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Could Your Business Use an Advisory Board?

Tuesday, May 22, 2012   (0 Comments)
Posted by: Jack Veale
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Business 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.

Are 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 important issue.

The Basic Idea

An 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.

Once, 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

The 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

You’re 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.

In 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 board’s potential.

Finding Board Members

So 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.

Don’t 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?

Like 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.

Even if your business is not struggling, these benefits can significantly increase your success.

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.


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