In last week’s Business leaders tip I discussed the concept of ‘Exploiting the Power of an Advisory Board in Your Business’. This week we take the next step of preparing yourself and assembling your Advisory Board in your small business.
Entrepreneurs and small and medium-sized business owners naturally have a lot of self-confidence, since starting your own business is an inherently adventurous and exciting proposition. Yet even the most self-assured business owners need a little help from their peers.
According to The Hartford 2015 Small Business Success Study, owners who feel their business is operating highly successfully say guidance from professional resources is a major contributor to their success.
The study also found that owners who feel less successful seem to be taking on the load and stress of running a small business more on their own.
If an entrepreneur or small business owner wants to keep control of his or her business yet still reap the benefits of professional advice, an advisory board is one way to get additional mentoring and expertise.
In the past most advisory board members, unlike corporate boards of directors, were typically volunteers, however, with time and resources being limited this is changing.
Unlike a board of directors, an advisory board is there to serve the entrepreneur without being concerned about investors in the business More and more business owners are considering the advisory board for their business and they also often serve on advisory boards for other businesses, sometimes in totally different industries or sectors.
For an advisory board to be effective, a business owner must recruit the right people. Here are some tips.
1. Identify Your Needs
The first thing you have to do is honestly assess your own skills and figure out where the knowledge and skill gaps are. Once you have done that, you need to figure out who might be able to fill in those gaps.
Most advisory boards are relatively small, with perhaps three to six people. As a suggestion, your advisory board has one advisor with expertise in every area where your business needs it, for example, one may advise on e-commerce, another provides legal or financial advice and a third maybe a retail distribution expert. The makeup of the board can and will shift over time as business needs change.
As an example, your company may be a wholesaler and you may have had an approach from an overseas company that wants to place a bulk order. This may be a totally new area for your business, and you may not be aware of the potential pitfalls of international distribution. So, you recruit someone to your advisory board with experience in that area.
Every business owner should decide and be clear on how they want to work with their advisory board. An advisory board will generally meet as a group on a bi-monthly or quarterly basis, however, the business owner may meet between these group meetings individually with the advisors on their board to discuss specific challenges in their business.
Essentially, while there’s no right or wrong way to work with an advisory board, it is important not to waste any board member’s valuable time. Be clear on your goals.
2. Selecting an advisory board
Selecting advisory board members is a very important task - and a number of questions emerge from the process. Perhaps the three key questions are:
1. “Why am I doing this”?
2. “What input do I need”?
3. “How can this person supplement/complement our existing skills”?
In addition to specific business development issues, there may be family or staff development issues to address.
Essentially there is no single answer; each owner/director has to consider the particular needs of the business at that time. Specific considerations may include:
• Independent thought: Where can I source the best advice from someone that understands my business and the environment I operate in?
o Will members of the extended family, such as a spouse or older children offer a new perspective, or will I need to look externally?
o What if they work in the business? What about other senior staff?
o What skill gaps require filling, such as strategy, human resources, marketing, legal, technology, operations and finance?
• Value congruence, or culture fit: A shared commitment to the development of the business and your own personal development. This implies a level of trust and respect beyond ordinary business relationships.
• Wisdom and courage: Advisory board members should be people you respect as much for their personal qualities as for any technical competence they may offer. Advisory board members need to “say it as it is” and feel comfortable in the event that the owner may reject the advice in pursuit of their own business agenda.
Next week... Scenarios for when a small or medium business need an advisory board
