Advisory boards can provide small businesses with the valuable guidance and support needed to chart a sustainable course for growth. However, selecting the proper advisory board members can be a difficult task. Where should you look? How many members will you need? How much should you pay them? These are just some of the questions we’ll answer here.
- Don’t look far. You shouldn’t have to search far and wide to find members for your board. Call colleagues, friends, and family for referrals. Speak with other small business owners in your neighborhood. Talk to your vendors. Recently retired executives and managers are often interested in helping the business community, and they possess the proper experience to guide you. When you sit down with a candidate, be honest. Tell them your problems and aspirations, and see how they react. Is it with enthusiasm? Knowledge? Choose people you admire and with whom you’ll be able to develop a relationship of trust. Read How to Find Strategic Investors or Advisory Board Members for additional help.
- Choose confidants. The professionals whom you ultimately will recruit for your advisory board should be capable of handling sensitive issues and confidential information with discretion. Again, trust is an issue and something to consider when making your selection.
- Map out your expectations. From the outset, establish specific terms of office, and make your expectations clear. How often will the board meet? How long should each meeting last? What will you offer your members in return for their time? Advisory board roles should also have term limits, such as 12 or 24 months. It can be awkward and potentially damaging to your business’s reputation to kick out an advisor if he or she is not performing. Setting term limits allows the transition to happen naturally.
- Determine the size of your board. Two or three people — provided they’re the right people — can often provide a huge and tangible benefit for a small business. You do not want too many people on your board as this will invite unproductive challenges.
- Reward your board members appropriately. Most advisory board members won’t be in it for the money; simply being an active part of your business will be payment enough. However, people also like to feel appreciated, so offer them some sort of nominal retribution. Host an upscale lunch each meeting, or pay each member a modest per-meeting honorarium. And, of course, thank them often for their time and reward their ideas with smiles, whether you use those ideas or not. For additional help on this topic, read How Should I Compensate an Advisory Board?
- Prepare for meetings. To get the most out of your advisory board meetings, prepare for them well in advance. Choose a site that is both comfortable and free of distractions. Solicit input for the agenda, and distribute important information ahead of time. Run the session as you would any professional meeting, and follow it with an action plan.
- Stay in touch. Keep your advisory board members informed of your company’s activities between meetings. The fact that they’ve agreed to be on your board means that they care about the welfare of your business. If they are consistently up-to-date on the goings-on of your enterprise, they will be of greater value to you.
- Distribute your business plan. It may seem obvious, but it’s a good idea to distribute copies of your business plan to each member of your board. The more familiar they are with your business, the more valuable their contributions will be.
- Maintain a professional edge. Remember that your advisors are neither employees nor suppliers, and they should not be treated as such. Advisors should in no way be held accountable for the decisions of the company nor for any fallout those decisions trigger. They are there to make suggestions and observations based on the quality information with which you provide them. It is up to you as the owner to make the decisions and to implement the plans.
- Create short-term goals. If you are uncertain regarding a potential advisor or whether or not your company even needs an advisory board, ask your advisors to help with short-term goals. Once you’ve achieved some business objectives, you will be in a better position to determine your business’s need for an advisory board. At that time you can talk about a longer commitment, or thank them for their help and continue on without a board.
For more on this topic, be sure to check out Create a Board of Advisors to Guide Your Business.