Being a director brings substantial responsibilities and risks. Before agreeing to take on a directorship, it’s crucial to understand your personal strengths and weaknesses. This understanding is vital as directors often need to rely on others in areas where they may not be experts. You should consider what you can bring to the board.
Here are some key questions you need to answer before accepting the position:
- What is the company’s core business?
- Are you interested in the company’s industry?
- Visit the company’s facilities, if possible.
- Does the company’s work align with your personal values?
- What’s the company’s future outlook?
- What contribution can you make to the company’s future?
- How might industry innovations impact the business?
- What’s your personal risk appetite?
- Are you looking at the company with a short-term or long-term perspective?
- Who are the other board members?
- What’s the risk tolerance of the business and other board members?
- What’s the business and its board members’ reputation?
- Do you respect the other board members?
- What’s the board’s influence over the business?
- Does the board function well as a team?
- How often are board meetings held, and what happens during these meetings?
- Are meeting minutes taken and shared among board members?
- Is there diversity on the board?
- Understand the company’s ownership structure.
- Who is the chairperson and what’s their leadership style?
- What’s the relationship between the chairperson and CEO?
- Analyse the company’s financial performance and balance sheet.
- How strong are the company’s cash flows, and does it rely on capital injections or further funding?
- How robust is the company’s forecasting, and how often is it reviewed?
- What will your roles and responsibilities be?
- How much time commitment is expected?
This list isn’t exhaustive but provides crucial considerations.
Once You’ve Accepted a Director Role
Once you become a director, you should treat it like a professional job. Participate in forums and discussions with other directors, attend educational courses, and read extensively.
Mentorship can be mutually beneficial, and you should look for opportunities both as a mentor and a mentee.
Remember, you’re part of a team working towards the betterment of the company. Focus on improving collective performance and bringing your unique experiences, knowledge, and compassion to the table.
Stay updated on future challenges and changes. As a director, you must help senior management handle unexpected events, like a pandemic, or macro changes like rising Environmental, Social, and Governance (ESG) issues.
Stay curious about the advancements in artificial intelligence (AI) as it could enhance your role as a director and other operational aspects of the business.
Don’t limit yourself to your area of expertise; instead, strive for a broader view and continuously expand your perspective.
The degree of your involvement as a director will be unique to each company and your personal circumstances. Regularly review your portfolio to ensure you can fulfill your responsibilities effectively.
Remember, the decision about capacity and commitment is solely yours.
Contact us today to learn how we can assist you on your entrepreneurial journey. To get in touch you can connect with us on (03) 8691 3111 or send us an email at hello@alliedlegal.com.au.
