Last week a fellow restaurant owner in upstate New York sought some business advice. Victor has been in the restaurant business for a short while in restaurant years, although to him it seems like a lifetime. He purchased a three unit restaurant group three years ago, opened another location, closed it and now is on still yet another location. In both instances he has used vendor´s money to finance the expansion and has also borrowed and raised money from other sources creating financial strains on the company. Having been in real estate development for a major fast-food chain before throwing his hat into the high-end culinary world, Victor thought he could switch from burgers to white linen without a problem.
The pressure of late vendor payments has tarnished or destroyed many business relationships that had been forged for decades by the previous owners of the business. Aside from this he is losing the trust of family, friends and others who have invested in his business plan thinking he could work wonders with his marketing and expansion abilities.
Victor wanted my thoughts on developing an advisory board to help him out of his conundrum. Having hit a bit of a patch in his journey, Victor has now decided he may want to ge the advice of a tour guide. On the verge of disaster, going into the slow season in New York State, his intent was to bring a handful of community people together, along with his vendors and ask them to sit on the advisory board to offer him guidance and direction. Yet, Victor seldom works his properties, talks to his staff, or gets involved in the community or the business.
My answer was simple. It is too late for the advisory board maneuver. Advisory Boards are a tremendous business tool. If they are implemented and used in a worthwhile manner, the guidance, suggestions, and advice given by those who accept a position on a working advisory board is invaluable.
Here´s what to look for in a sold, functioning advisory board:
1). Decide how many members you will feel comfortable with on your board. Too many make it cumbersome to come to agreement on topic discussions. Too few can impede worthwhile business creativity. Send a letter of invitation to those you want to serve. Make sure you let them know that this position is something that will take some time and work.
2). Make sure those you invite to sit on the board have expertise in the areas you need advice in and that you either know them or know someone who knows them
3). Be ready to take the advice given. Nothing is more discouraging to professionals than to seek their advice and then not use it or worse yet, even consider it.
4). Set up regular meetings and stick to them. And, run the meetings as you would any other meeting. Prepare an agenda, address the topics that need discussion and ask for suggestions on other topics.
5). Be professional. Although most restaurant owners have flamboyant out-going personalities, the advisory board meeting must be based on business and the problems you need t discuss. If the advisory board is just going to meet, eat and tell stories, go join a club.
6). Develop a cross section of the community you serve and the business people you want to bring together.
7). Be honest with the board. Don´t think you can constantly skate through with "Everything is great" if the wolves are at the door. Your meetings will just be a waste of time.
8). Make someone other than yourself the head of the advisory board. Set the term of service for a year and make sure the advisory board chairman rotates. Have a second list of potential members. Once you begin your advisory board you will find it very worthwhile. However, some members will find it too time consuming, others will find it boring, and still others will decide that they have served long enough.
9). Compensation. For the most part, financial compensation isn´t a requirement if you are establishing an advisory board. However, a monthly stipend in the form of a gift certificate to be used by the member and spouse or friends is always a respectable gesture.
10). Finally, don´t think the advisory board can keep the alligators away. Only solid, sound business practices can accomplish that.
As far as Victor is concerned, I offered advice as though I were on his advisory board: Pay your bills. Don´t lie to your vendors. Make sure that your liquor bills are in order and paid on time so the state liquor control commission doesn´t shut you down. Make sure your food is fresh. Give good customer service. And get involved in the community and the intricacies of your business instead of letting others take the fall for your foolish leaps. Come clean with your investors about your financial problems. Always get a map before you begin your journey: A tour guide pays little worth midway through an adventure. And, at this stage of the game drop back forty yards and punt. That´s what Ara Parseghian would do. And pray to God for a great Holiday season.