After being in business for a long time, entrepreneurs realize that they are often lonely at the top. Usually, the sole owner of a company is the one who creates the venture. As the organization grows, the owner hires more workers. Regardless of the company’s size, the entrepreneur is responsible for its success.
An advisory board is a business advisory that allows entrepreneurs to get the advice they need from experts. Unlike regular directors, these individuals are not involved in the governance or stakeholder representation of the company. Instead, they guide the current state of the business. An advisory board is typically a sounding board for entrepreneurs. It can provide them with valuable insight and guidance and help them develop their business plans. An entrepreneur should consider a few key factors when creating an effective advisory board.
With an advisory board, an entrepreneur can use it to weather the current economic conditions and business opportunities. For instance, a chef planning on opening a new restaurant might form an advisory panel to gain a deeper understanding of various fields, such as human resources and marketing. Before creating an advisory board, an entrepreneur should consider their knowledge gaps.
Board members should bring the specific experience needed to fulfill the strategic goals of the company and fill any knowledge gaps. This is especially important in family businesses when the baton is being passed from one generation to the next, as an experienced board will help this process go more smoothly.
- Have Doubters
The ideal advisors should be people committed to helping entrepreneurs reach their goals. They should not be afraid to provide advice that contradicts their thinking. Since the feedback from the board can be brutally honest and affect an entrepreneur’s confidence, they should avoid appointing individuals close to their family or friends. Even though they may be close friends, an entrepreneur may still find them valuable advisors if they have integrity and are genuinely interested in the company’s success.
- Leverage Your Network
Getting the right advisors can be a daunting task for an entrepreneur. The first step in finding an ideal advisor is identifying people in their professional or personal network with the necessary skills and experience to serve on the panel.
Referrals can be obtained if a particular need that the entrepreneur cannot meet someone in their network. After finding potential advisors, an entrepreneur should thoroughly vet them to ensure they would be an ideal fit. Aside from having the necessary technical expertise, advisors should also be passionate about helping entrepreneurs.
- Have a Clear Agenda
All board meetings should have a clear agenda that specifies why an issue is on the agenda and which problems or questions the meeting will work to solve. Prepping your advisory board for these topics will lead to a more productive meeting that allows you to collaborate effectively. As Advisory Board Architects suggests, providing your board members with this agenda a week before the meeting allows them the appropriate time to study relevant context information.
Sending out notes specifying what was agreed upon and conducting a post-meeting survey to improve the quality of meetings is a great way to document their success and promote productivity.
- Time is Money
Time is important in any business. Therefore, working towards efficiency should be one of the end goals for advisory boards. One way to achieve this is by having a set system for your board’s operations, such as keeping minutes for regularly scheduled meetings. Facilitating frequent communication between board members and the managers they work alongside is also essential to have a more efficient team.
Another way to improve your board’s efficiency is to prioritize and limit the aspects you want advice on to 3-5 areas that can be achieved both short-term and long-term.
Creating an advisory board is a learning process, but there are a few mistakes you’ll want to avoid as you do so.
- Do not make your board too homogeneous. You’ll want to ensure that there is a variety of expertise represented in order to have the best outcome.
- Do not forget the importance of communication. Poor communication between your advisory board and management team leads to dysfunction in your organization.
- Don’t treat your board advisors as board directors. They are not responsible for governance or fiduciary duties. If you do not have a fiduciary team, you can ask your advisors to oversee accountability for the leadership team.
- Do not hold onto advisors who are not pulling their weight or contributing in a positive matter.
- Don’t let good advice go to waste. Make sure you are putting this into action.