There are over two million small businesses in Australia, and of those 90 percent are micro-mini, meaning they have less than five employees. And 65 percent of those two million plus small businesses actually employ no staff; they are solo-owned and operated.
I can totally relate to that – that feeling of being all alone. I launched and built a business over 12 years, which I sold in 2007. I know what it’s like to be alone, trying to work out how to be more effective and really grow a business with limited resources. Creating an advisory board instantly expands your resources. An advisory board feels like a board of directors, although they’re not legal directors of your business, and they’re not shareholders. It’s really about putting together a team that can help you with your business in an advisory capacity. I am asked about this quite often and have incorporated the most common questions below.
Why do I need an advisory board for my business?
Advisory boards force you to step back from day to day operations. It’s so easy when we’ve got a million things going on to get bogged down in daily operations and crises. The advisory board will pull you out of that; they will keep you strategically focused, if that’s what you want them to do. We all suffer from myopia as well. We all too often get stuck into “only seeing things how we see things”. So, having access to other viewpoints is invaluable for you to be able to tackle complex issues in your business. Accountability is another benefit. When it’s just you, or you have a small team, it’s easy to let day-to-day activities take priority and let the important things slide. Been there, done that. Having somebody to report to, or just present to, will force you to lift your game, whether it’s just preparing for that meeting, or simply doing what you said you were going to do. Advisory boards allow you to utilise expanded networks, whether it is accessing an accounts person or a new vendor for your IT work. Your own network instantly gets multiplied with an advisory board.
How do I form an advisory board?
Where do I start? I recommend a minimum of three people, including you, up to about six. What about compensation? I always paid my advisory board members. Some initially said that they didn’t want to accept my money, but I think that it’s important to have an exchange. It doesn’t have to be money, per se. You might be able to come to an agreement where you exchange other services.
How often should I meet with the board?
Work out what you need for your business. If you’re going through a really difficult time, or a period of change or high-growth, you might be meeting monthly. On the other hand, you might only need to meet bi-monthly or quarterly. It really just depends on what you need.
Who should I invite?
I recommend that you the time out to sit down and do an analysis of yourself, your own strengths and challenges, or weaknesses that you feel are areas where you need help. There’s the self-analysis, and then there’s the analysis of your business, and what your business might need as well. From that, you can create a matrix of your desired board skills, and you want to try to cover off on all areas. There are loads of free online resources in this area of “board skills matrix”. The goal is to diversify the talent, based on those skills, as well as the risk profile. Consider having the following bases covered: operations, marketing, strategy, finance and HR. For operations, you will want a good processes and systems person, somebody who really understands how to maximise efficiency in business. You will want a good marketing/sales/branding person that really gets that and understands the ways to grow a business. You will want a strategic, big-picture person, someone who’s really going to get you thinking about your forward game – not only what you’re doing today, but also how it will affect your vision three years out and where you want to be. And of course you want a numbers person – this is really, really important. If this isn’t your strongest point, sign yourself up for a “Finance for Non-Accountants” course, as this is one area you should never abdicate. Also, if you employ staff, having someone on your advisory panel who is experienced in HR is invaluable. In terms of the risk profile, it is important to have a balance of “risk appetite” on the board. This means having a mix of advisors including those who may be more adventurous risk-takers and others who are more risk-adverse who ask hard questions about new projects and ventures to keep you aware of the potential downside. The overall goal of forming an advisory board is to create a team who is on your side, has diverse skills and talents and is able to assist in strategic decision-making, and provide access to people in other networks to help support and grow the business. And perhaps the biggest benefit is having confidants that you are able to share the highs and lows with.
Where do I find these people?
You’d be surprised! Start by utilizing your existing team, your accountant, lawyer, supplier, consultant – people that you already have in your network. Once you start thinking about doing this, you’ll be surprised; people will come out of the woodwork, and you’ll see people in a different light that could be potential advisory board members. The ABN is a great organisation for finding people who know business.
How do I manage the board members?
Let them know what you need. Be very clear about what you expect from them. How often and for how long do you meet? How often do you expect the board members to attend meetings? How much time do you expect from them? What is the time frame for the agreement? Once you have come to an agreement, put it in writing. You may want to consider including a non-disclosure agreement. However, keep all agreements simple and clear, and have a review in place every six months or so. Also consider an exit clause. Circumstances change, people change. Open and honest communication is the best bet. Having the right advisory board will get you thinking bigger and leave you better prepared for supporting and growing your business. And you may find comfort in the knowledge that you aren’t alone anymore! I certainly did.
