Corporate Boards
Assembling the right board is one of the entrepreneur's most important tasks. For relatively little (stock or options) your company can recruit a board with the inside scoop and "been-there, done that" expertise in your industry. Make sure to draft rules that govern the board, and declare a membership term that allows you to bring new voices to the group in an orderly fashion. Broadly defined, there are two types of boards:
Board of Directors
The board of directors has fiduciary (legal) responsibility to the shareholders of the company to help steer the company. It oversees how the company invests its resources, sets goals and measures performance. Also, the members of the board of directors are usually paid a retainer or options and are required to attend meetings.
Board of Advisors
A board of advisors, also called a council or a group to avoid confusion, does not have fiduciary responsibility to the owners of the company. It is an outside group that helps the entrepreneur think through problems and provides suggestions, contacts or new leads. The advisors may or may not be paid, but share some mutual interest with the founders or managers of the company.
