Have you ever considered creating an advisory board for your business? If you want to do everything you can to keep your business successful, an advisory board is worth serious consideration.
An advisory board is a small group of people chosen by a business owner to be their personal and confidential sounding board. The role of the advisory board is to inspire, challenge, and support the business owner. Brent Banda, an experienced advisory board member, says the goal of an advisory board is “to raise the standard and expectations for the company, to help it reach a higher level of sophistication.” In other words, to help the business reach its highest potential.
Business owners who have taken the leap find that their advisory board adds value in both expected and unexpected ways. Here are a few examples.
PLATFORM FOR CHANGE: CHALLENGING THE STATUS QUO
We humans find it so hard to change. It is far easier to keep doing things the same way than to do the hard work required to make changes. Yet change is critical to ongoing business success. Jan Early, co-owner of the long-time successful Early’s Farm & Garden Centre, is very pleased to have an advisory board. Early warns that “businesses can get into a rut, and that is a problem. If you are not growing your business, you are dying.” An advisory board challenges the business to do better.
Objective “outside” board members inspire critical review and they spur change. They can shed new light on better ways to do things because they have lived the experiences and witnessed the improvements.
When was the last time you seriously reassessed your business processes, your human resources policies, customer relations practices, safety standards, inventory management, and management succession planning? An advisory board can point you toward current, efficient processes and systems tailored to your particular business.
People in business together develop relationship patterns over time, sometimes over decades. But some of these relationships can be unprofessional, unhealthy, or self-serving, and they can be a drain on your business and on staff morale.
You may have, for example, a longserving employee who resists change. Or persistent sibling rivalry in the family business. Or a next-generation adult child who takes advantage of support staff. Or maybe the management team is no longer strong enough to lead a dynamic business. The business owner is entrenched, finding human resources management among the greatest challenges.
BUSINESS OWNERS WHO HAVE TAKEN THE LEAP FIND THAT THEIR ADVISORY BOARD ADDS VALUE.
An advisory board will expect the business owner to address the hard issues and they will support necessary and respectful changes. These hard decisions are often more readily accepted throughout the company because they have the backing of independent outside advisory board members. Bryan Leverick has experience on several advisory boards, and he reminds owners to think of long-term business success because “the marketplace does not reward weak performance.”
Planning one’s exit from a business does not come naturally or easily to most people. Leverick notes that some owners “don’t really want to let go, and they may have only a slow, leaky succession plan.” But as the saying goes, every owner will exit eventually – voluntarily or involuntarily. An advisory board is well positioned to facilitate the road to succession, sharing their own experiences. The advisory board, says Leverick, “will hold up a mirror and ask bluntly, ‘what if you are struck with cancer, develop Alzheimer’s, or are hit by a bus? Will your business carry on?’”
Succession planning is about ensuring the future of the business and everyone affected by the business: employees, customers, and suppliers, as well as the business owner and their family. It is a process best started early and developed thoughtfully.
DECISION-MAKING AND ACCOUNTABILITY
Advisory boards don’t make decisions. They expect the business owner to make decisions – informed decisions that are in the best interest of the business. That includes taking charge of the future and choosing strategic priorities so that your business stands the greatest likelihood of long-term success.
While owners may have made decisions largely by instinct in the past, when you have 50 – or 200 – employees on your payroll, the advisory board will expect more diligence in business decision-making. Pat Mah, the dynamic CEO of North Ridge Development Corporation, which has an advisory board, says the board will “expect evidence of why one course of action is recommended. You need to do your homework, the heavy lifting – and in the end, it is worthwhile to understand your business at a very deep level.” And this upfront process may be followed up with a question such as, “alright, show us what action you have taken after we had this thorough discussion on critical business issues. Show us how you measure results.” Wise business owners welcome the call for rigour and discipline.
GOOD MEETING PRACTICES
Spencer Early, also of Early’s Farm & Garden, admits that busy business owners may resort to having only ad hoc meetings with staff. Now that he has an advisory board, their meeting practices have greatly improved. The board models good meeting practices: they meet offsite, they have an agenda and a note-taker, and their goals are clear: strengthen the business, engage the next generation, think through the succession of owners and management.
As a result, Spencer Early sees “better planning, more communication, lots of respect from the outside advisers – and people are buying into the conversations.”
OPENING THE DOOR TO OUTSIDERS
Private and family businesses generally prefer to keep their business affairs confidential, avoiding judgement and exposure. Yet those who have invited carefully chosen outside board members into the internal corridors are pleasantly surprised.
External board members, Jan Early found, “show lots of respect. They are a fresh set of eyes, and they want us to succeed. They listen well and share very good ideas.”
Advisory boards can come in all shapes and sizes. Many consist of the CEO and a small number of external members. The Earlys’ advisory board comprises family members, senior management, and outside members. And Scott Banda, CEO of Federated Cooperatives Limited, speaks enthusiastically of his peer/personal advisers who “speak honestly and have my back.”
External directors are chosen based on their skills and experience to augment the leadership team. As well, stresses Leverick, they must be people “with a strong moral compass, people who will not tolerate negligent, unethical, or illegal behaviour within a business.”
Outside directorship is not a permanent assignment. External directors can change periodically, ensuring a refresh in thinking and the addition of new skills as required by the changing needs of the business.
WHAT WOULD YOU SAY TO SOMEONE EXPLORING THE IDEA OF AN ADVISORY BOARD?
Jan Early says, “Go for it. Start right now, even if you think things are going well in your business. With an advisory board in place, you are in good shape when things don’t go as well.” Leverick supports that suggestion. “Don’t wait until you are not successful. There is always another bump after each sweet spot. Your advisory board should get to know the business before there are problems.”
Jan Early can think of only one downside, and that comes “if the business owner does not listen and follow through on the goals. By having an advisory board, we are showing that we are serious about the future of the company.”
Are you reaching your full business potential? Building an advisory board is an investment in the future of your business.
First published in the June 2019 edition of The Business Advisor.