advantages of a small business advisory board
Companies limit their influence and success when they ignore crucial problems such as poor team cohesion, lack of focus, inadequate growth, and inconsistent performance.
The fastest growing companies sometimes achieve success by accident or good luck. The slow growing companies always do so out of neglect.
advantage: strength
An ideal small business advisory board will consist of a maximum of three outside members who have wide-ranging skills and experiences. Their expertise and experience can be leveraged in many different areas of a small business (up to $10 million in revenue) to provide accountability and guidance. The advisory board will bring to your company years of combined experiences, dealing with all types of relevant business situations and solutions. When the right mix of board members is selected, they can provide specific skills that a business owner and his or her management team may be lacking or underutilizing.
advantage: challenges
Entrepreneurs, ad-hoc partners, absentee investors, untrained managers, distracted owners are notorious for their overly optimistic philosophies toward their businesses. While optimism is certainly a trait that can help keep a team motivated, the right advisory board can challenge the owners to think more clearly and objectively and go beyond sheer optimism. The advisory board can play a crucial role in helping small businesses avoid a “tunnel vision” approach regarding their business. The advisory board can also serve as a "reality check", which can be most helpful in objectively analyzing any given business situation.
advantage: creativity
Advisory board members can provide creative ideas and alternative approaches for problem situations or new business opportunities, thanks to their maturity level, years-long business experience, and problem solving skills. When owners are overwhelmed just trying to operate their businesses day in and day out, they often lack the time or experiences to see beyond their daily routines. To use a popular phrase, "owners can miss the forest for the trees." Advisory board members are not in the weeds of day-to-day routines and can bring a new perspective regarding untapped opportunities and innovative solutions. They can help propel a small business to a higher level of revenue, performance and profitability.
advantage: connections
Networking and connecting to industry and environments is valuable for any business and can make a crucial difference in market intelligence. Advisory board members can use their connections for possible funding sources, finding strategic partners, knowing vendors, or connecting owners with subject matter experts. Leveraging the connections of advisory board members can increase the visibility of a small business to other members of a community. Moreover, if an advisory board is carefully selected, it may help lead the company in new directions, expand or rationalize the product or service offering, and ensure that the company resource utilization follows industry standards and marketplace demand.
advantage: trust
In the course of a year in the life of a business owner, there are days when problems need to be solved, days when challenges have to be met, and days when there is just the need to sit down with a sounding board of “think tank partners” to kick around the pros and cons of doing something “this way or that way.” This is perhaps one of most overlooked but equally as crucial function of your advisory board. Sometimes hearing other points of view, offered with sincerity and expertise, can steer an owner in the direction needed to create future growth.
advantage: growth
Small business owners are expected to know the technical aspects of their businesses, but they frequently lack experience in management of employees, salesmanship, business communications, or interpersonal relationships. Trusted advisory board members with a wealth of diversified experience can serve as mentors for a business owner’s personal development. Nearly all small business owners are ego driven and they either started or purchased their businesses, run their businesses “my way.” Nothing wrong with that, but owners must have an open mind if contemplating forming an advisory board and be ready to accept constructive advice and new ideas.
Advisory board members can help fill gaps that frequently exist in the competence and preparation of small business owners. These advisors, who have perhaps taken their own businesses from startup to maturity, can provide proven, structured processes and valuable feedback to help owners avoid pitfalls that are typically encountered on the road to success. If an advisory board is selected wisely, it can help lead a small business to lasting success and consistent performance.
Dr. Z's recommendations:
A maximum of three advisors for businesses up to $10 million in annual revenue
The advisory board should meet at least 4 times per year (quarterly)
The chairmanship of the advisory board should rotate among the three members
The board members should be compensated for their time and effort
A business owner or company executive should not take the role of advisor
A business investor should not take the role of advisor to avoid conflicts of interest
The board of advisors should diligently document and follow up on their work