Do You Have a Business Advisory Board?

Your Small Business Advisory Board

Why and How to Find Board Members

One of the hazards of being an entrepreneur is that you may not know what you don't know, which can lead to costly mistakes. An advisory board of experienced, knowledgeable people may help steer you in the right direction by acting as a sounding board and giving unbiased advice. It's also helpful to discuss your challenges with others, especially if they've overcome the same types of problems.

You'll need a group of between three and seven people, depending on the size of your business, who are willing to meet with you on a regular basis (perhaps quarterly) and as needed whenever you're facing a major decision. Because they will be adding value to your company as well as contributing their time and brainpower to assist you, you should at least cover their expenses in attending the meetings, including a meal if appropriate. You may also want to include a small stipend of a few hundred dollars a meeting if you can afford it. It will be one of the best investments you can make to ensure your future success.

  • What types of people do you want on your board?

    First, assess your strengths and weaknesses. If you're a young person starting your first company, you'll need seasoned professionals who can contribute their years of business experience in areas like management, cash flow, marketing, HR, etc. They wouldn't have to own a business like yours, because these same principles apply across all business sectors. On the other hand, if you have owned a business before, but this is your first foray into a different industry, contact people with in-depth experience and expertise in that field. If you're new to the geographical area, find people who've lived there a long time, know the local market, and have a robust network of contacts in the community.

    Next, consider diversity when forming your board — not just diversity of ages and races, but also of backgrounds and points of view. If you limit your search to potential board members who think just like you and approach problems the same way you do, you might as well be asking yourself for advice. You want people who will speak up, give honest opinions, and offer fresh ideas on how something can be done. If they are truly committed to the success of your venture, they won't be afraid to tell you when they think you're headed into trouble or when an idea you propose should be scrapped for the good of your company.

    Finally, who do you not want on your board? Family members will give you their opinions whether or not you ask for them (and whether or not they know anything about your business) so you don't need to recruit them for your advisory board. Friends are likely to tell you what you want to hear in order not to hurt your feelings, so they don't make good board members, either. Also avoid asking people you already pay for advice, such as your attorney or your CPA. While they may try to offer unbiased opinions, they have a vested interest in keeping you happy so that you'll renew their contract.

    Now that you've decided what types of people you want on your board, how do you go about finding them? Here are some places to look:

    Recommendations from your paid business advisors (banker, attorney, accountant, etc.). They know you and your company and may be able to recommend someone who would be a good fit. If they also introduce you, you'll have a better chance of having your offer accepted.

  • Industry or professional organizations

    You may already have joined an organization that brings together people in your type of business. If not, see if there's a local chapter and look for people who are leaders or officers in the group.

  • Business groups

    The local Chamber of Commerce or economic development agency can be a great place to meet business-minded local people. And don't forget networking groups like Rotary.

  • Groups of retired executives

    Many industries have organizations for people who are retired from business, but still want to keep in touch. If you can meet some of them, you may find that they not only have the experience you're looking for, but also have the free time to help you. 

  • Your business contacts

    Spread the word among your vendors, subcontractors, clients and customers that you are looking for influential business people for your advisory board. They're already familiar with your business, and you never know who may be included in their circle of acquaintances.

  • Your personal contacts

    People know people. If you ask your dentist, the principal of your child's school, your minister or other well-respected individuals, they may be able to recommend the perfect person for your board.

  • The most successful person in town

    You may think that someone who achieved business success in your community may be too busy to join your board, or that they may think it wouldn't be worth their time or effort. You may be surprised — they may be willing to mentor someone in a small business in order to "pay it forward" for help they were given when they were starting out. It never hurts to ask. Even they refuse, they may be able to introduce you to other people.

Bottom Line: Once you have found the right mix of people for your board, make sure to schedule regular meetings and to ask for the board's advice before jumping into a new project that might have unforeseen consequences. The final decision will be yours, but getting enough information beforehand can make the difference between success and failure.

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