Board Members Can Be Key Salespersons
Many smaller Øresund firms have the product, but not the personnel, investors seek. Start-ups and smaller firms understandably focus on developing their product rather than their company.
by Lawrence B. Landman
When the time comes to sell their product companies often need outside financing—if not initially then certainly when they seek to expand. Yet investors will often see that the firm is too small, not sufficiently developed, and will decline to invest in the company.
Instead of saying to such companies: “Go away and come back when you are bigger,” Angel Strategies says to companies with interesting products: “Lets work together to develop a company we can invest in.” It will then work with the company to develop its corporate infrastructure, including retaining appropriate personnel.
It advises companies to develop not only their management, but also their board of directors and scientific advisory board.
Many companies, we believe, do not properly develop their board of directors and scientific advisory board. Technical specialists should serve only on the Scientific Advisory Board. That, after all, is why the Scientific Advisory Board exists.
The Board of Directors’ focus should be sales. Board members should sell. Management should select for the board, not strategic geniuses, but people who will sell its product.
If someone agrees to serve on the board, he or she should believe in the product. He or she must also have industry knowledge and contacts. And if the board member believes in the product, and has industry knowledge and contacts, then why shouldn’t he or she sell the product?
As the company begins to enter the market, a company must generate revenue. A company needs money to:
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Pay for sales personnel and expansion.
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Finance product development.
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Prove to investors that the product will sell.
What more important task could a board member perform for a cash-strapped company than help it finance its most crucial activities?
Generating sales would also help board members perform their more traditional role of overseeing the company’s development. How better to understand the market’s reaction to a product than trying to sell it?
When a smaller company chooses someone for the board, it should agree to a sales quota with that person. And it should have an incentive program, such as an employee stock option plan, to give the board members the proper incentive to sell.
Turn board members into perhaps the company’s most important salespersons. Incentivize the board. Generate revenue. Show investors the product will sell. And at the same time learn about the product and market. Board members who sell provide many benefits.