Finding directors for smaller and early-stage company: don't be shy in your recruiting efforts. This can be a fun and educational experience.

• Author: Cagan, Dennis
• Position: DIRECTOR RECRUITMENT

THERE ARE AN ABUNDANCE Of issues around forming a board: the risks and benefits, how to form it, and what to do with it after it's formed. However, perhaps the most important consideration ultimately is who the actual directors will be and what value they add to your business.

Of course, the who must encompass their individual and collective core skills, experience, what they know and how they communicate it -- and your bottom line. Perhaps one of the least appreciated skills needed by directors is how they communicate and work as a team. A room full of high-powered, big-name, big-ego CEOs, venture capitalists, retired businessmen, or private equity folks are not going to provide one bit of value-added advice if they cannot relate to your company management and ownership and communicate with others effectively. Personalities are good; everyone should have one. But on a board they need to be held in check so as to allow each person to give their best advice, in the most constructive way, and not go overboard in either being too agreeable for the sake of perceived unanimity or stubborn obstruction when they are not in the majority.

You might be thinking, "That's all great, but I don't even know anyone who has ever been on a board, or anyone who has a notable reputation. Where am I going to ever find someone qualified, and then convince them to serve?"

Identifying your prospects

One thing to keep in mind is that we all probably know other smart, experienced folks. There are few set requirements for a director. In starting out it is all about getting the best possible people you can recruit. There are two key objectives for board composition at a private or early-stage company. The board's primary job is to give management good advice, surfacing all the pertinent issues for your consideration and open discussion, and providing you with the benefit of their broader, and perhaps deeper, experience. The second job is to lend their name and credibility to the company, usually for purposes of building credibility with customers, vendors, employees and, of course, investors. It instills confidence in stakeholders and business partners to know that a company's ownership and leadership solicits and values the advice of outside professionals.

It's worth noting that directors are not elected for life. Over time you will meet new people who may be even more successful, experienced, and noteworthy. As your company grows there is nothing wrong with...