When raising funds it always comes down to the people in the business, one way or another.

It makes good business sense and can make a big difference to your ability to raise funds if you have a strong board of advisors and/or directors.

Also, it is always advantageous to have at least one “signature director” whose background, career and reputation is well known and who can both provide advice and counsel as well as help you attract other first class directors. Signature directors are very hard to find, usually expensive but invaluable to the make-up of an outside board.

What makes a great board member?

A board member’s success is determined not only by his/her business skills and experience, but by their personality traits, or character. In the book “Welcome to the Board,” Jossey-Bass Inc. Publishers] author Fisher Howe identifies several characteristics of successful, happy board members:

  • They are honest.
  • They are enthusiastic.
  • They keep an open mind.
  • They are team players.
  • They tackle complex problems with relish.
  • They take an orderly approach to decision making.
  • They are competent.
  • They have a sense of humor.

Personality traits in “problem” board members may include:

  • Obsession with a single issue.
  • Always taking the “contrarian” view–just for show.
  • Expounding on strongly held opinions that are rarely backed up by fact or research.
  • “Board hopping” – or sitting on many boards, but serving none well.

Tips on putting together a board of directors:

Create a board that complements existing management: Look for people who bring new areas of expertise to your company. For example, if you own a small technology company but don’t have any marketing background, search for board members who can provide the marketing experience you need.

Chart your management needs: Create a chart to determine the kind of talent needed to move your company ahead. List the skills your management possesses. You can then make a list of the skills sets you need to acquire and the people who possess those skills.

Use your network of colleagues and friends: A well-rounded board of directors can be formed from your former schoolmates, vendors, professional service providers and social acquaintances. Make a list of candidates from this field and then vigorously scrutinise the list to ensure you are choosing the right talent for your company, not just people you like.

Keep board size manageable: The smaller your board, the more efficiently it is likely to operate. Unlike large companies that recruit high-profile board members to enhance corporate image, the board of a small company is usually a working board.

The exception to this rule is if your small company is going public and needs a larger board to guide you through the process.

Look for people who know how to raise capital: Even if your company does not need to raise capital now, it most likely will at some stage. Board members who have a strong financial background and knowledge of how to raise money are always an asset.

With regard to the ethical issues involved in selecting board members or in dealing with directors, the simplest rule is to do your homework.

Above all spend as much time selecting these people as you would a Senior executive in your company. With a strong Board of Directors you will get to where you are going faster and with fewer bumps so spend the time.