It is lonely at the top. Running your own business can be isolating with no one to objectively discuss strategy. Many entrepreneurs turn to their lawyer, accountant, or a consultant for help with little real relief. A better solution exists in forming an outside advisory board. This is not a legal board that is elected by the shareholders and has the fiduciary responsibility that goes along with it. This is a board of three to five outside advisors that are selected by the owner to help give advice and direction on key issues.
Aileron, a non-profit foundation in Dayton, OH, specializes in helping small business owners set up high performing advisory boards. Established in 2008 by billionaire Clay Mathile, Aileron believes that the advisory board can be the best or least used resource in the company.
Aileron and others experts in the industry list 10 essential elements:
1. Formulate a strategic plan before setting up the board
If your company does not have a plan about where it is going, then the board will not have goal to measure their actions. This will ensure that everyone is headed in the same consistent direction.
2. Find complementary skills
You need board members that match your organization. This includes not only industry expertise, but also skills such as marketing, finance, and distribution. Get help where you and your team are particularly weak.
3. Build agendas around the 3 to 5 biggest issues of the year
Set focused goals on a limited number of topics that can help the owner this year. Being over ambitious on how the board can help will dilute results.
4. Make sure that the board members are prepared
Send out material to the board members at least two weeks before the meetings. The quality of the advice that the board gives is based on the information they receive. This will also ensure that not only are the board members prepared, but the owner is as well.
5. The owner must run the meeting
This should never be an outside consultant or board member. When the owner runs the meeting, they are more likely to get the results they want. If they do not know how to run a meeting, this is a good time to learn.
6. Discussion time needs to exceed presentation time
Data dumps are not useful to anyone. Limit the time that is allotted to presentations and the length of PowerPoint presentations. The focus should be the discussion among the board members.
7. Have access to senior management
Do not let the owner hide the management team. A lot can be learned about company dynamics by talking directly to them.
8. Don’t be afraid of conflict
It is normal that business groups shy way from conflict. However, conflict can be the key to a productive discussion and add to the chemistry of the group. The key is to learn how to “fight” nice.
9. Do an assessment of the meeting right after the meeting
Get feedback on how the meeting went at the end of that meeting. Self-assessment and monitoring is key to any effective group.
10. Pay board advisors
Most board members get paid about $1,000 per meeting. Paying this small honorarium will ensure the attendance and productivity of the board.
What tips do you have for setting up an advisory board?