Could Your Business Use an Advisory Board?
Tuesday, May 22, 2012
Posted by: Jack Veale
owners continue to debate whether organizing an advisory board -- a group of
outside professional advisors -- to help run a family business is worth the
time and cost. During the past several years, small/family businesses increasingly
have used advisory boards, but with mixed results. As usual, the answer seems
to lie in your company’s unique needs.
internal conflicts preventing your business from succeeding? Do you need a
fresh perspective to help expand your operations? If so, your small/family
business may find an advisory board useful. But be careful, advisory boards
have their pitfalls as well. Let’s look at the pluses and minuses of this
The Basic Idea
advisory board is a paid group of nonfamily professionals that meets regularly
to discuss your business' topics. Advisory boards focus on "big picture”
issues--such as compensation, market strategy, and succession planning--rather than
day-to-day operational difficulties.
many business owners viewed advisory boards as a somewhat desperate measure.
The businesses that first used them needed immediate help and conferring with
others who had experienced similar difficulties seemed a stroke of brilliance.
But today, even successful small businesses face increasing technological and
logistical challenges, making advisory boards a more widely accepted strategy.
Understand the Minuses
small and family business community’s mixed reaction to advisory boards is not
unfounded. One major problem is finding appropriate members. After all, many
business owners have few professional contacts beyond family members or friends
already helping the business. And the time commitment involved often
discourages prospective members. Other business owners, or even outside
professionals, may not have the time to devote to an advisory board. If
retired, outsiders may lack the energy to productively serve your board. Or you
may simply find it difficult to find available professionals who are truly
qualified to advise you.
Use the Pluses
probably saying, "With the potential problems -- why should I even begin to
consider an advisory board?” But remember, when implemented and operated
correctly, an advisory board can offer a small/family business invaluable
perspective and advice. To begin your planning process, specifically identify
your advisory board’s functions. Focus on distinct issues, especially those you
and others do not have time to effectively resolve. Ask the board not to
deviate from these issues until it reaches acceptable solutions. And don’t feel
pressured to make your advisory board a permanent part of your business. If you
feel you won’t need its services indefinitely, make the advisory board a
temporary but renewable entity.
the past, many small/family businesses excluded their regular advisors (such as
their accountant, lawyer, financial planner and insurance advisor) from the
advisory board. This may still be wise – especially if you fear professional
conflict. But, if possible, consider including your regular advisors in
advisory board meetings. After all, they can bring experience to the table and
even help get your advisory board up to speed faster and with fewer problems.
And including them may lessen their fears and uncertainty regarding the board.
Discuss the matter with your regular advisors and assure them that you are not
supplanting them but rather need their cooperation to fulfill your advisory
Finding Board Members
where are all these helpful outside professionals? Contact local and national
professional organizations relating to your business type for help finding
prospective members. For example, The Executive Committee (also known as TEC)
and Rennaisance Executive Forums have many local chapters. The Service Corps of
Retired Executives (www.score.org) is another excellent resource. Although
these groups may not always have immediate access to appropriate references for
your company, they can often direct you to an organization that does.
restrict yourself to just your local area. Experts and business owners from
other cities and states can help you think outside the box – way outside the
box. Also, your regular advisors may find them less threatening because of
their physical distance. And, as a business owner, you may find revealing your
firm’s information to out-of-towners less intimidating.
Do You Need Perspective?
most business improvement strategies, advisory boards come with risks and
challenges. But if your business needs perspective, bringing in some outside
professional assistance can help solve persistent problems and introduce new
ideas into your company’s knowledge base.
if your business is not struggling, these benefits can significantly increase
Jack Veale's career began in various
positions at a high growth family owned business. He left the Boston area after
working for the company that was the basis of the book; "A Civil
Action." Jack formed PTCFO, Inc after leaving Idaho to return to New
England; 25 years later, PTCFO's focus and success involves ownership and
management succession, and transition, along with company transformation of
closely-held, family owned or ESOP companies.
Jack has authored "Creating
Strategic Innovation," a workbook to develop leadership through empowered
teams, and co-authored "Don't Do That," a book on best practices for
avoiding typical governance problems with ESOP's. He is active in IMC, serving
on the National Board of Directors.