As a business owner, you feel like you do it all and that no one else understands your business like you do. Although this may be true, to be successful, you need to be able to see your business from an outside perspective. Every business owner can benefit from the advice and guidance that only come from the experience and professional skills of others.
A team of professional business advisors—your banker, CPA, attorney, financial advisors, and more—is essential. These people have specialized skills that you need for your day-to-day business matters and strategic planning. Your team should be made up of experienced people you trust, who care about your business and who will work with the rest of your business advisors to help you succeed.
Another great way to get advice and mentoring, however, is one that many small business owners don’t take advantage of: an advisory board. An advisory board is a team of people who have experience relevant to you and your business and who are interested in helping your business grow. They make no decisions for you, have no obligation to you, and may or may not be paid (when they are, it is often with a combination of cash and stock options or other incentives). But they can be invaluable to you because they offer an objective, outside perspective about your business, your market, and your strategy.
What should you look for in someone to join your advisory board?
- Experienced business owners. Look for people who have run a business with a similar model (i.e., service business, manufacturing, retail, etc.). Ideally, they should have run a business that was once your size and then grew successfully. That way, they will understand your position, the hurdles that you face, and how to overcome them. Someone from a much larger company—even though they might have a big name—may not be ideal because that person has not faced the same challenges.
- Professionals who have worked within your industry can also offer a great perspective. They will understand your market, industry trend, and the competition.
- People with credibility. Their credibility and reputation help your credibility.
- Someone with an interest in what you do and who want to take the time to help you. An advisory role doesn’t take a lot of time, but many advisors fall off the radar if they are not truly interested in seeing your business succeed.
- Someone who doesn’t have a financial interest in your business or friends and family. You want people who can give you objective advice without being afraid to be direct.
You can find potential advisors through referrals, business organizations, networking, recommendations from your professional business advisors, or nonprofit mentoring or advising organizations. Typically, you should choose three to five people for your board, and it’s best for them to have different experience so they can offer you a variety of perspectives.
Once you find the right people, what should they do for you?
- Typically, a board should meet three to four times per year. Getting everyone together at the same time sparks discussion and ideas. Meetings should focus on strategy, planning, market trends, and other high-level topics, not small issues.
- Your advisors should be available to answer strategy questions when they come up, but you need to be respectful of their time. They are helping you on an informal basis, and they more than likely have a full-time job. An occasional question or discussion is fine, but you can’t expect them to help you on a daily or even weekly basis.
- The people you choose should know a lot of other people, so they can be a great source of contacts and referrals—customers, partners, and other advisors.
- A great advisory board gives your business credibility, especially to banks, investors, and other businesses. Having a solid board shows that you are utilizing your resources and taking steps to manage your company effectively.
An advisory board can take time to put together; in fact, it should take time because you need to be certain to find and choose the right people. Experience, perspective, and the motivation to utilize what they’ve learned to help you succeed are the key characteristics that great advisors will share.
For more information on advisors and boards for your small business, call us at (855) 236-0600.