When viewed from the outside, successful business owners seem to have all the
answers and know all the right moves. In
truth, behind every great leader sits a group of trusted individuals who
provide invaluable feedback, guidance and strategic thought. In a previous post
I wrote about one such group: A strategic business forum. Another fundamental resource to consider is a
board of directors. Most small
businesses do not carry with them the fiduciary requirement for a formal board
of directors, so oftentimes this takes the form of an advisory board.
What is an Advisory Board?
While a board of directors is made up of appointed or elected individuals who
are financially and legally liable for the business, an advisory board consists
of interested outsiders who have no financial or legal obligation. If your
business doesn’t have a board of directors, you may still create an advisory
Know When Your Business Needs a Board of Advisors
During Lewis & Clark Bank’s formation process, Jeff Sumpter and I incorporated
the experiences and advice of trusted friends and business contacts. We also
sought out and spent time with similar businesses who had been through the
process before, even if we didn’t know them prior to the bank’s formation
efforts. Gathering information and personal anecdotes from those who had
successfully “been there, done that” was essential for us.
No matter the stage of business -- formation, growth,
maturity or decline -- the value of this exercise remains. As a business moves through its lifecycle, it
experiences ups and downs. An advisory board can help your business open up new
avenues for growth and leap to the next level of success.
Frank Advice from People You Trust
Since the advisory board is not liable for the business, its advice is neither
fettered by obligation nor as laden as a board directive. As such, you the
business owner are free to either take or dismiss the advice. Ideally, the
board of advisors will provide the right mix of experience and expertise to complement your knowledge and skills.
A Business Leader’s Ace in the Hole
Members of the board of advisors, with their diverse professional backgrounds,
see your small business from different perspectives. They can help you pinpoint
opportunities and challenges, and navigate unfamiliar situations,
like recruiting your successor or managing a round of layoffs. An effective
advisory board is invaluable -- and I should briefly mention that it’s
important to acknowledge this value and consider providing some level of
which in my opinion is an investment worth making.
If you’re still unsure of an advisory board’s value to your small business, ask
around. Your network of professional contacts and business savvy friends will
provide their unique knowledge and opinions -- and you may realize you already
have an advisory board, albeit an informal one.