We often find that many SME owners don’t see the value of holding regular board meetings. When we ask business owners how often they hold a board meeting, a large percentage answer “once a year” or “very infrequently”. Often they mistakenly believe that they are purely a formality. Rather than a valuable way of managing their business and defining actions.
What is a board meeting and what it is not ….
A board meeting is a meeting of the directors. This is different from a general meeting, which is a meeting of the members (shareholders). In many SMEs the directors are the only shareholders which can confuse the picture. But the form and function of the two meetings are quite different.
The conduct of a board meeting is almost entirely unregulated by the Companies Act (unlike general meetings). But there is a statutory provision which requires minutes of board meetings to be kept (keep an eye out for our upcoming blog on this).
In all businesses there will be a need for operationally focused meetings to take place. But these are management meetings rather than board meetings. To understand more about the differences between management meetings and board meetings, see our previous article: What is the role of the board of directors?
Our next article will focus on Board agendas. For example; what you should be talking about and how it should be structured so keep an eye out for that too!
So how often should you hold a board meeting?
Our view is that you should hold a board meeting every month – for three main reasons:
1.Financial Control and Discipline
A monthly board meeting enables you to review the previous month’s financial performance and the position of the business against your budget and forecast. And to take any actions required.
A monthly board meeting is a great mental deadline for making sure that important things happen including:
- P&L, Balance sheets, and cashflows being produced in time for the meeting
- People taking the time to read and consider them before the meeting
- Actions getting agreed at the meeting
- Actions getting followed up after the meeting and before the meeting afterwards.
Holding board meetings monthly sets the pace for running your business. One of the key outputs of your Board meetings should be decisions about what should be done and agreed actions to make it happen. And actions always need timely monitoring and follow up.
A monthly cadence means that the board is on top of the business financials, KPIs and is following up actions properly. Waiting for six months until another board meeting to hold yourself to account for agreed actions is never a good recipe for business.
3.Scheduled time to work on your business
As your business grows or faces challenges it becomes more and more important to take time to think clearly, strategically and long term about your business. It’s all too easy to get buried in the day-to-day and lose sight of making sure that the business is working for you (and not just you working for the business). A monthly Board meeting – especially if you have some external perspective invited to it – is an unbeatable way of scheduling the time to make it actually happen.
And remember, you can hold a board meeting anywhere and it doesn’t need to take all day. If you have offices with a meeting room that’s fine but meetings can take place at home or any external venue where you can have some privacy (even the local pub!).
Where do I start?
Invite us to your board meeting! We’ll give you an external perspective on how well it’s working and how it might be improved to make your life easier and your business stronger. If you’re not running board meetings, book a Free Business Help Session to explore how they might be made to work for you.