GOT AN idea? Tick. Picked a company name? Tick.

Registered at Companies House? Tick. Listed your company directors? Er… Where do you start? Choosing the right board of directors for your business is actually one of the most difficult – and most important – things you need to do when launching your company.

Business owners often simply list people as directors to tick a box at Companies House without thinking it through, and many don’t have board meetings and, if they do, don’t always minute the discussions other than those that are fiduciary in nature and required by law.

But a strong board of directors is crucial for a business if it is to thrive as a stable, growing concern. It takes more than popping your husband or wife’s name on the form as Company Secretary or ascribing Sales Director status to a friend who offered to make a few calls for you.

Trust is clearly important, which is why many small business owners bring family and friends on to the board, but what is more important is relevant experience, passion, determination and a shared vision for the company.

Tanya Castell, CEO of Changing the Chemistry, she says a board of directors brings different perspectives and experiences, allowing business owners to benefit from those who have had relevant experiences and have seen what can go wrong in similar situations. The world continues to become more complex and therefore it is very difficult for a business owner to have all the knowledge and experience he/she needs to cover all aspects of running a business and hence directors can provide invaluable advice and knowledge.

And Castell insists it is as important for SMEs as large corporates to focus on board governance and resilience.

“Whilst an SME may be less complicated than a large corporate,” she says, “they are potentially less likely to have all the experiences and knowledge required. Even if they do have all the knowledge, each board member will bring their own experience and lessons learnt, which can avoid others facing the same pitfalls.”

Diversity is important, but there are other factors business owners should also consider when building their board.

Changing the Chemistry promotes diversity of thought around the boardroom table – this means not only diversity of identity (who we are – gender, ethnicity, etc) but also cognitive (how we think – analytical, big picture, etc) and experiential (what we have done and lived through, ie, skills and experience). “It may be that a business owner is also interested in board members who can help with business development and therefore will be focused on the connections and network that a director can bring,” says Castell.

Castell suggest boards should consider when they last did a skills assessment of what they have around the table and what they need for their organisation at that point in time, as it will vary depending on the stage of evolution of the business. “Boards should also not duck considering how effective they are and have the difficult discussions with directors who are not performing or engaging adequately,” she says. “Having an open culture that is willing to talk about such matters is important to ensuring the right discussions happen around business issues and that differences of views are heard.”