As we ramp up for The Private Company Governance Summit 2026, which will take place June 10-12 in Washington, D.C., we are speaking to our panelists to get a bit of insight on the topics they will be discussing at the event. Today, we speak with Teri Quimby, director of Marketocracy Masters, about the subject matter of “From Scratch to Strategy: Launching Your First Board,” the pre-conference session she will be participating in at PCGS 2026.
Private Company Director: What would you say are the common pitfalls for private companies starting their first board and what do you think could be done to avoid them?
Quimby: Private companies that build strong first boards send a clear signal of credibility and legitimacy to investors, lenders, vendors, employees, customers, regulators and other stakeholders. The message is simple: The business is serious about governance and long-term value creation. A well-constructed board can provide expert advice, risk and compliance oversight, guidance for growth and scaling, better strategic decision-making and implementation, and disciplined succession planning … if it is built on a solid governance foundation.
Pitfall 1: Skipping Governance Basics and Clarity of Purpose
Successful leaders tend to share a common habit. They know governance basics well and apply them consistently and often. For a first board, that means:
- Defining the board’s purpose, authority, responsibilities and framework in a written charter.
- Establishing a cadence of meetings, with agendas and minutes that document oversight of strategy, risk and performance.
- Clarifying the division of authority between board and management, how information will flow and how decisions will be made.
These basics increase effectiveness, reduce confusion, support better decision-making and oversight, and align board actions with the company’s mission and strategic direction. They provide a stable foundation as the company grows or becomes more complex.
A frequent mistake is forming a board simply because investors, lenders or family members insist on it, without answering the core question: “Why now, and for what purpose?” Without this clarity, it’s possible for meetings to drift, frustrations to mount and stakeholders to see the board as not adding value. Before reaching this point, a determination must be made as to what type of board is needed.
The two main options are fiduciary and advisory boards. A fiduciary board governs with authority, makes binding decisions and imposes fiduciary duties on directors. An advisory board offers nonbinding guidance, does not govern with authority or votes and does not carry fiduciary duties.
In either case, a written board charter at the outset is table stakes. It documents processes and procedures, clarifies roles and expectations, and provides an outline for demonstrating oversight and fulfillment of fiduciary duties. For advisory boards, a charter also helps prevent “mission creep” into fiduciary responsibilities. Regularly revisiting the charter keeps expectations aligned and concentrates everyone’s efforts on the company’s long-term interests.
Other formal governance documents also require attention. In addition to state corporation law authorizations and prohibitions, articles of incorporation and bylaws add necessary layers of formal governance. Beware of creating voting obstacles in bylaws with unanimity requirements. While majority and supermajority votes may be appropriate for significant matters, unanimity is uncommon and can cause standstills on critical decisions.
Pitfall 2: Filling Seats Only with “People We Know”
For a first board, it is tempting to appoint long-time advisors, trusted friends or several directors from the same industry because they are familiar. While trust and at least one director with deep industry experience are important, overreliance on known quantities creates capability gaps and blind spots.
A practical alternative is to use a simple board skills matrix that lists the capabilities the company will need over the next few years, such as industry knowledge, financial acumen, operational expertise, talent and succession experience, regulatory or compliance insight and customer perspective. This tool can then be used to assess current and prospective directors against those needs. It encourages diversity of skills and backgrounds, prompts consideration of candidates from other industries with complementary experience, and keeps the focus on what the corporation needs rather than who is most familiar to the founders. For family companies, it may mean looking outside the family and the business to obtain the talent the board requires.
Pitfall 3: Blurred Lines Between Board and Management
Setting boundaries can be difficult for first boards, especially when directors are unsure when to advise and when to decide. Founders or CEOs may pull directors into operations or, conversely, keep them at arm’s length. The familiar rule of “noses in, fingers out” captures the concept of oversight versus day‑to‑day management, but the line is rarely obvious in a young or private company.
Sound governance documents serve as guardrails, and clarity is essential. Clear role descriptions for the board, the chair, the CEO and key committees are needed. Everyone should understand which actions require board approval and which are appropriately delegated to management. This reduces friction, increases effectiveness and efficiency, positions directors to challenge constructively without micromanaging, and helps management know when and how to seek feedback from the board.
Pitfall 4: Weak Information and Inadequate Board Packs
Even thoughtful directors cannot meet their duties if information arrives late, is incomplete or is overly filtered. In many first boards, meeting calendars shift, board packs appear at the last minute or materials are overloaded with operational detail but light on risk, strategy execution and forward-looking indicators.
Addressing this, again, starts with the basics, which includes setting an annual board calendar, locking in meeting dates, and agreeing on deadlines and standards for board materials. Agendas and minutes should clearly reflect oversight of strategy, risk and performance, keeping fiduciary duties in mind. Board packs should be designed to drive discussion, not simply report activity. Some boards also schedule interim updates on key risk or strategic topics between meetings so directors are not surprised and can respond quickly when conditions change; these reports provide information in closer to real time.
Directors should be asking questions such as:
- How do we know this?
- What messy information is missing from the board pack, slides or reports?
- What information is needed to drive a more effective discussion?
The difference between a first board that disappoints and one that accelerates the company’s growth often comes down to mastery of fundamentals: clarity of purpose, thoughtful composition, well-defined roles and disciplined governance practices followed every time. When these basics are in place, a private company’s first board becomes more than a box‑checking exercise. It becomes a strategic asset that compounds value over years.
To hear more from Teri Quimby, register today for The Private Company Governance Summit 2026.