We are only as good as the team around us, so it makes sense to build your expert entourage right? Kerry Packer was renowned for saying that he was the dumbest man in the room, and that was based on the premise that he would surround himself with experts so he didn’t have to be the expert.
An Advisory Board is key to helping you stay on track to achieve your bold objectives…or maybe first off identifying those objectives. What I find is that advisory board are under-utilised and often improperly structured. BRW release their fastest growing businesses each year and one thing they have in common is that they surround themselves with experts. In most cases, these experts are in the form of an Advisory Board.
How do I run An Advisory Board?
An Advisory Board can be as simple as 2 to 3 individuals that come together to meet 2 to 3 times per year. It is usually made up of the key stakeholders in the business, their accountant (to facilitate the meeting) and a group of select individuals, potentially including your best clients (but don’t get confused with the alternative called a Client Advisory Board). Some silent equity partners may also participate due to their invested interest in the success of the business. The individuals do not become directors of the entity and they are not there to tell you how to do things. They are invited (and paid) to bring their skills and expertise to the table, which is laser focused on asking the hard questions and also to challenge the growth and strategic decision making of the business.
How do I pay Advisory Board Members?
Advisory Board members are typically remunerated and I’ve seen all sorts of arrangements. What I’ve found usually works best is researching what other small to medium sized businesses are paying for board roles just to keep everything uniform and on commercial terms. The point of having an Advisory Board is that you are forming a mastermind to help you grow and innovate your business and they should be remunerated accordingly for their contributions and time. The creation of board position descriptions or a charter will provide clarity on roles and responsibilities and also support the remuneration offered. This is usually a work-in-process so don’t feel like you need to get everything right the first time.
The types of individuals that would add the most value to your advisory board are those who have built successful businesses in a range of industries, those who have experience in the direction you want your business to go and individuals from large corporations who can bring corporate and global experience to the table (in some cases, your best clients!). Again, they are not there for implementation or execution of strategy, they are there to ask questions and challenge you.
Some of my favourite questions to ask are:
- what would break first if we grow your business by 10x?
- what does your business want to be when it grows up?
- what if you were to do it this way or that way?
- do you think you should recruit an experienced CEO to direct and drive the business to these levels?
- is your wife/husband/brother/sister the best person to fill the role they currently hold?
Building and nurturing your advisory board is an ongoing process. Potential candidates may decline your offer, some may become redundant and on the other hand, some may be perfect. Like all things, it’s just a matter of getting started and refining the structure. A wise man once said, “The time will never be right.”
Virtual CFO @ BJT Financial Services. We are experts in tax but I specialise in working with small-medium businesses to improve their condition through what I have found to be 8 key areas.