Advisory boards

Seven great reasons to have one By Anita Campbell Have you ever thought about setting up an advisory board? It can be one of the best moves you make for your business. And it is easier than you think costing little or nothing. A brain trust for your business Here are seven great reasons to set one up today. 1. Expertise you can't buy Advisory board members can bring skill sets that are totally out of reach for many small businesses. Take the example of an advisory board for a small technology company. The advisors are: A finance manager with Fortune 500 experience A retired CEO The CTO of a midsized technology company A university professor Imagine what it would cost to hire this level of skill, experience, and knowledge. A carefully chosen advisory board can give you access to such people for a tiny fraction of that cost or no cost. Most of the time, the only expense comes from convening meetings. However, you don't have to wait for a meeting. When you have an advisory board, good advice is just a phone call or email away. 2. Business contacts when you need them Choose advisory board members with diverse backgrounds, and their network can become one of your most valuable assets. Looking for potential customers, sympathetic bankers, well-heeled investors, or even talented new employees? Sometimes a brief introduction by an advisor is all it takes to open doors that you thought were closed or that you never knew existed. Advisory board members are sincerely interested in your success. They want to introduce you to anyone they feel might help grow your business. 3. The benefits of a Board of Directors without the hassles Some business owners think an advisory board is the same as a Board of Directors. Yet, the two are very different. Definition of an Advisory Board An advisory board is exactly what the name suggests: it is there simply to advise. This means you reap the benefits of your advisors, without all the formalities, intrusiveness and expense of a Board of Directors. a. Advisory board members have no formal authority or power within your company, unlike Directors. b. An advisory board does not have the same legal responsibilities (fiduciary duties) as a Board of Directors. That means you won't need to pay the high fees and provide Directors Insurance coverage to protect them from liability exposure. c. You need not reveal your business's most intimate financial details to advisory board members. Unlike with Directors, it's your choice how much information to share with advisors. d. You need not observe legal formalities for meetings, such as voting, quorums, etc. With a Board of Directors, such legalities are mandatory. 4. Simple and inexpensive to set up and operate An Advisory board can be as informal as a breakfast meeting twice a year. Or they can be slightly more structured, with regular working meetings once a quarter complete with agendas. The level of formality and structure is up to you. What are the costs? Most advisory boards serve for free. Business owners typically call upon friends and colleagues who are willing to help out and flattered to be asked. However, it is customary to reimburse advisors for long distance travel or out-of-pocket expenses. At the very least, expect to foot the bill for complimentary breakfasts and lunches. 5. Grow your business faster An advisory board is a great way to signal to the world your intent to grow your business. Few actions say as much about your commitment. Only companies that are serious about growth take the time and effort to organize an advisory board. When assembling your Board, pick advisors who can help you develop growth strategies. Individuals whose judgment you respect and who have strategic thinking ability are what you need on an advisory board. 6. A personal sounding board Advisory boards can serve as a sounding board for new ideas, or for solving weighty problems. One of the best things about advisory board members is that they are willing, informed listeners. Sometimes, simply being able to talk to someone you trust is all it takes. Your advisors may well have dealt with the same issues in the past. They may be able to lead you to creative solutions so simple that you've overlooked them. They have probably "been there, done that." You gain the benefit of their hard-learned lessons without having to go through the same pain yourself. 7. Mentoring Let's face it: The top is a lonely place. Business owners often have few ways to get support and guidance. Your employees expect you to have all the answers. But to whom do you turn when you need help with those answers? That's where an advisory board can make all the difference. Think of your advisors as mentors. Mentors help coach you to become a more effective leader. They inspire you to greater leadership heights through their own positive examples. They help you get through the tough times. They support and encourage. Advisors can bring out the best in you. So what are you waiting for? Get started on that advisory board! About the Author: Anita Campbell is a former senior corporate executive and serial entrepreneur who has launched several small businesses. Used with permission. Copyright 2004, Anita Campbell. All rights reserved.