It’s easy to get caught up in the day-to-day details of running a successful business. But it’s important to take a step back every now and then. From afar, you can better assess where you are and where you’re headed. Sharing this view with an advisory board can help to keep your business on the right track.
What is an advisory board?
An advisory board’s primary function is to advise the business owner on a range of professional matters for which they possess expertise. Members of an advisory board might advise on anything from a new product line to a buy-sell agreement.
Who are the members of an advisory board?
A typical advisory board may include peers, mentors, and professional staff, such as attorneys, financial planners, bankers, insurance agents, and CPAs.
Here are four things to consider for an effective advisory board:
#1 You Don't Know What You Don't Know.
This is precisely why successful entrepreneurs have surrounded themselves with a team of smart people. Great leaders “check their ego at the door” and allow for ideas and discussion to flow. An advisory board gives you the ability to collaborate with various experts to solve key issues and brainstorm ideas. Of course, it’s wise to place individuals on your advisory board who have experience in what you’re trying to accomplish. For instance, if you’re considering a merger or purchasing a business, make sure to include professionals who possess a wealth of M&A experience. Together you can uncover more solutions and leverage more resources within your network.
#2 Think Outside Your Usual Circle.
In addition your mentors, peers, and professionals, you may want to consider including an industry insider. For instance, this could be a representative from your major vendor. Having a frank, high-level conversation with this individual could help you better understand your market—as well as your invoices. They may be willing to provide insight into price fluctuations, market trends, and even comparable businesses.
#3 Include the Next Generation.
If you’re planning to pass your business on to younger family members or staff in the coming years, consider inviting these individuals to attend advisory board meetings. Not only is it wise for the next generation to become acquainted with your trusted advisors but it also gives them an opportunity to engage in high-level discussions.
#4 Meet Regularly—and Not in Your Place of Business.
Advisory board meetings should be on a consistent schedule, ideally 3-4 times a year. To minimize distractions, consider holding these meetings outside of your place of business. With a formal meeting on the calendar, you can fully engage in high-level thinking, giving you the perspective—and expertise—you need to focus on what lies ahead.
An advisory board may not be for every business, but for some it’s a game changer. I hope these considerations are helpful in envisioning what yours could be. If you’d like to move ahead with establishing an advisory board, giving your CPA or other trusted advisor a call is a good place to start.