Build an effective board to address the tough questions

Business is a risky venture, a lot riskier than is necessary. A talented, effective board helps growth-oriented companies address risks and seize opportunities that may be invisible to the leadership team.

Steve Schlecht discovered the value of a talented board the hard way. Close to bankruptcy in his first entrepreneurial endeavor, he built Gempler's into a $30 million business on the remnants of his original business, in part by creating an independent, talented board.

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"Early on, I thought I had all the answers and could do it myself, but that approach didn't work. I decided I'd never let that happen to me again," Schlecht says in explaining why he created a board capable of running a much larger company than his own. In 2003, Schlecht sold Gempler's to Lab Safety Supply, the Janesville division of W.W. Grainger. Schlecht now owns Duluth Trading Co., a fast-growing Belleville catalog/Internet business offering work clothing and gear for people who work with their hands.

Schlecht's board excels because he's open-minded, which can be hard for CEOs. "When you build a business from scratch and you have majority control, there's a tendency to build fences around yourself. You want to keep the business the way you built it. It's hard to admit your vulnerabilities or to have board members work with your direct reports. But you need to," Schlecht advises.

Why do engaged, proactive boards ? those that pose questions you may not be able to immediately answer ? help companies achieve top-tier performance?

Talented board members make you smarter. Eric Apfelbach, CEO of Virent Energy Systems, has worked with boards in established and startup technology companies. "When I feel too close to an issue, I share what's on my mind, the pros and cons of the solution I'm considering, and then I ask my board to brainstorm. 'What am I missing? Do you see the situation the way I do?' My board removes my blinders."

Strong boards help you overcome what author Robert Quinn calls the "tyranny of the in-basket," a tendency to become so involved in day-to-day tactics you fail to address strategy.

"The board always brings you back to strategy, especially if you're in a crisis and have only been thinking tactically as managers," Apfelbach said.

Experienced board members also help you anticipate and navigate growth-related hurdles. "The board helped our company see what I call a company's life events, such as when it's time to bring in a CFO, when to start branding investments, and when to redefine strategy," Schlecht said.

"My board once advised that before we could talk about super-growth again, I had to get my balance sheet in order and build the systems and procedures that would drop more money to the bottom line."

If your existing board is not engaged, change the members or the dynamic. Replace cronies with forthright outsiders who have built companies that achieved your aspirations. Risk sharing your fears, concerns and unanswered questions with your board. If your business faces complex issues and does not have a board, create one. If you're running a startup, choose investors who will make the strongest board members.

"Great board members are the Mother Teresas of the business world. They just want to help you and your company grow," Apfelbach said. "How could you not want this support on your side?"