It can be lonely at the top, but it does not have to be.
Starting and growing a company is challenging and many times the entrepreneur is faced with situations that have not been experienced in their professional life. Where does the owner go for help? Many entrepreneurs have found having an advisory board is the best solution.
An advisory board is just what it says it is. It gives advice. The members are there to listen, to understand your concerns and to talk through options that may help you move forward. The advisory board has no governance or fiduciary responsibility over the company’s operations. That is important because the members are not legally responsible for the actions the owner chooses to move forward. A board of directors has governance and fiduciary responsibility. The board of directors set policy and hold the management responsible for hitting the targets set.
Some thoughts about setting up and maximizing the gains from your advisory board.
There should be a specific purpose for setting up the board and a delineation of the results expected.
Many entrepreneurs find it difficult to be open and expose their internal operations to outsiders. This may be due to not wanting to talk about what you feel are your management shortcomings but most often the concerns are focused on protecting intellectual property and not to give competitors any information that can diminish your success. You certainly will not recruit people that have any desire to do damage to you or your company. It is rare that the people you invite to the board will not sign a non-compete/non-disclosure agreement.
Define very clearly what you are looking for in relation to talents and expertise.
It is probably best not to include family or your network of friends on the board. Their personal attachment to you might make it difficult for them to be totally open and critical of courses of action you plan to take.
There are many sources to recruit board members. You have the economic development groups in our area including SCORE, Small Business Development Center, Service groups like Rotary and the chamber of commerce. Your banker, accountant and lawyer should be able to suggest strong candidates. Meet with potential members to satisfy yourself that they fit and have what you are looking for when it comes to skills.
Keep the board small (three to five members). The value of your board is determined by the commitment and skills of the members, not by size
Compensation of the board members must be considered. Most small business advisory board members get paid a fee. They are people willing to give back, they have been helped along the way and money is not the issue. You can find ways to show gratitude for their support
Board membership should not be a long-term commitment. As you and your company grow, different needs will be identified. Thank those that have played their part and make changes.
Some suggested ground rules for maximizing the effectiveness of your board.
Respect and minimize the time commitment of board members. Prior to meetings share data and topics so the group comes prepared to contribute.
Have a meeting agenda that is specific. In some cases, it may help to set time allocated to each subject.
Keep the meetings on track.
Listen and respond to what the board members say. I remember when I had my first advisory board, “I don’t want to be there if you’re not going to listen and make use of my suggestions.” Follow-up notes of results also show appreciation for their help.
There are times when meeting with individual board members is appropriate.
Don’t hesitate to have key staff members be involved with the board. What a wonderful learning experience for all.
There are times you feel alone and want answers. Advisory boards do work. You are still the one running your company and responsible for the results. There is tremendous talent that can be tapped in our community. Why not make use of it.
SCORE is here to help. Richard.firstname.lastname@example.org or 218-251-4413.