Insight from Outsiders

Why advisory boards are a smart move for small businesses.

A great way to develop deep relationships with local professionals while also gaining expert counsel on your small business is by enlisting an advisory board.

Advisory boards differ from director boards, which are administrative in nature. Advisers are just that—they serve as business mentors and have no liability or financial interest in the company, so they are free to provide candid, expert advice. This allows business owners to focus on day-to-day operations while the advisory board crafts a strategic vision for the company.

One common misconception is that advisory boards only have a place in larger companies. But small business owners often require more third-party counsel on business operations and ongoing validation of company decisions than the CEO of a larger company, who has layers of qualified employees to turn to.

Regularly consulting with a team of professionals who are familiar with the economic environment, such as those with banking, accounting, law and marketing backgrounds, increases your likelihood of sustainability and long-term success.

Outline Needs

Start with a list of areas where you have ongoing questions and concerns or where you would like to improve your business. For example, one key benefit that can be gained from this process is strengthened financial performance. Having the right team on board will help you navigate issues such as budgeting, making strategic business decisions, timing of capital improvements, getting the best return on your investment, preparing taxes and annual business planning. Get as specific as possible to ensure that the effort is well worth it.

Make It an Easy Sell

Before you even begin prospecting for advisers, figure out what you are willing and comfortable offering to make it worth their time. While some may be willing to do it out of respect for you, most professionals are busy people, and even small gestures make it justifiable for them to commit. Some examples of this could be trading services, donating money or company time to their favorite charity, or offering to sit on their business advisory board.

Outline Prospects

If you don’t already have candidates in mind, talk to other small business owners who have advisory boards or ask your personal and professional contacts who serve on advisory boards to outline the ideal group for your business. You will likely end up with referrals or opportunities to meet with people. Be direct about what you want to accomplish, what’s expected of them and what you can offer in return for their valuable time. Limit the group to three to five people to start, since you can always add to the group at a later time.

Develop a Regular Schedule

Once you’ve solidified commitments from your advisory members, schedule a meeting in a social setting for introductions. The members can get to know each other and learn more about your businesses opportunities and challenges. You also can discuss and decide on a regular meeting schedule that would be appropriate and convenient. Consider alternatives to after-hours meetings, such as gathering over breakfast, coffee or a working lunch, when minds are more refreshed.

Getting Started

Don’t let too much time pass between introductions and the first meeting so the group doesn’t lose momentum. It’s good practice to cover immediate or timely questions at the first few meetings and then move on to long-term and emerging questions for future meetings. Send the agenda to advisory members at least one day in advance so they will be prepared for discussion. Working from an agenda also helps keep the meeting focused and ensures the members that it will be a productive use of their time.

You Are in Charge

Don’t lose sight of the fact that this is your board. You own the responsibilities of organizing, assembling and running the meetings, but you also have the flexibility to digest and act upon feedback at your own pace. If you reach a point where the board is not working for you, explore ways to shift the focus or substitute members. Finally, be respectful of the members’ volunteerism. A certain level of counseling outside of regular meetings may be appropriate, but try to keep issues reserved for meeting times.

Once your board is active, you will be on a positive trajectory toward future success and informed opportunity.