While normally associated with large publicly-traded businesses, instituting a board of directors could significantly help your private or family-owned business achieve and maintain success. While “fiduciary boards” have a responsibility to protect and act on behalf of the shareholders for publicly-traded businesses, “advisory boards” evaluate business opportunities and provide non-binding advice to management for private-held businesses. Due to the informal role of an advisory board, your business’s management will still have the last call before a decision is made, which is why they are favored in small private businesses or startups.
For family-owned businesses, a board of directors may provide some fresh outside ideas to help the business expand. In addition to new business concepts, a board of directors could actually help keep your family-business “in the family,” by providing guidance on succession and longevity. To ease the fear of exposing family-business secrets, the attorneys at Rock Fusco & Connelly can help draft and implement non-disclosure agreements with the board members to ensure confidential information never leaves the boardroom.
If costs are a concern, it is important to note that implementing a board of directors may pay for itself. According to a Lodestone Global survey, 87% of privately-held companies saw increased revenue after forming a board and 82% saw increased earnings before interest, tax, depreciation and amortization. For a family-business, the board brings an impartial view and will help keep expenses under control.
Choosing a board of directors can build your business by bringing industry expertise, marketing and sales knowledge, and management proficiency to your private or family-owned business. For strategic and legal advice to maximize your business’s potential, contact Rock Fusco & Connelly.