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Advisory Board for Small Businesses

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Often the leaders of middle market, privately-held companies assume that advisory boards are limited to the corporate world.  But the reality is that many small to mid-size companies rely on advisory boards to bring them fresh perspectives and important insights. Family owned businesses are especially concerned about becoming too insular and so they turn to outside professionals for their business acumen and experiences.

How do you form an advisory board?

In a middle market company the owners and others in management roles should carefully consider who they would like to invite to serve on their advisory board. It is important to seek out participants with knowledge of the company and the industry as well as those who are outside of the sector and can provide different suggestions.  It is also important to seek out members who are diverse, including those from different generations, cultures and genders - so that the company benefits from a variety of strategic ideas. 

What is the role of the advisory board? 

Having encouraged a group of trusted colleagues to join the company’s advisory board, it is essential to define a clear purpose for the group, set goals and guidelines, and create a structured process so that the company can gain the most from the board’s collective wisdom.  Companies that want to have a role as leaders in their field understand that they cannot afford to be too narrow in their approach, making it necessary for them to call on others to help them be more visionary, to see the 'bigger' picture and to be more prepared to lead, rather than respond, to changes that may take the company in a new and unexpected direction.

Once the board members have been invited and the board is formed, the President or CEO has an obligation to ensure that a meeting agenda is developed in advance and that notes/minutes are taken at each meeting and shared immediately afterward.  Relevant tasks should be assigned to advisory board members with dates for completion to confirm that implementation will occurs. All of these activities and processes help to keep the advisory board members engaged, focused and productive and ensure a mutually beneficial experience. 

How does an advisory board add value to a privately held company? 

While advisory board members may have no real 'power' over company decisions, their voices are heard. In this way they can influence the direction of the company, assisting with establishing short and long term goals, refining the strategic vision of the company and striving toward consistent profitability and sustainability.   

Each business owner sets the stage for his or her advisory board based on the company's current life cycle stage, its short and long term goals, and management's appetite for embracing change. A board that includes inside leaders and outside professionals can draw on the best of both worlds - combining those who add value from within with those who offer an objective, external view. 

The advantage to companies that form advisory boards is that the leaders have consistent access to a wide range of smart ideas from trusted business colleagues from inside and outside the company that can lead to more effective strategic decision making, stronger alliances and a culture that encourages growth and innovation.