If you’re like me – a small business owner with minimal staff – no doubt there are times when you wish you had someone to bounce an idea off of or help you through a difficult decision. If this is the case, you could benefit by forming an advisory board.
Let me suggest several benefits that derive from meeting regularly with a group of individuals for the purpose of obtaining advice:
- Unbiased perspective. Often the small business owner can't see the forest for the trees; they are too caught up in the day-to-day operations of their company. Given the proper information, a good advisory board can often see things that the businessperson can't or doesn't want to see.
- Experience pool. If members are selected wisely, you will have a collective experience that surpasses your own. Oftentimes, though their industry may be different, they will have ‘been there, done that’ and be able to offer insight how you might handle a problem or tough decision. I call this benefit wisdom.
- Encouragement and support. It is likely your board members will be serving because they value your relationship and desire your success. Just showing up – not to mention the advice they give, can be a tremendous encouragement. Depending on your board, it may not be unusual to get a call during the quarter, checking in on you and offering helpful comments or other suggestions.
- Accountability. I'm a firm believer in accountability - it is, perhaps, the number one reason I’ve had an advisory board (in one form or another) for over twenty-five years. Being accountable to someone other than myself affects the decisions I make and the actions I take. It helps keep me honest, in check and on track. And for most small business owners, this is critical.
Who should serve? At one point, needing advice for selecting 1-2 new individuals to serve on my board, I asked one long-standing member (who also had an advisory board) what criteria I should use in selecting candidates. Here are some of the highlights of that discussion – along with a few things I've learned over 20 years:
- If they are business owners, their company should be larger or more profitable than yours
- Avoid lawyers, accountants and bankers - you already have relationships with these people and can obtain the information you need when you need it
- They should represent a cross-section of general industry – not just yours
- They should possess expertise in areas that you are deficient in
- They should be willing to serve for less than what their time is worth
- They should have a sincere interest in seeing your company succeed
Notice I've said they should be paid. For sure, the financial pressures of small business are huge, but when weighed against the wealth of information and experience to be had from an advisory board, the cost is minimal. What is the right amount? That is between you and your potential candidates, but the compensation should reflect the value you place on their time, given your means.
When should you meet? I recommend quarterly, because it is often enough for your members to stay in tune with your business and its unique challenges. Not only that, in most small companies there are always issues to be addressed and if you only meet once or twice a year, it is difficult to get the help you need when you need it.
What should you look for and where do you find these people? Although every company is different, there are key areas common to most: finance, marketing/sales, operations, HR, and systems/management. I suggest that you build a board that, at least collectively, will provide the needed expertise in these and other critical fields.
I found the best way to build a board is through the relationships in the marketplace I already have. For a new start-up, however, the owner might ask other, more established owners or solicit names through the local chamber of commerce or an industry association.
There’s a proverb that says, “plans fail for lack of counsel, but with many advisers they succeed.” I believe an advisory board is just what the small businessperson needs to help ensure their corporate success.