Summary: A board of advisors provides professional guidance on a host of important business issues during startup and beyond. Your board should include four core professionals as well as industry insiders.
Corporations always have a board of directors; it's a requirement of the legal business structure. But regardless of your business structure, as a small business startup you can, and should, have a board of advisors.
Your board is there to guide you and help you make critical business decisions. It also serves as proof that you are a serious business owner with a strong team in place. This becomes especially important when seeking capital for your business.
You'll compensate these individuals for their services either directly or indirectly. For example, you may pay your attorney or accountant an hourly consulting fee. In comparison, your insurance representative makes a commission from the products or services for which he or she contracts with you.
Meet the Players
Let's start with the four basic players on your board:
- Lawyer or legal representative
- Accountant or financial representative
- Business insurance representative
- Banking representative
Your lawyer can help you select your business structure and file any necessary paperwork. A lawyer is also a valuable resource when you are creating your first contracts, dealing with copyright and trademark issues, leasing a business location, and more. (For more information, see Finding the Right Small Business Lawyer.)
Your accountant will help with everything from advising you on business structure and large company purchases to providing support in all things tax-related. You may need a full-time accountant as your business grows, but during startup, make sure you include an accountant on your board to advise you on matters you can't quite afford to spend a full-time salary on. (For more information, see Why Your Business Needs an Accountant.)
It's often helpful for the legal and financial experts on your board to work together. Consider having a launch meeting where you can make necessary small business decisions as a team and delegate the various required tasks. Meeting as a group helps ensure that there will be no miscommunication.
Depending on your type of business, you may find it helpful to include your insurance representative in this meeting, especially if your business involves potential liabilities.
Bring on the Banker
The fourth member of the team is your banking representative. Even in an age of direct deposits and automated banking, it's critical that you become a known face at your local financial institution. Make it a habit to physically walk into your bank during regular banking hours to make a simple deposit or withdrawal. Make a personal connection with the banking team.
As your business grows, you'll require their specific business services in some capacity. Perhaps you'll simply need to open a business checking account. You may be looking for financial assistance to actually start the business. Or you may need a loan to grow the business down the road. Thinks will go easier if you know your bank and let them know you.
Beyond the First Four
There's flexibility when selecting additional members of your board. Try to balance your team between professionals (the first four) and those who'll be more consultative. For example, you might want to add a customer or a supplier to your board.
If your business is strictly local, one of your board members could be a competitor from another area. If you're a franchise, select another franchise owner in a neighboring state.
Many business ideas lend themselves to partnerships with other businesses. For example, if you're specializing in accounting services for over-the-road haulers, the owner of the largest truck stop on the interstate might be a good resource for you. If you're a wedding consultant, the manager of the bridal shop or the award-winning local floral designer may be good additions to your board. If you're getting into the pet-sitting business, a local veterinarian or the manager of the neighborhood pet store might provide excellent guidance.
If you're looking to grow big quickly, try to include a few high-octane business leaders on your board. These might include a big-time business owner in your state, a slick venture capitalist, or a Silicon Valley-esque visionary. (For more information, see Build a Board of Advisors to Fuel Rapid Growth.)
There's no limit to the size of the board or the membership profile. Your board doesn't need to meet officially; they can simply exist on paper and you can access them as you need their guidance and expertise. Most people would be honored if you placed them on your board of advisors. Ask them.
- Every startup should assemble a board of directors to guide the business in important decisions.
- The four core members of your board are an accountant, lawyer, insurance agent, and banking representative.
- Insiders such as customers, suppliers, and business owners in related (but not competitive) companies can add industry depth and expertise to your board.
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- Six Low-Risk Ways to Start a Business
- Startup Basics
- Do You Have the Right Stuff to Be an Entrepreneur?
- The Best Education You Can Get for Starting a Business
- Dealing with Startup Risks
- Business Plan Basics
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- Get Help Writing Your Business Plan
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- How Much Working Capital Does a Startup Really Need?
- What Is a Business Line of Credit?
- Finding Startup Capital for Your Small Business
- When Your Friends and Family Help Fund Your Business
- Startup Office Equipment
- Create a Board of Advisors to Guide Your Business
- A Startup's Guide to Business Licenses and Permits
- Hiring for Your Startup
- Creating a Business Plan: Resources
- Starting a Business: Resources
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