Steps to make your Advisory Board successful
Now that we know what a Small Business Advisory Board is and why we need one, we now need to understand what the objectives are and how it will operate to achieve those objectives.
Objectives of the Advisory Board
The business owner and the advisory board must understand exactly what is expected from the advisory board on the whole and from its individual members. In smaller businesses, advisory boards advise the business owner directly. In larger businesses, the advisory board may be created to advise specific subgroups. For example, marketing, sales, manufacturing operations, finance, and so forth. Who is receiving the advice and counsel of the advisory board will determine the skills required by advisory board members.
Not understanding objectives and expectations is likely to lead to a disorganized and ineffective advisory board. At the worst it will create frustration for the business owner and the advisory board members alike.
If the business already has a formal board of directors, care must be taken to avoid confusion over the boundaries between activities and responsibilities of the advisory board and the board of directors. The advisory board provides guidance, but has no formal authority over decisions made. That authority rests with the business owner and the board of directors.
How big should an Advisory Board be?
There is no right answer to this question. The advisory board must be the “right” size. It should be built with the current, short term and long term goals of the business in mind. Company culture should also play a role in selection of advisory board members and the size of the advisory board. If the culture is more informal, the advisory board must work well within that culture. The opposite is also true.
An advisory board with too many members provides challenges in delivering information required to enable it to be effective and for organizing meetings. It is often best to begin with one or two advisory board members and grow from there to the appropriate size over time as the business owner becomes more experienced in managing the advisory board. Group dynamics suggest a maximum size of eight.
How often should the Advisory Board meet?
By definition this is a group and the effectiveness of a group is directly related to how well the group’s activities are organized and managed.
Advisory board members are recruited because they possess expertise needed by the business. Most advisory board members are actively involved their own businesses. Meetings should be scheduled well in advance and on a fixed schedule. Quarterly or semi-annual meetings work very well. It all depends on the objectives the advisory board is addressing. It is important to get the meetings scheduled far enough in advance to be sure all members will be in attendance.
Advisory board members typically are not continuously involved in the business and must be provided enough information prior to meetings to use the meeting time as effectively and efficiently as possible. Distributing information in advance can make all the difference in a well-functioning advisory board and an ineffective one. If information is not provided beforehand, a large portion of the meeting will be taken up going over background details. Advisory boards can be most effective if given time to reflect and digest information about the issues at hand before providing valuable feedback. Be sure to get confidentiality agreements executed and on file so sharing of confidential materials won’t become a roadblock to having an effective advisory board.
Do you need a meeting agenda?
Yes! Effective meetings require a well-thought-out agenda. The business owner should think about the biggest unanswered question or challenge facing the company. This can then form the basis of the next meeting.
The agenda must be prepared and distributed in advance with the background materials. Topics should focus on a few core strategic matters so that you can have the right people at the meeting and keep the meetings productive. Managing the advisory board members’ time is crucial.
How long should members serve?
Recruiting advisory board members can be difficult. However, it can be more difficult to terminate advisory board membership. Setting the objectives of the advisory board will help this situation. For example, if an advisory board is formed to help address several specific issues, when those issues are resolved or solidly underway towards resolution, it is good to decide if a different set of skills is now needed to address new issues. Briefing advisory board members of this intention at the beginning will help make these transitions easier.
Do Advisory Board members get compensation?
Advisory board members choose to serve for a variety of reasons ranging from personal ties to direct compensation to equity in the business. It is entirely up to the business owner to determine how to appropriately compensate advisory board members to reflect the value anticipated from participation. No single formula exists. The best way to calculate compensation is based on the anticipated benefit received from having an outside source to provide advice and counsel.
Don't go it alone
Nobody can build a great business alone. It is a lonely job. The most common complaint from business owners is the feeling of isolation. An advisory board, put together thoughtfully and purposefully can alleviate some of that isolation and help make the business even more successful.
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