Every business needs a sounding board and a set of experienced mentors. The most successful companies are run by individuals who acknowledge what they don’t know and seek the counsel of others. Gaining outside perspective on issues can help a business owner make grounded, forward-thinking decisions.
In many companies, that counsel is provided by a fully functioning board of directors, as dictated by the company’s bylaws. But if your company doesn’t require or desire an official board of directors structure, an advisory board can be an advantageous alternative. An advisory board can hold owners accountable for goals and provide insight on a variety of matters, and it can help fill a knowledge gap in a business.
Business owners often are caught up in their own worlds, dealing with the issues of the day. Unfortunately, all too often the bigger, more strategic issues are relegated to the bottom of the list either because of time or expertise. If used properly, an advisory board can provide quality, independent counsel on strategic initiatives as well as a forum for accountability in accomplishing tasks.
In addition, an advisory board can supplement internal skill sets, assist in resolving owner conflicts, and provide credibility to the business in the eyes of outside stakeholders like banks and bonding companies.
A board can help set the mission and strategic direction of a company, but its work goes beyond that. A board can assist owners in setting financial strategies and planning for succession, which may involve everything from identifying talent to transitioning a company, targeting investors, and executing a sale. Also, a board can offer ideas for managing risk.
Finding the right members for an advisory board is often the hardest part. Typically, the best ones have entrepreneurial experience and strategic-thinking capabilities, which are qualities often found in business owners. These people have lived the decisions that the owner is confronting. A board member may even have worked in the same industry. Both perspectives are valuable.
Choose members who fill a need. Be sure they have an interest in the process and care about the success of your business. A board should include a combination of members from inside and outside the organization. Networking is the best way to identify capable candidates for an advisory board. Let people know that you are looking for board members, but be specific as to the qualities desired in a candidate. In particular, talk to your accountant, attorney, banker, and other professional associates for suggestions. These people know your business the best.
Once your advisory board members are in place, be committed to the process. Schedule regular meetings and be sensitive to members’ time demands. Also, prepare for meetings and create a meaningful agenda. Distribute timely information to board members in advance so they can read and study it. Have the courage to replace non-performing board members. And most importantly, keep an open mind at all times. Those who gain the most knowledge from a board realize that the insight members bring to the table is for their benefit.
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