Why Is My Advisory Board Not Working?

Many entrepreneurs enjoy running their businesses as they see fit without having someone to look over their shoulder. So I give a lot of credit to entrepreneurs who have found the courage to form accountability structures, whether it is in the form of coaching or boards. For the purposes of this article, we will spotlight the advisory board, which is a great first step in establishing governance structures for your business.

An advisory board is one that provides wise counsel or advice and oversight to the business on diverse aspects without taking on fiduciary responsibility. I have spoken with quite a few entrepreneurs who have been left frustrated by the failure of advisory boards to live up to their expectations despite their best efforts. The reason why your advisory board might not be as effective as you want it to be is because you did not consider one or more of the questions below:

Why do I need an advisory board?

One of the main reasons for constituting an advisory board is the recognition that your business is at a complex enough stage to require diverse but structured voices at the table. Yes, you have an auditor or a relationship manager at the bank, and a good friend advising you on matters of marketing or you have outsourced HR functions…that is great. However, the importance of bringing experts to the table is to allow each to provide their unique perspective on the same problem and offer coherent solutions that build on each other’s approach. It will save you the time and money if, instead of having multiple similar conversations and implementing duplicate recommendations, you can get these voices to form and function as one team, a board.?

When am I ready for an advisory board?

So when is the right time to form an advisory board? Our recommendation is as early as possible. However, you must not only be willing to seek advice but also to be held accountable for applying the advice you get. Your time is precious, and so is that of the key people you look to invite on to your board. Are you ready to be held accountable? Has your enterprise stagnated and you are looking for new voices around the table to inspire and sustain new growth? Are you ready to share the burden of running your business and separate the business from yourself? Are you ready to lay foundations for your succession plan by structuring your business to run in your absence; giving you freedom now and creating a legacy for posterity? If you answered yes to most of those questions, then you are probably ready for an advisory board

Who is sitting on my board?

One of the most critical aspects of constituting an advisory board is determining who gets invited to sit on the board. Because of the loose nature of advisory boards, some people end up having spouses,? golfing buddies, and their auditors on the board. Others go for big names with the hope of increasing visibility and profile of their business. Sadly, this approach ends up leaving both you and the people you have invited to serve frustrated. Your basis of selecting who sits on your board ought to be primarily driven by business needs, competence, expertise, and values alignment and not by sentiments like friendships and familiarity. You first need to audit the key skills your business needs at that point in time and then list out the people with such skills. Get more than one name for each skill, and schedule a time to approach them with your request. Try and be very specific in defining the skill you need, for example, if it's finance, is the expertise you want on your board to do with tax matters or financial management? Finally, keep the team small. An ideal number is anywhere between three to seven members.

What are their terms of engagement?

Setting and communicating your expectations from the get go will do you great good. Once you have identified the people to approach, schedule a time to meet and have a clear proposal for their consideration. Besides being clear on what value and expertise they bring to your board, they? would also want to know for how long you expect them to serve on your board, who else is part of your board, how often you expect to meet, and how long each meeting will take. Paying board allowances can be a sticky point for a small business, but not being forthright to state that you may not be able to pay board allowances is inexcusable. Prepare yourself to hear ‘no’ by considering more than one person per role. Being clear on your terms of engagement, of, say a 3-year commitment up for review every year, provides an exit plan if the arrangement is not working for either party, without losing the relationship.?

How are the meetings set up and run?

It is far easier to set up a board than it is to keep it engaged. Board meetings need to be efficient and effective out of respect for everybody’s time. Having a set day and time every time for your meetings increases chances of people showing up because that time slot is reserved in their calendars. Then have a clear agenda clearly denoting matters of information, discussion, and decision set out for the board’s consideration. Be sure to send out any reading material with ample time to read ahead of the meeting, preferably a week ahead. Start your meeting on time, and end on time, every time. Make sure notes are taken, and there is follow up on action items before the next scheduled meeting.?

Contact us at [email protected] if you need help with setting up, training, and engaging an advisory board for your business.