How to set up a Board of Advisors for a small 10 person consulting company?
We're thinking about setting up a Board of Advisors to help achieve our business development goals. Does anyone have advice on this, or experience they'd like to share?
There are a few things you need to consider.
1) What do you really want to accomplish with your board of advisors? You mentioned you want help achieving your business development goals. What does that really mean? Do you want help selling or do you want guidance on how best to grow your business? Make sure you're not confusing what a consultant would do with what a board of advisors would do. Don't expect your board of advisors to be consultants to your business or an augmentation of your sales force. They will most likely do a little or each, but you shouldn't expect them to fill all your needs.
2) Determine precisely what areas of expertise you wish to have your board represent. Some examples include: strategy, HR, legal, finance, industry expertise, etc. Make sure you have a well-rounded board that includes the expertise you feel you need the most.
3) Realize that you're going to have to pay them for their time. Most people who are worth their salt will not sit on a board of advisors without some form of compensation for their time.
4) Have at least some members who have experience being on a board (of advisors or directors). You don't want all rookies.
5) Write a charter that outlines the roles, responsibilities and expectations for board members. Have a plan for terms and turnover, as well as performance management.
I hope this is helpful. I'm sure the rest of this community will have additional thoughts.
Unlike a board of directors, (formal legal authority over a company) and a fiduciary duty to its stockholders, the advisory board won't make decisions for you. Solicit candidates with a two or three page prospectus describing the business. Explain why you want a board and what you're looking for. Then detail how it will operate, and its structure; including compensation (if any) and the length of time you want that person to service. Please make sure you explain that this venture is exploratory (you want to make sure they are a good fit).They should be able to jell with other board members (including you). The board should meet 3 to 4 times per year, in a professional setting. Make sure you put the agenda in writing, and state clearly what you expect the board to contribute at each session. Remember, they are there to give advice
I would start the process by defining your company's key success factors -- the characteristics that most determine whether the business will thrive and the strategic challenges the company will face. You stated that the advisory board was for a consultant company (Service) I would suggest two or of your three outside advisers be from service businesses. (The advisory board should be at the level you want to go to, rather than the level you're at,")
Don't recruit highly visible executive from a big company. Choose people that are just above where you want to be. If you projected sales are 2 million, then seek a person or persons with a company just above that (3 to 5 million).
Last but not least, each board member, by name, should also receive written indemnification, and they should sign a nondisclosure agreement.
I hope this information was helpful.
You should select a professional accountant and a lawyer who focus on your type of business and they should be part of your advisory group along with professionals who have a strong track record in your line of business from marketing and sales.
Barry, typically you want to have business people that can help your business as your advisors. For example if you will need legal advice one of your board members would be a lawyer specializing in your business field. You may also want someone in marketing and finance (CPA). You do this so you can get these service donated or in gratis. Most make the mistake of getting their best friend, uncle or other family member to be board members because that seems to be the easiest answer.
Think about who could really help you advance your business goals. Don't be afraid to go outside your network either. Local Chamber of Commerce's are great resources to find like minded business people.
Hope this helps some.
One of the best solutions out there for a Non biased, no conflict Board is to utilize SCORE. There are 12000 volunteers across the country. The only cost for mentoring is your time and effort. You can find a local chapter by going to www.score.org/chapters-map and enter your zip code and click Search.. the closest offices will be the result. You can even connect with mentors via email, Skype and chat. SCORE is a resource partner with the Small Business Administration. Feel free to reach out to me if you have any questions.
Barry, here's another approach. I run business owner advisory groups, and I know similar groups exist in many cities. In my groups, ten owners of growing small businesses meet each month--under my direction--to help each other set goals, stay on target, and tackle management challenges. You get the benefit of the expertise of nine other owners, and learn a lot from how they tackle growth challenges.
Most of my group members also have other outside advisors, such as attorney and CFO, and some even have a board of directors. But the ongoing predictable monthly meetings with the same savvy people keeps them on target.
Barry after a little background check on your professional profile I believed you are very well informed about this question you posted but notwithstanding let me help you with my kindergarten brain in business on the topic "How to set up a Board of Advisors for a small 10 person consulting company?"
1. What is the vision of the business
2. Who are the target market of the business
3. What kind of Industrial sector do you want to venture into
This will help you to know the kind of advisory board you need to put in place bcos the Advisory board is a vital requirement for an incorporated company. For the small, privately owned company, this usually means that the founder and perhaps a family member make up the board, or that the board consists of the shareholders and/or a few friends. The annual meeting generally involves a good lunch, maybe a review of the financial statements, then back to work having had an enjoyable time. The board, in effect, is used only as a nominal body to support the owner’s proposals.
Given that theoretically a board of directors is charged with looking after the organization’s long term future, this potential asset seems much underutilized. The smaller, private company is charting a course in an environment that is increasing in turbulence and becoming less stable. The winds of change can fill your sails or blow you off course. The changing times underline the importance of a dedicated board or advisory group.I also wish to add this few warning
Barry by now I believe you have gotten enough information to work with but be careful so that you don't get chock with too much information and I know by now you know what to do but there are some pitfalls that you must guide against like
Your Necessary Pitfalls to Avoid
Some potential problem areas to avoid when setting up or working with your advisory board are: Members missing meetings. Because board members are usually running successful businesses of their own, they may not always be available for every meeting.
However, board members should be made aware that attendance of board meetings is important and expected. If a member is chronically absent, the value of their membership on the board should be reviewed.
Insecurity of senior managers. Some company insiders may feel intimidated or threatened by the involvement of outsiders. The CEO or owner must make every effort to communicate to his staff the benefits and importance of having a board of advisors.
Incompatible personalities. This is a challenging situation, because most members of your board will be strong willed, achiever types, who have gotten where they are by taking charge. Many will have strong convictions about their opinions and may find it hard to defer the leadership of the meetings to the CEO. You must determine when a member’s personality is “too strong” and becoming disruptive.
Excessive number of board members. Because of their strong personalities, if you have too many members on your board, the more assertive members often dominate the debates, depriving you of the contributions the quieter members may have made.
Lack of CEO communication. Withholding company information or not regularly communicating with the members of your board of advisors destroys trust and effectiveness. Regular communication between meetings is essential to maintaining an effective board.
Inadequate compensation. As I mentioned, you do not w ant compensation to be the determining factor in a candidates membership on your advisory board, however successful individuals of the caliber you seek expect to be fairly compensated for their time and know ledge.
Barry, with due respect to all the suggestions you have already got – the reflective one from Kathleen, descriptive one from Peter, the another approach by Mike, a typical lookout of Joe and an extremely modest yet insightful expressions of Dr. Holy-John – I believe all you need is an analytical, creative, empathetic, really experienced, resourceful, visionary and ever-probing well-wisher as an unreasonable friend or alter-ego in form of a OD Consultant and not a ‘Board of Advisors’ in general and for a 10 person company in particular. When you are looking forward to enjoy a delicacy, it is always advisable to avoid too many cooks... the conventional wisdom says!
Simply put, I would include someone who is strong on ethics, someone who is well connected in a complimentary industry and someone who is astute and aware of tax and governance issues locally/nationally/internationally. I would discount people who do what you do unless they are ultra-successful and are happy to mentor.
The advantage of an informal board is that they can give advice independently of each other and the official Board. This may be more like a friend or confidant. The disadvantage is that they may not think through their answers as well as you may like, or they may not fully comprehend what is involved, therefore the consequences of acting on it may be more complex than they (or you) realise.
At CEI Compliance, whenever we advise on strategy we suggest an alternative and even complimentary to the above is to use existing customers as an informal sounding board through selective surveys and ask for suggestions/ideas/opinions, even anonymously if it is a sensitive subject.
Excellent short article here that summarizes some experience.
I'm my experience the most important factor is that the advisors share core values that are aligned with the company's - and when they are also shareholders or board members that they share similar goals. I've seen many companies flounder because some board members for example, are focused on exit while others desire growth - all had great expertise in the various areas others here have commented on - but in the end the lack of shared values and desired outcomes made their advice at odds with the founder's goal.
That is a very complicated question and I think you meant it to be simple.
You need to look at what you really want out of the advisors?
1. Do you want to defer decision making abilities or have a sounding board
2. Do you want industry experts, business experts, technology experts?
3. How much will you rely on them, or will they be more for oversight?
In addition, some general things to consider:
1. Where do you want to grow?
2. How involved in the operations and the vision do you want to be? If you want to be responsible for growth and work, and leave vision to someone else, then your team of advisors is different.
3. Are you looking for investors now or in the future?
4. How you will compensate them? There's more ways than just pure compensation that top advisors will look at?
Also, what are you trying to accomplish with this. You said business development. Business development can mean many things. If I was to make an analysis, I'm guessing you're looking for people who bring contacts. So you'll have to have a solid business plan, a solid marketing plan, and a solid vision and execution plan.
In addition, having a board of advisors is your tactic, it's your process. What really is your overall strategy? Why do you need a board of advisors to help with business development? How does it fit in with your strategic plan? You need to answer these questions before you can answer anything else.
Wow! What an exciting topic. i am coming in a little late, however I would like to comment.
Everyone here has offered tremendous valuable information. Everyone is spot on with their advice.
For us, as we have been building our business, most of our focus has been on streamlining our companies, so having a “team” as our advisors has been critical.
The roles of each Advisor you bring to your team has to be in the strength in which is needed within your organization. Each Advisor has to have a specific function and clear expectation with the skills needed to match up with your vision and your journey within your business. It’s good to sit down and write down the specific help you need. And you match up the person you know who will get you there.
For example if you need help with strategy and you know someone who is good with strategizing, then you approach them with that specific job. Same with marketing, development, quality control, all of it.
When you get there, back your talk with commitment. The relationships are there, but committing is huge. The productivity comes from the way both sides drive the business machine to reach the goals you have set this Advisory Board up to do.
Otherwise, everyone who has posted has given a little bit of their knowledge that can help you move forward...and hopefully help you fine tune your strategy for this Advisory Board.
I wish you business success!
One of the successful manner to find advisors for Board of Advisors is to ask your client / customer base to make an appointment to see their boss, invite the person for quick lunch and bring up the subject of achieving your business developmental goals. When they see it matches their interest or skill sets that they may be contribute, they would be honored to be a part of a mutually benefit relationship. Make sure deliver a clear message about the Board's mission, vision, other advisors, and what their image you want them to project. Then most importantly "Follow-up" ask them to join the Board of Advisors. Lastly ask them if they can recommend someone they respect or friend they could suggest as potential advisors. Develop a running name list until you accomplish your purpose of setting up a Board of Advisors for any type of business or 10 person consulting company..
Having served on several boards of non-profits and arts organizations, I have always found it good to get people who have vision for the organization...Nothing like stagnant board members who fight progress...It is also good to have folks with strong ties to the community, but also certain types of people are needed as well...Most boards have at least one accountant, lawyer, and community leader on their boards......Also believe it is good to have folks with ties to Junior Leagues, Jaycees, and other social organizations so you can try and tap into their resources as well as corporate types who believe in the mission of the organization...
Keep it simple.
1. Hire an odd number of advisors so you don't encounter stalemates. Perhaps 3 for your size of company.
2. Hire advisors with experience in the field.
3. Hire advisors with absolutely no experience in the field, but who do have experience of running their own business.
4. Hire a range of personalities with diverse backgrounds.
5. Hire advisors with knowledge of current day operations, bringing onboard systems for tomorrow, and visionaries who can see around corners for you.
I hope this helps...
above are several good advises. I would add only one: For a small company advisers should also help in spreading "word of mouth" about your company and products. Search for those kind of people that can add real value to what you do in term of "selling" your business products.
Board of advisors, if set up properly, can have a dramatic impact on your business. 3 critical steps: (1) select a board who can help your business internally and externally. (2) Let the board members know they need to bring, their rolodex's and provide introductions for you and (3) you should have each of them sign a commitment document on how many hours they can dedicate towards your initiatives.
For these expectations, you should be prepared to offer them compensation (it can be deferred, so you don't exhaust your cash flow or some stock if your company is planning on an exit event down the line.
If your goal in using a Board of Advisors is purely for business development, then one of the most important attributes of any of those Advisors will be who they know. As a consulting business you need to build a client base. Your Advisors should be able to help you get in the door with potential clients through introductions. It's up to your firm then to sell yourself to these clients.
How and how many people you need to get involved depends on what your business goals are?
For a team of 10 consultants you probably don't want another 10 consultants.
At a very basic level, you are seeking a solution for problem(s) your are encountering. An advisor is not someone that provides you a solution like provide you with contacts or increase your network.
An advisor should provide insight/critic to your projections and plans for solutions.
The advisor should provide guidance either by suggesting approaches to a solution or sharing experiences where a particular approach is or is not optimum.
In short, by listing the problems you believe you need or the aswers that need validation you will be in position to determine who should you seek to help and the whorth of the advice.
My two cents...
It depends on your arena of work. You should normally have specialists on your board, they need to bring something to the table and also show up for meetings. The board comes with status, advisors need to be recognized and praised. My experience is with non profit in the entertainment field, but it is all the same to me. Normally professors, lawyers and financial advisors make great board members but so do small business owners, celebrities and rising stars. Where is the business and is what areas do you plan on consulting?