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Board of Advice

Building a great business takes more than an idea. Get help with the shared expertise of an Advisory Board.

The phrase “people don’t know what they don’t know” is no more relevant than in the world of SME.

As a business owner, you’re often responsible for everything and the great challenge is being able to work on your business while you work in your business. With business practices and technology changing at such pace, it’s increasingly difficult to know everything and be the figurehead expert for your business.

That’s why an Advisory Board can help you make considered and rational decisions for the short and long-term prosperity of your business. With a well-planned and structured Advisory Board, you can tap into the individual and collective insights of experienced business people when you need to.

So what is an Advisory Board? An Advisory Board is a group of business people, usually with expertise in key areas of your business, who can provide advice and direction – with the goal of helping you make better business decisions. An Advisory Board is not a (Corporate) Board of Directors, who set company policies, enforce strategic directives, determine budgets – as well as having legal responsibilities as directors.

For SME, there is often the argument that an Advisory Board is a better option than a formal Board of Directors as it can be more agile and flexible (with fewer personal egos). Remember, an Advisory Board is about non-binding advice that a business owner is free to adopt or not.

Benefits of an Advisory Board.

Benefits of an advisory board include:

  • providing a forum that encourages you as owner to take a regular ‘helicopter’ view of the business
  • creating access to knowledge and experience that you may not possess within your business
  • removing personal agendas of internal management, as the advice is external
  • introducing a devil’s advocate to your business decision-making process
  • uncovering new ideas from different perspectives, including some insights into future business trends
  • solving problems or barriers specific to your business by drawing on experiences from other businesses
  • opening new opportunities for your business through the networks of your Advisory Board members

Like any new initiative, an Advisory Board can have its drawbacks as well – such as tension if roles aren’t clearly defined, meetings becoming non-productive without set agendas, and increased demands on the business owner. So you need to consider several key issues when setting up an Advisory Board.

Objectives

Before you do anything, you need to clearly define the objectives of your Advisory Board upfront – this can help sell the idea to prospective members. Your objectives can be defined anyway you like, but usually focus on bigger picture discussions or problem solving around strategic direction. Your objectives can be around:

  • formulating strategic direction – use members as a sounding board
  • providing accountability to implement business plans
  • testing the policies and procedures (rather than set them) of the business
  • exploring new ideas and business trends mentoring and networking
  • review of performance – financial and operational

At a less strategic level, an Advisory Board can also provide support to management as they implement growth strategies or help SME owners and managers improve their awareness and understanding of their business.

Rules of Engagement

You need to make sure everyone involved in your Advisory Board understands and abides by the rules of the group. If you want to build an authentic and productive group – and enjoy the positive outcomes – you should make the following criteria mandatory:

  • honesty
  • openness and transparency
  • confidentiality
  • commitment
  • accountability

By seeking our people with these attributes, you’ll almost be guaranteed to work with people you can trust and who want to be involved. Remember though that your Advisory Board members will be busy in their own right, so don’t waste their time by being disorganised.

Advisory Team

There is no golden rule for how big or small your Advisory Board should be. The key is to identify areas of your business where you could use expert help and guidance. Take five minutes to list the five biggest mistakes you’ve make in your business and there’s your starting point for expertise you might need on your Board.

You can tap into friend and family, or existing business colleagues or advisors you work with – your accountant is a good place to start. When you’re choosing people for your Advisory Board, consider:

  • people with different skills within the same industry
  • people with similar skills from outside your industry – a different perspective
  • people who specialise in an area you’re not great at or an area you need to focus on in the short-term
  • people who communicate well (including yourself)
  • aiming for diversity on your panel
  • avoiding sycophants – you want robust discussion, not insipid consensuses

It may be best to start with just one or two outside advisors to get perspective. As the scope of your Advisory Board builds, you can bring in additional expertise and take a more formal, sophisticated approach.

Separately, you’ll need to consider compensation for your Advisory Board members. Some will have a set fee as part of their profession, others may expect payment per meeting, and some (eg. retired business people) may come free just to stay involved in the world of business. Remuneration is simply a matter of communication and negotiation – but whatever you decide, make sure it’s in writing.

As for attracting advisors, just ask! And keep asking. Outline your need and vision for an Advisory Board will help your prospects buy into your idea. And when your Advisory Board is up and running, make sure you communicate you progress and status on their suggestions or why you haven’t followed their advice. Keep the team I the loop to keep them engaged.

Structure and Agenda

Have an agenda set out before you hold any Advisory Board meetings, and make sure it’s delivered to your members well in advance if you want to get value from the meeting. A documented agenda allows you to address the key topics, seek advice and hold discussions without going off track and turning your session into a non-productive talk-fest.

Here are things you should think about when setting up your Advisory Board structure:

  • ask members for input on the agenda
  • circulate your agenda and supporting notes or documents beforehand
  • have a secretary to take minutes
  • have a chairperson to keep the meeting on topic
  • make sure your meeting environment is suitable
  • end every meeting with a summary of agreed commitments, a list of actions and assigned responsibilities (who is going to do what by when)

Meetings with Purpose

By now you’re getting a picture of how to plan and implement a successful Advisory Board. One more piece of the puzzle is to hold your meeting in a productive environment.

Don’t meet anywhere there is too much noise or distraction, including your own office. A coffee shop or restaurant is fine if they have a private area or if your group is small, but you’re better using a more business-like environment – and make sure you have all the necessary tools available, including:

  • a whiteboard – it sounds archaic but don’t underestimate how well people communicate when they can draw their ideas for all to see
  • a TV and/or computer – Skype is handy if someone is unavailable in person
  • a screen to display documents, slides and proposals to everyone, but avoid death by Powerpoint if it doesn’t add value

Make sure everyone is comfortable before and during the meeting – set your own group rules around the use of mobile devices during your sessions, and make no exceptions to those agreed rules. And in our world of technology, keep paper documents to a minimum (only what’s necessary).

Your Next Step

Introducing an Advisory Board can be a great asset to you and your business. It can be a great collaboration tool, provide you with valuable (real-world) business education and open your eyes to new ideas and opportunities.

An Advisory Board will cost you time, effort and money – but it could be one of your best investments in the growth and future stability of your business. Let’s talk more about your plans for an Advisory Board for your business.

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