Recently we wrote about the importance of objective advice. So today we thought we’d take that thought one step further and talk about benefits of putting together an advisory board (also known as a board of advisors).
A well put together board of advisors can be a huge asset to your business regardless of what stage your business is at.
What can a great advisory board do?
- Help you grow your business through their connections
- Keep you focused and on top of your business plan
- Challenge your current business thinking
- Suggest new directions and trends that you might not be across yet
- Provide checks and balances to existing (or new) processes
- Act as sounding boards for issues and challenges you might be facing
- Keep you sane
So just how do you go about creating your advisory board?
Choose the right people
Whilst it’s tempting to ask friends for their advice, often, because they are emotionally connected to you, they’ll want to shield you from the tough stuff and that’s not what you need from your advisory team. You want people with different areas of strength who are known as successful problem solvers and communicators in their own industry, so choose team members from a wide range of industry and professional experiences.
Don’t just be limited to locals. If there’s someone you think would make an excellent advisory board member, but they’re not local, don’t just dismiss the idea. Technology has come along way and you might be able to virtually work them into the room using Skype, Apple’s Face Time or just by having them call in on speakerphone.
Do be careful of recruiting ‘big names’ – although they might add credibility, you want your advisory board to be about your business, not them.
If you discover that you’ve made a mistake because you’ve got fireworks on your board or someone’s just not pulling their weight, don’t be afraid to step up and say it’s not working and ask them to leave – it’s your board.
Set it up correctly
Your advisors will likely be privy to your financials, customer information and other sensitive information. Hence you’ll want to make sure that prior to your first meeting, you’ve had your legal counsel draft confidentiality/non-disclosure agreements for your advisors to sign. This is done, not because you don’t trust them, but because you want to make sure that yours is a forum for honest and robust discussion.
Manage their expectations
In order for your board to be really useful to your business, it’s critical that you set expectations up front. Be clear about what level of involvement you’re expecting from advisory team members and what deliverables, if any, you’re looking for from them. You’ll need to outline how often you’ll meet, how much time you’re expecting they’ll give to your business in between meetings, if there’s any compensation, etc.
If you’re not providing compensation, do keep in mind your advisors will also benefit from a mix of new ideas, stimulating discussions and often, if your advisors are towards the end of their careers, they might see working with you as their way of giving back.
Make the most of your meetings with agendas and minutes
Your scheduled meeting is isn’t time for a catch-up/chit-chat. It’s a business meeting. So always make sure that you’ve got an agenda worked out and circulated well in advance. And follow the meeting with minutes that outline what deliverables are due for action in the coming period so results can be reviewed at the next meeting.
Just to be clear – advisory boards are different to a board of directors
A board of advisors is just that – there to advise you. They;
- Generally have no formal role in your business (ie: employees need not apply) because with that comes the potential for conflict of interest and hidden agendas
- Have no fiduciary responsibilities under ASIC the same way that company directors do and their suggestions will usually be non-binding.
- Are not ‘formally appointed’ although you might have a process you follow to decide who you need on your team
So whilst you’re taking ‘advice’ from them, remember that your corporate responsibility rests on your shoulders and anything that really doesn’t sound or feel right, should be run by your legal or financial advisors before action is taken. And at the end of the day, it’s your business and their ‘advice’ is merely suggestion and you have to be mostly comfortable that what’s been suggested will work for your business. If we can help you with advisory board selection, we’d be delighted. Give Kerry a call on 6023 1700, drop us a note or connect with Kerry via LinkedIn.