Family Businesses Need Active Boards

In a multi-generational family business, outside board members can bring tremendous value and help relatives shape their business strategy.

As a consultant to business families, I’m often asked, “Do you really need a board of directors?” My answer is always “Yes and no.”

Corporations are legally required to have a board of directors. But many entrepreneurial companies have a board meeting once a year to satisfy the legal requirements. Essentially, those boards are inactive. So, yes there’s a board, but no, it isn’t made useful.

In fact, for entrepreneurs in family businesses, the idea of a board of directors is often seen as unnecessary or even onerous. When the entrepreneur is “doing everything,” the BOD just gets in the way. Even if a board might add value, it seems like an extra burden or waste of time. Here again, the BOD is not allowed to be useful.

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