In 1990, John Bachus and three executives of World Air-ways Inc. left their company and founded US Order, a startup with the concept that a phone could be used to do such things as check stock quotes, bank and purchase groceries. Bachus helped the firm grow to [dollar]50 million.
It might have been a home run, however, in those days US Order wrongly thought people would use phones rather than computers. It was the right idea with the wrong platform for that time. Bachus, now managing partner of New Atlantic Ventures, said in a recent Washington Post interview that he learned an important lesson: "If you are a hard-charging young company with blinders on, you need to have outside advisers to see the big picture."
Privately held or family-owned businesses are not bound by the sane rules as public companies and are therefore not required to have an independent board of directors. Nonetheless, independent directors with a successful busi-ness background can play an invaluable role by offering an outsider's perspective on a company's operations. The board can act as industry experts when needed, financial experts when internal or external auditing concerns arise and contacts to gain new customers or funding sources.
Importantly, businesses transitioning through various stages of development can alleviate growing pains by relying on individuals who have "been there and done that."
Independent directors can help in transitioning an en-trepreneur and owner from being.a doer to a manager and, ultimately, a leader. A main benefit is having an independ-ent voice to balance the sometimes myopic decision-mak-ing that can often plague privately held and family-owned businesses, especially as they deal with emotional overlays of personal relationships.
Running a privately held or family-owned business h&, been described many times as a lonely job. There is rarely time for reflection and long-range thinking in the daily events of the chief executive officer. These tasks or challenges have not been eliminated; they just may consume much of the CEO's time and do not get the required attention.
As the business grows, the need for information, dia-logue, knowledge-sharing, planning and delegation increases. An independent board can offer much-needed guidance and assistance in developing the company's short- and long-term strategies.
Though not beneficial for every privately held or family-owned business, there are various reasons why an independent board would...