What is more challenging to an entrepreneur than carrying all the responsibility for your biz on your shoulders? Unlike in employment where you have the benefit of supervisory management, as an entrepreneur you are everything. Your life, that of your biz, employees, suppliers and even buyers depend on you. Most often, you do not possess all the knowledge and experience to go with the biz. What you have is a brilliant idea, and sufficient energy. Some decisions really frustrate you and you wish you had someone to help. Yes you should have. For large corporates it’s called a Board of Directors (BoD). For small biz however, you have to make do with a Board of Advisors (BoA). The difference being the level of legal responsibilities they assume. You are best advised to, as much as possible, avoid close friends and families being in your BoA. You will always have other opportunities for them to cheer you on, tell you what you want to hear and generally make you feel important.
1. What will the Board of Advisors Do?
i. Provide Outside Perspective
Being outsiders, the BoA aren’t as immersed into your biz as you are. They are able to see things from an objective perspective and ask questions you may not have considered. A BoA should be honest with you, challenge you and possibly apply breaks on you at times. This is difficult for most entrepreneurs but guess what? Even the best get help.
ii. Bring New Experience
Your young biz may only be able to afford so much skill and talent. If you are lucky to have a proper management they may also be a little limited in experience. A properly constituted BoA will be able to inject specific skills and experience lacking in the company. Go for guys with authoritative experience in their business area.
iii. Provide Accountability
You thought the ultimate pride of being an entrepreneur is being your own boss? Maybe not entirely. You prepare the rules, procedures, strategies, tactics, budgets, work plans etc. But as a person you hardly are able to hold yourself accountable to them. What is better than having someone who will enforce corporate governance aspects and also hold you and your management accountable to your promise and the decisions you take? Apart from improving general performance results and effectiveness, being accountable to someone else will also help avoid costly mistake you would otherwise make.
iv. Greater Credibility
A BoA can enhance the credibility of your biz in your circles or even larger circles. A BoA helps you open doors that would otherwise be tightly shut. Firstly, the idea that your biz is subjected to corporate governance is a big plus with prospective creditors and investors. Additionally, if you have among your advisors some serious names with authority in specific areas then it becomes even much easier for you to secure appointments and other small (or big) favors. Try to see how your letter head looks if it has the names of your Board at the footer. A good Board of Advisors should not only open your access to networks but also actively make important introductions for your biz and also enhance your public relations as a company.
v. Provide Strategic Direction
If well empowered, your BoA will be able to provide strategic direction for your biz by aligning your strategies and actions to the core objectives of your biz. A BoA also ensures that if it is time to adapt or even change the core business of your venture then it is steered clean. Additionally, their input can also ensure you get the best deals when it comes to hiring senior staff, negotiating contracts etc.
2. Things to look for as you get your Board of Advisors
i. Ideal Size
The BoA should neither be too small nor too large. You need it to be easy to deliberate and make decisions without discussions getting unnecessarily lengthy. It is widely recommended to have 3-5 advisors. You will not want to turn your Board meetings into a Baraza.
Try to find a BoA that brings in diverse circumstances in skill and experience, perspectives, age, gender and also other diversities. Don’t get guys that all think the same but ensure you optimize on the diversity of the board. While at it, you will try to avoid getting Advisors whose personalities are not compatible otherwise they will use your Board as an ego competition platform. If your mentor agrees to sit in the Board it will be an additional advantage.
It is recommended for a BoA to meet at least once quarterly. However, depending on the growth phase of your company and extraordinary need, it will be possible to have more regular meetings but not more than 6 in a year. Remember the BoA won’t replace your management. Unless in extra ordinary circumstances, BoAs should be able to do a good job in 90-180 minutes. Day Long meetings would indicate a huge problem in the BoA.
Due to their infrequent and also short nature, BoA meetings will require you to prepare really well. Get your agenda right, distribute it in good time, prepare every material that is needed and always be clear on what you expect of the meeting. Bring to the meetings only agenda that you need input and definite decisions from the BoA. It is always important to ensure there is optimum openness in communication between yourself, management and the Board. Otherwise, unless there is clear communication, you won’t get value for the Board. If you seek the advice and decision of the Board, it is a nice thing to implement it. Otherwise it won’t be gainful for either you or the board.
v. Management Buy-in
It is nice to get the buy-in of your management and staff on the issue of the Board and for them to understand that all your actions are held to account somewhere. Have department meetings, then have management meetings from where you consolidate the management position of your company then present that positon to the board. Hardly should it be necessary for employees to appear before the Board unless it’s absolutely important.
The BoA will be contributing valuable time and input into the success of your business. This will lead to the success and growth of your company. How about sharing just a little bit of that success with the people who help with the decision and advice? I have sat in a few Boards myself and I assure you we like receiving that cheque. Your Advisors use fuel to come to your issues, they give your ideas and time which may not necessarily be that cheap. Board allowances can be anything from a minimum of 20k annual.
vii. Performance of the Board
It is always nice to agree on results with their Board with also Key Performance indicators for the Board; How much in capital will they help you raise, how many customers will they deliver, how much revenues can they help raise etc. An evaluation of their performance will then tell you if they are of value to the company or need to be changed, replaced or the entire idea discarded. In any case, you will spent money on them. Better get value.
Now, if you would need help in thinking around a Board of Advisors for your biz do not hesitate to get in touch