Many small businesses do not actually need a board of directors. You need to think about areas where you may need a board of directors. If you need someone with specialized skills to oversee aspects like management, you may consider hiring a board of directors.
Exactly what will the role of the board of directors be? How will they function? How will tasks be executed, and who takes the final decision? These are the questions you need to ponder before you select a board of directors.
In order to avoid losses in business or fraud, your board of directors needs to be accountable. They have to implement the ideas discussed and execute tasks assigned to them. Without accountability of the board, your business will suffer not just financial loss but possibly even loss of reputation.
The board of directors should have people from diverse backgrounds. This lessens the tendency for groupism and increases the chances of the right decisions being implemented. Moreover, having people from varied backgrounds on board is an effective way of getting new ideas.
Kind of Board
What kind of board do you need? You could have a large board only if your business is large or you plan to expand. Mostly, small businesses need just an advisory council, where the directors will offer advice but not take decisions.
You need to fix a term for which each director will serve on the board. Setting a term for the board avoids stagnation, and you will get new ideas from new members.