A Board of Advisors can make the difference between the success or failure of a small or medium sized business.
Also known as an Advisory Board, Advisory Panel or Advisory Council they an affordable, low risk, flexible and cost effective arrangement. Filling gaps in the owner’s skill and knowledge. Ensuring the business owner has the resources and support they need to build a successful enterprise.
All SMB’s are under resourced in terms of the diversity of skills required ... the Board provides these missing expert skills and perspective.
Larger businesses have specific people or departments that fulfil all the required roles with their special skills and knowledge. These range from marketing and sales, product creation and innovation, supply chain, people, finance, strategy and planning to risk and regulations.
However in a SMB all these varied functions must be managed with limited manpower ... and often just the owner.
This creates massive pressure on small business owners who struggle to know what are the important things they should be doing. Then wasting time finding out how to do them. Trying to filter the critical tasks out of their list of 150 outstanding to-dos!
Wasting time trying to learn skills they should outsource. Ignoring critical issues that they don't recognise or understand!
Finding themselves tangled in the weeds as the business struggles from crisis to crisis.
Many of the challenges faced by an SMB owner can be overcome by having a Board of Advisors.
Board of Advisors
The Board usually consists of 3 to 5 carefully selected members, with defined roles and focus. However in a small business there may be fewer ... with even one being better than none!
The two primary roles are:
- Assist the business owner in making better decisions.
- Hold the owner accountable for delivering the results of the agreed decisions.
In addition they are a sounding board for ideas and plans and are expected to objectively and critically evaluate the owners’ ideas and plans. They are not a group of “yes” people and should be asking lots of “why” and “how” questions.
Providing objectivity, creativity or guidance as circumstances demand.
Leading to better decisions for the business. Knowing that if the business is successful so will be the lives of the owner and employees.
The Board should have specific and complementary skills and knowledge. The members should fill the missing skills in the business. And as these change over time the board composition should reflect these changes.
The members of this board are not shareholders or investors and hold no real power in the business.
Yet their input will make a critical contribution to the business success.
John Francis, or better known as "Johnny Franchise", has spent a lot of time and energy helping to set up and organize Boards of Advisors.
Francis says “I see the power and value that comes from these advisory boards that build a tremendous advantage”.
He states "I see the value. I've seen it before, putting a board in place and then looking at it a year or two later after a board has been in place."
The Role of the Board of Advisors
A Board of Advisors is an underestimated and underutilized concept for helping business owners make faster and better decisions.
The Board of Advisors must guide the owner to focus on issues that matter. Whether this is strategy, prioritization, people, risks, opportunities or infrastructure. It then ensures that there is accountability. With the agreed actions are carried out and the results are delivered.
The Board brings a structured accountability process. It ensures that the owner focuses on “eating frogs” - prioritising the tasks that are important and his time is not consumed by day to day firefighting.
It helps the owner to work towards the future business “keeping the end in mind” and not stuck in the present ... which is a reflection of past decisions!
An effective Board will provide opinions and perspective as well as specialist knowledge.
Eliminate Founders Syndrome
The Board can go a long way reducing the drama and the frustration that occurs when a founder gets in their own way. Falling into an unconscious state called "founders syndrome".
An insidious condition where the founder thinks they need to handle and control every single thing that happens in the business.This can lead to a number of predictable destructive outcomes:
- The owner becomes the bottleneck.
- They generate a lot of frustration throughout the operation.
- Their illogical behaviour drives away high performing staff because they're not allowed to do their jobs.
The Board of Advisors will provide the owner with a wider and more balanced perspective and reduce the threats of a frazzled, nit-picking, bottleneck owner.In doing so they will zero in at simplifying the strategies, the execution and the accountability and unleash the power inside that organization.
The Structure of the Advisory Board
A question I’m often asked is; “Times are tight, we don’t have much money. Is it worth the investment?” My reply, “How much can you afford to fail?”
This might seem trite but owners have to make a choice.
Having an Advisory Board is not a guarantee of success but it does guarantee that the owner will be focussed on building a business and not stuck in a stressful, frustrating survival trap.
Like any employees or company advisors, like accountants or lawyers, the members must be carefully selected. They can be appointed for short probationary periods until it is clear that they fit the culture and add real value to the business. While these Boards are informal it is critical they have the trust and respect of the business owner. As the role will at times demand tough negotiation and constructive conflict.
A Board is not made up with a bunch of friends but skilled professionals hand-picked to add value.
The Board members must see issues that the founder doesn’t see or doesn’t understand. And can be used in all phases of the business life cycle from initial business planning and justification to the sale of the business.
As this Board is a value adding element of the business it goes without saying that members will be remunerated.
Advisory board members should leverage their knowledge and network. Providing other vantage points and viewpoints. Their role being along the lines of that of a non-executive director.
Their performance and value should be evaluated and members changed to suit the circumstances.
Within a year or two the Board should have made a significant impact on the business performance. Ensuring a structured operation with all the required internal workings in place.
Resulting in a business delivering consistent and exceptional performance.
The Advantages of an Advisory Board
Francis says "It's very satisfying to see the impact of setting up the board and then serving on the board. But really rewarding is looking at the results a year or two later. Saying to the founder, “now look at your company, look at what you've done here you’ve turned yourself from a founder into a CEO of a successful business”.
The Board of Advisors is a mechanism to help make this happen. It is an affordable, low risk. high impact performance multiplier.
With high potential for positive impact.
With an effective board the effectiveness of the business is multiplied many times. Their return on investment should be high with returns measured both financially and in the wellbeing of all the business stakeholders ... especially the owner.
The result of having an effective, competent Board of Advisors will be to have more successful small and medium sized businesses. Avoiding the financial and emotional pain that goes with a failed business.
An Advisory. Board is not an overnight solution. It takes time and it takes effort. However to make an initial impact the Board should look for any “low hanging fruit” that will immediately impact the company performance.
If you think that an Advisory Board will benefit your business or you would like to discuss this concept further then please contact me.