The benefits of an Advisory Board to keep business owners on track to deliver to their business plan
The day-to-day grind can be a lonely existence for business owners.
Inevitably, you can feel that everything rides on your shoulders. You may also be so busy down ‘in the weeds’ doing the more mundane work that you have no time to explore strategic areas in which your business could improve and grow.
That is why the input and guidance of an advisory board can make a world of difference. Although many business owners overlook such an option, it can be one of the best ways to deliver sustainable success.
The key advantages
A well-selected advisory board can act as a sounding board on crucial decisions or planning, while adding value to your business by bringing additional experience, skills and knowledge to the table.
The board members typically advise, mentor and share the ups and downs of the enterprise. They may help with the formulation of ideas, the execution of your vision, or on significant matters relating to risk-mitigation.
Depending on their background, they could offer general business counsel, or provide specific input in areas such as accounting, sales and marketing that enhance your business’s reputation and credibility in the marketplace.
The best board members will test and challenge you to do things better, rather than just rubber-stamping existing ideas or processes. Collectively, they should be able to clearly articulate why you should – or should not – follow certain paths or make certain decisions.
Why a charter is crucial
Meeting with advisory boards should not be seen as a chance for you to occasionally catch up with fellow business people for a coffee and a casual chat. Structure is required.
To be effective, while also being respectful of board members’ time and expertise, a proper charter should be drafted. This sets out the role, responsibilities, composition and operation of the advisory board.
It should also state that the function of the board is to advise and make non-binding recommendations to the business owners. In return, these members should understand their duty to provide an independent source of information and advice to the owners of the business on strategic issues, or any risks the business may face.
The board should meet regularly throughout the year – ideally three to four times – and follow a clear agenda that the designated chairperson sets. Any pre-reading material should be distributed to members at least one week prior to the session. An action list should be recorded during the meetings to ensure there is follow-up on discussion points.
The ideal number of board members will differ from business to business depending on scale, but three or more is typical. Be aware that you can have too many people on a board – in such circumstances meetings may become an unproductive talkfest.
Set clear objectives
The objectives and focus of an advisory board may vary from sector to sector, but these goals should be clear and could include:
- Assessing the positioning of the company with regard to business, market and industry trends
- Providing ‘wise counsel’ on issues raised by the owners, directors or management
- Monitoring the business performance and challenging the owners and management to consider options for improving the business
- Assessing key financial metrics
- Discussing potential succession or sale options, and steps to prepare for such an event.
Such objectives can be shaped and adapted depending on the specific circumstances of the business.
Listen, learn and act
Coming up with innovative ideas and new strategies is difficult in a vacuum, so having an advisory board can be a godsend for a business owner. Of course, it only works if you are open to considering the suggestions of the board. If you are not going to heed its advice, there is little value in proceeding.
On the contrary, engaging with a smart advisory board can take your business to another level and help you deal with challenges and opportunities in a way that is rarely possible with just one person or a small, internal management team calling the shots.
While some may baulk at paying for the participation of advisory board members, all evidence suggests that the benefits are likely to far outweigh any costs that are incurred.
Take a long-term view – and watch your business soar.