25 Oct Is Your Growing Business Ready for an Advisory Board?
Running an early stage business often poses the classic “can’t see the forest for the trees” dilemma. You’re so focused on the next project, the next sale or the next new hire that you may not see the larger picture of where your business is going and how to manage or grow it. Add to that the complexity and uncertainty of our current environment and it becomes even more difficult to put issues in their proper perspective. That’s why setting up an advisory board can help.
It’s important to understand that an advisory board serves a different purpose than a formal, outside board of directors. Unlike outside directors, advisory board members have no legal liability. They don’t have any real “power” from a legal perspective.
Fundamentally, an advisory board is there to help your growing business make the transition from being a founder-managed, entrepreneurial venture to having professionalized management. During this transition period, which can take years, or even a generation, the business may not be ready for a formal, outside board of directors. Yet the business owner(s) may need more than just informal advice from peers to take the company to the next level. Thus, an advisory board serves an important purpose during this period of transition.
A typical advisory board might consist of a CPA, an attorney, the owner-manager(s), an industry consultant, and possibly a business savvy family member or friend. An experienced family business consultant or coach also can be helpful in facilitating advisory board meetings or helping members work through sensitive topics.
Perhaps the greatest benefit of an advisory board is to ensure a coordinated effort between professional advisors. Too often, advisors to owner-managed businesses provide their advice in a vacuum. This inhibits the business from moving forward through important life cycle transitions because there is no coordinated approach or organized group to oversee it.
By setting up an advisory board that meets regularly, with agendas and minutes, business owners can be assured of prompt attention to key issues, coordinated action and implementation of decisions. In turn, business owners and leaders will become comfortable with the idea of outside review of the business, paving the way for a true board of directors in the future.