excited. Then, he got deflated when he asked... Any guarantees with this service? and I answered I cant guarantee PRECISE financial gains (be weary of ANYONE who does that i.e. tells you I guarantee Ill help you make $X,XXX,XXX in X months) but I guarantee you will see a marked improvement from working with me. He wasnt too happy to hear that. But the next thing I said really got his goat. I said... I cant offer you a money back guarantee on this type of service since Im trading my time and expertise for cash here. You cant give me back my time so I dont offer refunds on this for that reason. He then said... Well, Kunle, I love the sound of this deal. In fact, I am TOTALLY convinced you CAN deliver on what weve discussed. Talking to you gives me the confidence this is possible. However, I have a board of directors I have to sell this to. If there are no guarantees these guys wont sign off on a deal like this. They need to be totally convinced theres no way to lose here. I ended up giving him another Don Corleone offer to take back to his Board. But, it left a bitter taste in my mouth and I will probably cancel the offer before he gets the chance to table it before his board of skeptics. I felt however I needed to write this to give fair warning to anyone who may need it. After spending almost an hour on the phone with this guy, giving him useful business development strategies to implement, he gets excited and wants to go forward but cant because he answers to a group of guys who often see things differently than he does. Thats great when it gets you out of making a bad choice. But trust me, it will suck if they second guess you and end up being wrong themselves. One recent story to learn from is what happened to a formerly prominent tech startup called Digg. At the peak of Diggs existence years ago, Kevin Rose the founder was offered a $60,000,000 buyout by News Corp, one of the biggest media groups in the world. Somehow, his board forced him to walk away from the deal. He reluctantly had to agree and felt like it was crazy to do so. He was right. Years later, after so many managerial and developmental issues and disagreements with the board, the same company that was offered $60M for their then start-up was sold for a mere $500,000! What a let down, right? Right. The way I see it... if any board made me lose $59,500,000 in a deal that was clearly on the up and up, theyll all be taking a board walk off the pier one after another if you catch my drift! I mean... the nerve some folks have to be brought in to advice and help a founder make decisions only to end up TAKING OVER when they feel something is off. I mean... really... the nerve! So, Im writing this to let you know that in my book, having a board as a start-up or growing existing small business sounds all MBA and posh. But believe me when I tell you that it may very well end up being the worst decision of your entire business life. Just ask (if only you could!) the likes of the late Steve Jobs, former CEO of Apple Inc and the brains behind some of the worlds greatest technological and business decisions and inventions, including but not limited to the ever-present iPad that has so far resulted in an estimated $100 Billion+ in sales for his company. Steve Jobs was once ousted from that very company that he had co-founded... by his own board... because they didnt like the way he was running things! As I say... the nerve! So, heres my 5 major reasons you should stay away from boards, 2 by 4s and base ball bats when youre trying to start or run a small business... 1. Youre just starting out (or trying to grow), you need to be nimble. You need to be able to make quick decisions and manoeuvres that may not always be right but are better made without a group of people opposing your every audacious move. 2. To be in business you have to be audacious. Not risk averse. Not stupid or gullible, but open to taking calculated risks none the less. If you have conservative board members, out go your rights to take bold quick steps for your business. 3. I make and change decisions on a whim sometimes to get into and out of opportunities quickly. This approach can be disastrous if a wrong move is made and it can be tremendous too when the right one is. This is why you need to have the freedom to follow your gut instincts and act quickly when needed. 4. A board should be able to trust your judgement unless you are really bad at making CEO decisions in which case you should hire a competent person for that role and get out of the way. The board should give them room too. 5. Board led decisions are not always right and have been the source of the downfall of many a great company. Steve Jobs was fired as head of his own company by a board that thought he wasnt right for the job anymore. They then hired a competent CEO who did far worse than Jobs. They ended up pleading with Jobs to come back. He used that opportunity to put the board in their place. But thank God he did come back because now we have the iPad:) There are a lot more reasons but these should suffice to prove my point. Having a board can go either way for a business i.e. may be a good choice or a bad one, just like everything in life. The point of this article is not to say dont have a board. Its to say dont think having a board solves all your support and growth problems because the decisions made by outside influencers who cant always see what you see could just as easily break you as make you. Personally Im too much of a free spirit to be tamed by a group of people who dont or cant see the future I see for my businesses or who are inflexible, risk averse or any number of things an entrepreneur needs to be (or not be) to remain competitive in a crowded market place. I have advisers and thats it. Who makes the final decisions? I do. Who takes the blame when decisions are wrong? I do. Who gets the applause when decisions are right? I do. I take it on myself because Im pretty good at what I do. As Ive said, if youre not great at being a CEO then get outside help (I hope it ends up being a good choice!) If youre like me and would rather sink or swim based on your own efforts, vision and decisions, take the leap and dont second guess yourself. If Jobs was still alive Id ask him this: If you had it to do over, would you choose to have a board for Apple Inc. at the beginning? They threw you out of your own company because they couldnt see your vision any more the way you did. You made some wrong turns and they crucified you for that and fired you! Would you make that choice again of choosing to have a board at the start? Thats what Id ask the man who after some failed projects himself, later led the world to the now daily (almost indispensable) use of the worlds most revolutionary gadgets as we know them today (touch screen computer technology). Would Jobs have let a board decide whether or not to release the iPad? If I were Steve Jobs, Id say... Screw the board... Literally! Pun intended of course :)
Posted on: Sat, 15 Mar 2014 08:11:23 +0000
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