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Presenting to the Board: Best Practices on What to Share, When, and How

Kristen Craft | June 11, 2018

This guest post comes to us from Jon Medeiros, Director of Finance and Operations at Ovia Health. Jon is also a father, husband, listener, reader, and occasionally a writer. You can find him on LinkedIn and Twitter for random thoughts about work, life, and finance.

In my first guest post with Tettra two months ago, I wrote about transparency in early-stage companies. As I mentioned, being in finance at a startup is unique: you’re generally one of only a few individuals with such breadth of knowledge about the company, ranging from minute financial details to the capitalization table. And in making the decision about how much transparency is needed in a given situation, I offered three considerations: knowing your audience; being truthful but tailoring your message; and preparing for more questions. Let’s dive into greater detail about transparency, as it pertains to board meetings.

Prior to joining a startup, I spent nearly five years at an enormous company (40,000+ people) and had a better chance of walking on the moon than being in a board meeting. You can imagine the culture shock then, of not only sitting in on a meeting, but preparing and presenting materials, within two months of joining Ovia Health. My only board involvement prior to that point was being a volunteer board member and treasurer of a non-profit for a few years. A great experience to be sure, but it was nothing like being on the inside of an early stage company in that setting.

Since joining Ovia two years ago I’ve prepared materials for and presented at roughly 20 board calls and/or live meetings. Even though I still have much to learn, what follows are my personal insights around board meetings and transparency at a startup.

Frequency

The CEO/CFO of a company should provide regular business updates to the board, at least on a monthly basis, with more in-depth strategy discussions less frequently (e.g. quarterly). The prevailing wisdom here is that if you’re only getting together once a quarter for a few hours, you could find yourself getting knee deep into tactics and business updates, rather than spending ample time on strategy. It nearly goes without saying, but good board members can bring a tremendous amount of knowledge and experience to the table. The management team should leverage this as frequently as possible and even have the occasional “ad hoc” meeting or phone call when big decisions come up that require some guidance. A strong meeting rhythm can go a long way.

Level of detail

The rule of thumb I try to follow is to provide information at a fairly high level, but with enough detail that board members have a solid picture of business performance without being too far in the weeds. A simple example of this might be showing a quarterly trend of total operating expenses, rather than the monthly department-level detail that might be too granular for the presentation. If certain members want more information, you could always send detailed financials prior to the meeting. This will allow for time to read through the details and arrive at the meeting with questions already in hand. Also, there should be ample time spent on higher level strategic issues – think fundraising, hiring plans and key executives needed, or new product strategy. Lastly, it usually makes sense to kick off the meeting with “standard” board procedures like approving new option grants and minutes from the last board meeting.

Metrics that matter

There is certainly an endless number of metrics that could be used in a board deck. Every company is different, but some good metrics and trends to focus on are closed deals (bookings / annual recurring revenue or ARR), recognized revenue (on a GAAP basis), expenses (on a GAAP basis), cash flow (in my opinion, of the utmost importance), cash “runway” (if burning cash), and other metrics more specific to your marketing, sales, customer success, and operational efforts. Focus on the leading indicators, or the metrics that when analyzed by the management team and board, will provide some predictability around future results. At Ovia Health, we spend a lot of time on late-stage pipeline, bookings, revenue, and cash metrics, as those tend to be most critical at the post-Series A growth stage we’ve been in for the last 18-24 months. As we mature, we will likely spend more time on metrics around profitability and operating efficiency (e.g. EBITDA margin and customer acquisition cost, or CAC, payback).

Presenting the data

Just as there are endless metrics, there are many different ways to present information to the board. For example, you might want to spend time discussing results vs. your budget, results vs. prior year or prior quarter, and future projections to give the board a sense of what’s to come. It may seem obvious but having a well-thought-out annual budget in place will allow for more effective presentation and analysis with your management team and board. Also, using visuals can be an effective way to show trends in your business. At Ovia, we have slides that show charts of bookings and revenue vs. budget on a quarterly basis and another slide that shows the last six quarters of revenue with stacked bars for the different business lines we have. And beyond the financial review, when we do regular business updates it’s useful to show a pipeline “funnel” with some trends around overall pipeline growth and sales stage conversions.

Gather feedback

As with almost anything, I believe it makes sense to ask for feedback around what’s working and what’s not working in your board meetings. Hold some conversations with individual board members to get a sense of whether they’re receiving the information that’s critical for them to be effective in their role. It can be easy to get caught up in “rolling the deck forward” without re-visiting the why of each slide that’s in there. Looking back at the 15+ presentations I’ve helped pull together over the past couple years, it’s amazing to see how much they’ve evolved as the company has grown. What was once a not very pretty deck, with rather pedestrian financial and business update slides, has now become a beautiful work of art that I take great pride in.

The cadence of board updates is a critical part of an early stage company’s operating rhythm. Keep in mind that many of the above insights are likely tailored to earlier stages, which is what I’ve been involved in (think Seed stage or Series A companies, maybe Series B). As companies grow to larger funding rounds (Series B or C and beyond) and higher revenue ($50 million to $100 million and beyond), one can expect a much greater sophistication and rigor around board updates. The frequency may be similar, but the level of detail could vary, and the metrics that matter will most certainly change (e.g. more emphasis on profitability and efficiency metrics).

One final piece of advice is for startup leaders to leverage their networks and always ask board members or investors for advice as the company matures. Find out how other companies are presenting to the board, what metrics they’re measuring on a regular basis, and what key strategic questions they’re asking of board members during meetings. Establishing strong board rhythm and transparency isn’t rocket science, but it’s also not something that should be a painful, just-going-through-the-motions exercise. Ensuring that your board gets the information they need to contribute to you and your organization can be quite valuable for early-stage companies.