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Tap into the wisdom of experts

How an advisory board can improve your business

By Dawn Josephson

Whether you’re a “solopreneur” or employer of hundreds of people, at some point everyadvisory board entrepreneur reaches a startling conclusion: “I don’t know everything, and I need help making decisions.”

Yes, it’s a tough pill to swallow. But the sooner a business owner reaches out and accepts key insights from others, the more successful the business will be.

This realization often marks the pivotal moment when many entrepreneurs decide to form an advisory board. While many business owners interchange the terms “advisory board” and “board of directors,” they are actually two very different things.

Just as the name implies, an advisory board simply offers advice to the business owner.

Sandy Bartow small

Sandy Bartow

Sandy Bartow, vice president of the Jacksonville Regional Chamber of Commerce’s Small Business Division, explains, “An advisory board is a non-fiduciary board of advisors who assist in a business’s growth and planning. This group provides a 360 degree view of differing viewpoints and combined expertise related to an issue, a challenge, or planning.”

In contrast, a board of directors is a body of elected or appointed members who jointly oversee the activities of the company. They govern the organization by establishing broad policies and objectives; select, appoint, support, and review the performance of the CEO; ensure the availability of adequate financial resources; approve annual budgets; and are held accountable to the stakeholders for the organization’s performance.

Knowing this, an advisory board is often the better choice for a for-profit small business. (Non-profits of any size typically must have a board of directors.)

A fresh perspective

Having an outside perspective for your business sounds good in theory, but is it always good in practice? Some local business owners certainly think so.

Clint Drawdy

Clint Drawdy

Clint Drawdy

and Chad Perse started Hire Methods, a professional staffing company, in 2004. A few months into their new venture, they realized they needed some guidance and formed a six-person advisory board. Today, they couldn’t imagine running their business without one.

“In the beginning, our company was growing very fast— perhaps too fast,” explains Drawdy. “Our advisory board helped us navigate that period and work with banks effectively so we could get the capital we needed to keep growing the right way.”

Chad Perce

Chad Perce

Since then, they’ve relied on their advisory board for a number of specific issues, including growth, financing, marketing, and overall strategy. “Sometimes the board members act as a devil’s advocate, and other times they offer experiential learning,” says Drawdy. “Both are important. The key for me is not leading my advisors to the answer I want. I’ve learned that it’s best to just state the problem and give some company background, but not to paint a scenario in such a way that I inadvertently force them to a certain conclusion. That’s when I get the best advice.”

Nathn Fabrick

Nathn Fabrick

Nathan Fabrick

, president of 110%, an athletic apparel company, was fortunate in that when he purchased the company in 2009, an eight-member advisory board was already in place. Since day one, he’s leaned on them to help with the business’s strategy.

“Getting to use other people’s experience, wisdom, and guidance helps you stay on track,” he says. “When you run a small business, it’s easy to slide into rabbit holes and start working on things that might be good for today, but not good for the business’s long-term growth. It’s helpful to have outsiders ask you questions, make sure you build systems, and hold you accountable.”

Both Drawdy and Fabrick agree that their advisory boards have positively impacted their company’s growth. They also encourage all business owners to form their own advisory board as soon as possible.

Tips from the pros

If you think an advisory board sounds like a good option but you’re unsure how to form one, here are some tips to get you started.

• Pick the right people. Cathy Hagan, area director for the UNF Small Business

Cathy Hagan
Cathy Hagan

Development Center, says that many business owners ask their friends and family to be board members, but that’s not always the best strategy. “You should look for key expertise and find people who understand your industry,” she says. “You want people who have skills you don’t possess or who have a strong network. That’s not always your friends and family.”

Therefore, she advises that you seek out professionals from a variety of backgrounds, such as finance, marketing, and human resources. Reach out to those people, even if you don’t personally know them, and ask if they’d be on your advisory board. You’ll be surprised how many people say “yes.”

• Establish a meeting schedule. According to Bartow, the board’s meeting schedule will depend on the stage or current activity of the business. If something intense is going on, such as an acquisition, the advisory board may meet weekly. However, for routine matters, bi-monthly or quarterly will often suffice. Both Drawdy and Fabrick meet with their advisory boards on a quarterly basis.

• Enforce term limits. While you could have the same advisory board members forever, you also want the ability to dismiss one and bring in someone new. “As the business grows, the owner’s needs of expertise will change,” says Hagan. “You want your board to reflect the advice you need and the stage you’re in. So bring board members in with a one or two year term, with an option to renew. That way there’s no hard feelings should you want to get rid of someone.”

• Decide compensation. While many business owners pay for food and other meeting expenses for board members, being on an advisory board is typically an unpaid position. “Experts agree to do it because they like to give back,” says Bartow. “They want to support a business owner and help them grow their company.”

Additionally, Drawdy reveals that the meetings aren’t always about him. “Sometimes the issue we’re discussing also pertains to a board member’s business,” he says. “My board members often say they leave the meetings having learned just as much from the experience.”  

No matter how helpful or insightful an advisory board may be, the final decisions the business owner makes are solely their own. “At the end of the day, you have to go with your gut,” says Fabrick. “No one knows your business better than you. So listen to your advisors and learn from them…but take everything with a grain of salt.”

Dawn Josephson is a contributing editor to Advantage. She can be reached at dawn@masterwritingcoach.com.


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