I could make up a terrific story about this, but I won't lie - I had avoided (as in postponed, side-stepped, procrastinated) having a board of directors until now.
Frankly, I had visions of having a group of old, cranky, humorless men telling me what to do. Of course I was just being lazy, too. I would rather be out making products and building a business than sitting around trying to make sense out of Excel files, charts and graphs, and essentially being bored to death in the process. Our company, however, has reached the point where "proper governance" is important...even necessary.
The "let's do it because we all think it's a really good idea" mentality had to go. We really needed to be able to show that all of our shareholders were represented in our decision making - and represented fairly. So I asked my business mentor and close friend, who knows and understands our industry very well, to be the first member of the board of directors. Now let's be clear - I didn't ask him because he's my "friend." That would have shown very poor judgment, and frankly, friends don't always make the best business advisors. I asked him because he's already the one person who advises me on all "board-type" matters, anyway! So imagine this: I felt like a "big grown-up boy" in long pants, carrying my briefcase filled with notes, reports, Excel printouts, etc., to my first board of directors meeting on Friday, February 15, 2008, at 2 PM ET. If you are picturing a large dark paneled room with a long table, think again. Outside our "boardroom" were chickens, squirrels, birds, and other creatures - large and small, wild and domesticated. Inside the "boardroom" (besides the board members) were a dog (a.k.a. The Wolf), two cats (a.k.a. Puffy and Fluffy), and five children. Yes, we were in my friend's home, gathered around his kitchen table. Maybe someday we will meet in that dark-paneled room with a long table. But I don't care how big my business gets - I hope we can continue to meet with the same "family feeling." There was a certain calmness, almost a serenity, about the entire meeting. There was nothing stuffy or even formal, although we did follow the rules of a proper meeting. So my first board of directors meeting started with a brief lesson about what exactly happens at board meetings! My friend and mentor gave a simple, five-minute explanation of what board meetings were all about...and in the process, he completely changed my preconceived ideas. That's what I really want to share today. What Do You Think Is Supposed To Happen At Board Meetings? - Company planning strategy? - Hiring strategy? - Financial planning? No, no, and no. Those are the things that I THOUGHT were supposed to happen at a board meeting, but was I ever wrong. The things listed above are the territory covered by company management...not the board of directors. The board of directors has exactly one responsibility, and that responsibility is... GOVERNANCE Just like a sovereign nation, each company has what they call "articles of incorporation." These "articles" are actually the laws - or rules - that the management of the company must abide by. So the whole purpose of the board of directors is just to make sure those laws are followed. The point is for the board to make sure the decisions that are made in the day-to-day operation of the company are really in the best financial interest of the shareholders. Of course, not ALL of the decisions that are made by management are the right decisions - anyone can be wrong, it's inevitable. But the decisions have to be made within the laws laid down in the articles of incorporation. They can't be sneaky decisions, they can't have malicious undertones, and they can't be decisions that line the pockets of management at the expense of shareholders. Here is just one example of the type of responsibility shouldered by the board of directors: The board does not decide who is hired to fill a position. The board simply "empowers the management" to pursue that hire. It's still management's job to make the final decision about who is hired to fill the position. The board only acknowledges that they understand why the position has been created and filled. The board of directors GOVERNS. It does not strategize. So in the end, I didn't need all those spreadsheet printouts and detailed notes. What I did need was exactly what I got - a lesson in how to think about shareholder value, while simultaneously running the company.
About The Author
Nick Siegel The Mystery CEO is a young entrepreneur who started a company now doing close to $2 Million a year right in his DORM room! Now he lets you watch over his shoulders as he learns more about entrepreneurship. You can even listen-in when he interviews CEOs who manage $100 Million+ companies! Read his entrepreneurship blog right away for all the entrepreneurship training you'll ever need! http://www.mysteryceo.com/
Sunday, September 7, 2008
My Very First Board of Directors Meeting...
What Does RICH Mean To You?
Have you ever been asked that question? I was! Back in 1979 while doing a “pressure cooker” course on selling with an insurance company! I wondered how relevant that question was, considering my personal and financial situation at the time.
No wife! No job! I was a solo dad with three children, one of them a baby less than a year old. “You must be kidding”, I thought to myself at the time! What relevance can that have to me learning to sell insurance policies? How naive I was! The course that followed had an unbelievably positive and a life changing effect on me. Although it only took affect several years later. The seed had been sown! You’re probably saying to yourself, “How can a course on selling life insurance have that much effect on anyone?” Well that Insurance Company was the one created by W Clement Stone. I found the course to be very challenging, because in New Zealand at that time we weren’t really aware of the “Hype” that Americans used to motivate their workers to perform at their optimum. It pleases me each time I think about it now, to know that I passed, top of the class and received a book as a reward, this book was already a best seller, but I’d never heard of it. Success Through a Positive Mental Attitude, of which W Clement Stone was co-author with Napoleon Hill. They shared their secrets on becoming wealthy and having a healthy, productive lifestyle, utilising the power of a "positive mental attitude". Sadly my motivation and my persistence waned and I stopped selling insurance. I kept all the information, studies and the book I had won. The “BOOK” Success Through a Positive Mental Attitude, which I never opened or read for probably 3 years. However I did continue two very positive things! I continued to read on a daily basis some of his quotes and I even put them on the wall. My two favourites were; “Success is achieved and maintained by those who try and keep trying” and “Whatever the mind of man can conceive and believe, it can achieve”. The second thing and the one which I believed the most important was “Goal Setting” I enjoyed the challenge and had learned enough during the course to realise its long term value. Life began to take several steps in the right direction not major ones, but positive ones. Several important things happened in my life over the next 12 years. Around 1981-2 I began reading, Through a Positive Mental Attitude, I applied so many of their ideas and formulae, and by 1992 mine and my families life had completely turned around, this included a wonderful wife and two more children and a list of goals I had made in 1986 after father passed away, became a reality. I had arrived finally, or so I thought, and was ready to respond to the question that still continued to bother me after all those years. What Does RICH Mean To You? I had some answers! That’s what I believed anyway! 1 - " A consistent income created from hard work 2 - " A healthy family 3 - " A loving wife and loving children 4 - "A nice car 5 - " A great holidays There are other things, but they are either directly or indirectly related to the above list. Even now when I look at that list it seems to have “hit the nail on the head”. Then within three years it all slowly began to fall apart, business wise, thankfully not family wise our “Polynesian Inheritance” is so strong, family always come first! Where was I going wrong? What was I doing wrong? Whose fault was it? Why now when we seemed so successful? A myriad of questions passed through my mind, I began to blame myself, I was making wrong decisions. I had begun a downward slide a personal one that took away my mental fortitude, my belief, my self-confidence, I lost motivation, the thing that really hurts me when I think back is that, “I didn’t really care anymore” I began to think that the world owed me, I was a good person so for that I should be rewarded. What a “Pity party”, darn pitiful is all I can say now! After all these years I am finally getting back on track! I realise that age and the new generation means I can never be what I was back then, why? Well that’s the past and I now live for today! Not tomorrow! I have found a “Certain Way” that has been available to each and every one of us for more than ninety years. Probably what W Clement Stone and Napoleon Hill and thousands of others used to become rich, but forgot to tell us some very vital points, whether they did it consciously or just took it for granted that we would figure it out, I am really not to sure. Want to find out as I have??? The real meaning of what “RICH” is, go to my website “Right Now” and find out how you to can have a “RICH” balanced and fulfilled life with “Prosperous Equilibrium”. PS. Get a “FREE COPY” about this “Certain Way”, with THE SCIENCE OF GETTING RICH check it out right now! http://www.prosperous-equilibrium.com/
About The Author
I have been involved in several businesses over the last 38 years, some very successful and some not so good! But I love it! I began as a Motor Mechanic who owned several car repair businesses employing up to 15 people in New Zealand and Tahiti. When my father passed away in 1986 I took over his work as a Medical Interpreter and Guide in New Zealand, being fluent in three languages. We owned apartments for clients also. We now live in Australia and am now involved in Internet Marketing and loving the challenge. A very happy "Baby Boomer"! http://www.prosperous-equilibrium.com/
How to Successfully Navigate Your Business through an Economic Downturn
An economic downturn is a phase of the business cycle in which the economy as a whole is in decline.This phase basically marks the end of the period of growth in the business cycle. Economic downturn...
An economic downturn is a phase of the business cycle in which the economy as a whole is in decline.This phase basically marks the end of the period of growth in the business cycle. Economic downturns are characterized by decreased levels of consumer purchases (especially of durable goods) and, subsequently, reduced levels of production by businesses. While economic downturns are admittedly difficult, and are formidable obstacles to small businesses that are trying to survive and grow, an economic downturn can open up opportunities. A well-managed company can realize the opportunity to gain market share by taking customers away from their competitors. Resourceful entrepreneurs capture the available opportunities, from an economic downturn, by developing alternate methods of doing business that were never implemented during a prior growth period. The challenge of successfully navigating your business through an economic downturn lies in the realignment of your business with current economic realities. Specifically, you, as the business owner, need to renew a focus on your core clients/customers, reduce your operating expenses, conserve cash, and manage more proactively, rather than reactively, is paramount. Here are best practices that will help you to successfully navigate your business through an economic downturn: Goals: The primary goal of any business owner is to survive the current economic downturn and to develop a leaner, more cost-effective and more efficient operation. The secondary goal is to grow the business even during this current economic downturn. Objectives: • Conserve cash. • Protect assets. • Reduce costs. • Improve efficiencies. • Grow customer base. Required Action: • Do not panic… History shows that economic downturns do not last forever. Remain calm and act in a rational manner as you refocus your attention on resizing your company to the current economic conditions.