When the daughter of a business bought her $6 million family-owned company, she created a board of advisers for guidance. When a young owner started his second technology business after successfully selling his first company for $25 million, he contacted key people to become his board of advisers.
When several brothers took over their father’s $47 million business, they established a board of advisers to help them manage growth and manage sibling leadership. All were looking for strategic advice from a team of experts to help them navigate business and personal growth and change.
A strong board of advisers is vital. This holds true for mature businesses large and small, for family businesses and for young companies. Mature companies may think bringing in a consultant for a specific need is sufficient. Family businesses often think outsiders won’t understand their unique issues. New companies think the last thing they need to get is an advisory board. They would all be wise to rethink.
Guiding business growth and strategy is enhanced by developing a team of objective experts as your strategic advisers. It is a successful solution for companies looking to build strong, strategy-minded direction. And for advisers, it is an opportunity to become more effective as a business leader and develop strong relationships in the business community.
To create an effective advisory board, know why you need a board and have the appropriate expectations — then find the best people and structure it properly.
Know the reason for creating an advisory board
An advisory board must be selected based on a strategic needs assessment of what your business requires in order to achieve its long-term mission and vision. Small, privately held companies almost always benefit from a board of advisers.
Clearly define the role of the advisory board
Look for strategic advice, contacts, mentoring, planning, recommendations, feedback in specifically identified areas and objectivity. This is not part of the legal organizational structure; no decision-making responsibility, no fiduciary responsibility, no voting, no setting policy, no legal liability for actions of the organization.
How to determine ‘whom’ to have on your advisory board.
The right advisory board members can range from someone with the expertise needed in the company to a prominent business leader. After assessing the business, look at long-range plans and identify gaps. Identify if top-level assistance is needed based on strategic analysis. Identify someone with the most appropriate skills, experience, knowledge, commitment, attitude, and contacts.
Look for target areas of expertise
Make a list of target areas where the company could benefit from real expertise and advice. Listing target areas helps identify whom to look for to be on the advisory board. Also consider a successful entrepreneur; someone who had gone through succession; someone who has sold her business. This allows small companies to attract exactly the talent needed.
Areas could include:
- Industry experience;
- Financial review;
- Customer relationship management;
- Raising capital;
- Branding, marketing and sales, public relations, reputation building;
- Technology, research and new product development;
- Business and strategic planning, geographical expansion, and strategic alliances;
- Human resources, organizational issues, personnel recruitment;
- Manufacturing process development, intellectual property.
To find advisory board members, owners frequently turn to someone who has a successful advisory board, a consultant with whom they have a trusting relationship, or someone in business they respect. You might just be amazed by the quality of people willing to sit on an advisory board.
Objectivity and a network of contacts are the two most valuable assets a board member brings. If the right advisers are selected, their expertise and commitment will make a major contribution to the organization and to the business’s performance, and is a strong source of competitive advantage over the organizations with no effective board.
An advisory board will be stronger and more effective if it is genuinely an ‘outside’ board, or the majority of members have never served within the company or are family members.
Mass High Tech, August 29, 2005
By Laurie Kirk