Managing a small business is a complex process, especially for those with only a few employees. You need expertise in many areas beyond your main product or service.
Staying on top of accounting, finance, marketing, employee management and government regulations is required. So is remaining aware of the big picture as it pertains to your business strategy and industry.
It’s difficult to become expert in everything, but with the right advisory board, you may not need to be.
An advisory board differs from an official board of directors in several key aspects. Advisory boards are not legally or financially responsible for your business. They have no power to make decisions.
There are also no legally mandated procedures for running an advisory board, such as meeting format, minutes and quorums. You decide how much proprietary or financial information you are comfortable sharing.
Free from these requirements, you can tailor an advisory board to your needs and preferences. The most typical scenario is to have a three- or four-member board that meets quarterly.
Instead of meeting as a group, you could schedule individual sessions with advisers. A more informal and less structured approach is to join peer business groups and roundtables.
The best format and member composition for you will depend on the type of expertise and input you want from your advisers. Are you seeking help with a specific area, a sounding board for ideas and strategy, business connections or a combination of these?
Many business owners already have relationships with a CPA and an attorney. They were most likely your first and most trusted resources when creating your company. These professionals often form the core of advisory boards, and you may benefit from their proactive engagement in helping your business move forward. A caveat is that they will require payment for meeting time. Other advisory board members may not.
Bankers are another common adviser choice. Rather than visiting your lender only when you are seeking a loan, regular discussions of your business performance and goals can help smooth the way for future financing or adjustments to existing debt.
Bankers work with a wide range of businesses and therefore are often an untapped source of wisdom. They may be able to advise you regarding industry and local business trends as well as financial options.
The Small Business Administration funds two programs that provide free professional advice. Representatives from either of these groups might be a welcome addition to your adviser group.
- SCORE is an organization of retired business executives and a source of industry-specific expertise or general advice.
- The Small Business Development Center (SBDC) is made up of university-based professional consultants. SBDC counselors tend to be generalists because they work with all sectors, often specializing in helping with business plans, expansion planning, financing and marketing.
Sometimes business owners serve on each other’s advisory boards, and this association can be a valuable source of inspiration, contacts and support. The same can be found in peer groups. If none exist in your area, you can form your own with a few phone calls. Chambers of commerce and other professional organizations often hold roundtables focusing on key business topics. They may also provide peer support.
If you’re in a start-up or growth phase, you might benefit from the stepped-up relationship of being mentored. Mentors are often successful business owners who want to give back, and they offer hands-on assistance and a wealth of experience.
However you decide to compose and run your advisory board, remaining appreciative of the valuable contributions of its members is key. Limiting board terms to one or two years, offering nice meals or stipends for those not receiving compensation, and limiting the number of meetings will keep your advisers happy. So will seeing the tangible results of their help in your success.