But sometimes the prestige implied in the invitation can make even the savviest entrepreneur overlook the responsibility, stress and opportunity cost that accompany a board position. Before you order new business cards, take the time to carefully consider the opportunity.
There’s no doubt that sitting on a board of directors can be beneficial for any entrepreneur. Apart from the obvious financial benefits of gaining equity in a company (and possible compensation), board membership offers the rare chance to provide expertise and feedback, make a positive impact on a promising company and network with others in your industry or another field.
This all sounds wonderful, but you still need to do your homework to make sure this particular opportunity is a good fit for you right now.
1. Do your research. Before you jump headlong into a board position, do due diligence. Consider any possible legal troubles or patent infringements the corporation could face. Evaluate the company’s culture and history to ensure the firm is a good fit for your values. Round out your knowledge of the company and the board by reading press releases and reviewing corporate milestones to determine whether the business is growing and meeting its goals. Use directories such as the Forum for Corporate Directors and the Corporate Directors Forum to research members of the board so there aren’t any surprises.
2. Assess your strategic knowledge and expertise. According to Spencer Stuart, 50 percent of newly elected board members are retired individuals -- professionals with years of experience and valuable guidance to offer. If you’re still at the early stages of your career, you may have knowledge to share, consider whether you’re in a position to offer advice. Imagine how much more you could contribute in five or 10 years. Do you have a proven track record that will make other board members listen to your opinions? Remember, you’ll only be happy in this position if you feel that your input is valued and respected.
3. Request clear expectations. Often companies invite consultants and experts to become board members as a way of enticing them to donate their time for free. Be sure to ask for a clear outline of the board’s expectations before making a commitment. What does the chairman of the board need from you? How often will the board expect you to appear at meetings? It’s tempting to say yes and settle the details later, but this approach could cost you in the long run.
4. Evaluate your time constraints. The typical director on a corpoate board spends 28 days a year at meetings, according to McKinsey. Do you have that kind of time, and even if so, what would be you sacrificing to take a board seat? Would you struggle to attend meetings as you work to build your own company? If you can't block off a serious chunk of time on your calendar, you may end up feeling that board meetings are stressful, last-minute commitments to check off your to-do list.
When you’re invited to join a board -- especially as a young entrepreneur -- you may be tempted to say yes without considering what you’ll sacrifice. But if you don’t seriously evaluate the time commitment, your own experience and the board’s expectations, you might unintentionally sabotage the opportunity. No matter what decision you make, mull the offer over so you can make sure it’s a good fit for you and the company.