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 board.
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 compensation, 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.
CHARTING THE COURSE®