By Spencer Silk
May 23, 2013
No business is too small to benefit from having an advisory board and an advisory board is such a powerful management tool that no small business should be without one. Think about the last time you met with other business people and had an open discussion, sharing your ideas and concerns. An advisory board is a formal version of this process.
Unlike a one-time or casual event, an advisory board is composed of people with a genuine interest in your business and a desire to see it do well. You can think of an advisory board as a management think tank. Your advisory board members will serve as a sounding board, a source of ideas and expertise – and give you honest advice.
More than anyone else, your advisory board will be on your side. They will be people with no ax to grind who want to listen to you and advise you. Above all, they will want to contribute to your business’s well-being.
A well-structured advisory board would provide perspective. An advisory board can make critical contacts with CEOs of potential acquisitions and get real-time market knowledge of the start-ups that are currently working toward disrupting their core business. The right advisers will think about market transition as a startup rather than an established company.
An advisory board should not be confused with a board of directors. Unlike directors, advisory board members have no authority over your company. They are simply there to offer advice that you can take or dismiss. They do not have the legally imposed fiduciary duties of directors.
Two keys to success
Have an objective: The most successful boards are formed with a specific goal in mind. Some form a board strictly for the purpose of getting input on new business plan.
Put it in writing: Though advisory boards are more informal than boards of directors, they should still be governed by written agreements. Generally, board members should sign a nondisclosure agreement, and it is wise to draft a charter that outlines your board’s responsibilities and logistics, such as meeting frequency, expected time commitment and compensation, if any.
An advisory board is an especially valuable management resource for small businesses. No single person can know everything, and ad hoc, on-the-fly advice can be worse than no advice. An Advisory Board that meets regularly gets to know you and your business and can provide the management expertise you need to avoid shoals of mistakes and set your business on a true course. Seek advice from others and start your own today.
Spencer Silk is president of Franklin CIO Services LLC - a professional services firm that assists small and medium sized businesses with planning and updating business plans, developing and improving processes to improve performance, payables, billing, revenue cycle and production. Silk can be reached at franklincio.com/index.html or 248-642-3287.