In my personal experience working with business owners around the country, less than 10 percent of privately owned companies operate with a true board of advisors. The most common reason is that small business owners enjoy total control of their companies and have little interest in relinquishing authority. In addition, business owners tend to be very private and are not comfortable with outsiders having an intimate knowledge of their sensitive information.
Two questions need to be addressed by every business owner: 1) Is there value in securing outside advice regarding the core functions of your business, and (2) Can this advice be had without giving up control, authority or privacy? There are numerous benefits to forming a team of outside advisors including: enhanced business growth, accountability, encouragement, critical thinking, unfiltered feedback, vision planning and prioritization.
Enhanced business growth is a natural outcome of soliciting and implementing ideas from outside advisors. Many business owners have reaped tremendous rewards by forming an outside board of advisors. According to TEC, a well know advisory board organization, TEC member companies are growing faster than the S&P 500, the Dow Industrials, and the Fortune 500 combined. Clearly, these companies are receiving input from their peers that is positively affecting their company.
We all need greater accountability. Webster’s defines accountability as an obligation or willingness to accept responsibility for one's actions. It is further defined as a statement explaining one's conduct or exposition of reasons, causes or motives. It is dangerous to operate unchecked in any part of your life and your business is no exception. We all know how tempting it can be compromise integrity or put off responsibility when no one is watching.
The world of a business owner can be very lonely. An encouraging word goes a long way toward propelling us past the proverbial bump in the road.
Critical thinking skills allow us to see the forest and the trees! Outside advisors can hone and challenge our pre-conceived ideas and improve our ability to assess situations and react appropriately.
Employees and company insiders tend to filter the responses and information they give their superiors. Outside advisors can be tasked with providing unfiltered feedback with no concern for the owner’s response. This relationship also provides a safe outlet for sharing problems.
Vision planning is at the core of every owner’s responsibility. Advisors can provide a fresh perspective and feedback to improve the viability of your plan and suggest strategies to reduce potential obstacles.
It is difficult at best to maintain priorities during the heat of your daily business battles. A team of advisors can act as a guide insuring you stay on the course you have plotted.
The primary type of outside advisor who can be utilized without giving up control or authority is an advisory board. It has no ability to mandate decisions or obligate you to action and they operate at your sole discretion.
An advisory board can take many shapes, including an informal gathering of colleagues and establishment of formal groups with specific objectives. The greatest benefit is received from establishing a formal board that meets with you on a systematic basis.
Advisory boards can range in size from a few people to as many as 15. TEC, which can be found at www.teconline.com, is an example of an organization that facilitates and creates a board of advisors for your company. TEC (which has been around since 1957), has over 7,000 members, combined revenue of member companies of $133 billion, and combined employees of member companies of 2.1 million. TEC has established facilitators around the world who act as moderators of each board of advisors. Business owners, who meet certain criteria, pay an annual fee to join an existing board of advisors. The board is comprised of peers who are in different industries but facing similar challenges. The TEC facilitator organizes monthly meetings of the board with a formal agenda and stated objectives.
In addition, the TEC facilitator participates in individual meetings with each of the members in his group to provide targeted advice. The net result is a group of like-minded business owners who act as a board of advisors for each other’s company.
Another approach is to establish your own board of advisors. This group would be committed to providing you with feedback but without your corresponding responsibility to their company. The obvious challenge is finding people who would be enthusiastic about becoming involved in your company on a monthly basis. One way to overcome this is to offer a small stipend. You can provide additional motivation by allowing them to publicize the fact they serve on your board of advisors thereby enhancing their credibility. Consider going to some of your existing individual advisors to solicit their participation.
You need to take a methodical and detailed approach in selecting your team of advisors. Larry Bossidy, chairman & CEO of Allied Signal, Inc., summed it up best when he said, “There was a time when I thought that brains were everything. That view has dimmed recently. I think brains are important but now I also look for good team-builders, good communicators and courageous people who do not get stuck with an idea. You need people who are more nimble, who have the ability to lead organizations in changing and tumultuous times comfortably, without panicking.” Look for individuals who add value to the company by among other things:
- Providing wisdom from years of experience.
- Offering a successful record of accomplishment leading growing and healthy companies – You cannot take someone where you have never been.
- Offer access to new relationships in areas you want exposure.
- Enhancing the credibility to the company.
- Demonstrating strategic, objective thinking and good communication.
Confidentiality is of paramount importance. Can you trust the advisors you have assembled? Most of the due diligence is done by the facilitator in an organization such as TEC. If you assemble your own group, get confidentiality agreements signed by each member. This creates a professional framework and highlights the importance of the trust you have placed in each person.
Increase your board’s effectiveness by holding regular planned meetings with clear agendas. Provide an outline of your agenda at least one week in advance. Facilitate frequent interaction and communication of important issues and ideas among the board members.
“There are high spots in all of our lives and most of them have come about through encouragement from someone else. I don’t care how great, how famous, or successful a man or woman may be, each hungers for applause.”
- George Matthew Adam
