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CREATE AN ADVISORY BOARD TO ENERGIZE YOUR BUSINESS

by: Cary Christian

Most small businesses have a board of directors composed of several of the shareholders of the company. This board usually doesn't meet formally and serves little purpose other than to rubber stamp corporate resolutions that are required periodically.

Small businesses cannot usually afford to have an outside board of directors that includes "big name" executives like their larger counterparts do. But smaller companies can still create a board that will provide valuable input and new ideas to the business. I'm talking about an advisory board.

An advisory board is not the same as a board of directors. It does not exercise any authority over the business. Its findings and recommendations are not binding on the business owner. But it can provide strategic resources that are simply not available to the business on a day-to-day basis.


THE MAKEUP OF AN ADVISORY BOARD

To create your advisory board you want to find individuals from different disciplines that complement your own internal industry expertise. For example, you might have a representative from your largest vendor, a marketing consultant, your accountant, a systems person, a representative from your largest customer, and so forth.

You do not want to include anyone in this group that will tend to restrain the free flow of information, so you'll have to be careful with the inclusion of certain types of individuals.

For example, you may be uncomfortable including a representative from your largest customer. You may not want this customer to know so much about your business. On the other hand, this is your opportunity to get inside your customer's head and learn more about what they're looking for in a relationship and what their views of the market are. It will also tend to make your relationship stronger.

Another example might be your attorney, who will probably be the first to tell you that he or she should NOT be a member of the group. The presence of an attorney will tend to change the dynamics of your meetings in a negative way.

You want to think about every major area of concern in your business, and particularly those where you think you are weak, and attempt to place someone on this board that is an expert in that area.


WHAT'S IN IT FOR THEM?

The big question is how you get appropriate people to want to participate on your board. It's actually easier than you would think.

Your major vendor will probably jump at the chance to provide you with a representative because you are an important customer. It provides a way for them to cement their relationship with you. The same is true of marketing consultants, accountants and other professionals who have an existing relationship with you, and probably even more true of such professionals who do not have a relationship with your business BUT WOULD LIKE TO.

Pick out the people you want and approach them with the idea of participation on your advisory board. You'll probably get the people you want. If you include people who currently provide services to your company, make sure they understand that participation on this board is NOT BILLABLE TIME.


THE MEETINGS

You should meet at least once per quarter, and possibly once per month. Be prepared to discuss how your business is doing financially, your goals and any particular strategic problems you need to have the board address.

Prepare a complete agenda and have handouts available that provide all the information your board will need to evaluate the issues before them. Run the meeting professionally and strictly adhere to any time constraints of the participants. Arrange a nice lunch for the participants at your cost.

These meetings will not substitute for professional consultation that some of the participants would normally provide to you for a fee. Do not try to use it for this purpose. You should be concentrating solely on the overall strategy of your company and how specific issues and decisions you have tentatively made will affect your ability to execute that strategy.

For example, you may have been considering selling a lower end version of one of your products to increase sales to people who cannot afford your existing products. Your board may tell you that you will be cheapening your image and that such a move will hurt sales overall. Then again, depending on your industry and how you are viewed in that industry, it may be a tremendous idea. The discussion among the members of the board will provide you with outstanding feedback on these types of issues.


A WORD ABOUT HOME BUSINESSES

Even home businesses can form an advisory board. It probably won't be as sophisticated or formal, but it can still be useful. Find friends and contacts who have the special skills you need and buy them lunch every month or so. Spend an hour learning from them ways to make your business more efficient and profitable.


IN SUMMARY

An advisory board can provide terrific benefits to any small business. Use it to supplement your knowledge in areas where you are weak and to keep your fingers on the pulse of your markets. With the right composition, it might become one of your most important business assets and a source of advantage over your competitors!


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