Why your business needs an advisory board

Published by www.smesouthafrica.co.za  on 26 October 2015


Establishing an advisory board for your startup is one of the best ways to ensure that your business succeeds. You might have a nose for business, but surrounding yourself with people who know more than you do, and have experience in business, can help you set realistic goals for your business journey.

Puseletso Modimogale, founder of Therapeutic Touch Studio, a company that provides stress management strategies to individuals and corporates, and business mentor at enterprise development organisation The Hope Factory, tells SME SA why business owners need a panel of advisers.

She explains that the members of an advisory board are not directors in the traditional sense, nor do they serve a governance function. They provide strategic advice, introduce new skills to the business, and challenge entrepreneurs to continuously improve the way they run their businesses.

Many business owners make the mistake of asking friends and like-minded people to be the sounding board for their business. However, it is more helpful to surround yourself with people who are objective, will challenge your thinking, and give you honest advice (even if you don't want to hear it).

A good candidate should:

  • Bring a variety of skills to the business.
  • Help you to structure and manage your business efficiently.
  • Have the ability to focus on the big picture such as strategic issues, market trends and challenges facing your industry.
  • Offer guidance and advice on operations, legal matters and finance.
  • Help you to improve your networking skills and facilitate introductions to potential suppliers and customers.
  • Help you to avoid making mistakes that could harm your business.

Modimogale says business owners can use this checklist when establishing an advisory board.

  1. What would you like to achieve? Business owners should first define the purpose and goals of the advisory board. Once you know this, communicate your vision to the board so that all members know what your expectations are.

 

  1. Be honest with yourself - you have to know what you don't know. It is important for business owners to critically assess where they lack knowledge. You might be good at picking up new business leads, but have no experience in hiring the right people or structuring a realistic budget. Perhaps you have designed a basic product or service, but now need creative people to help you refine your product. Identifying where you need help is good starting point to select the right people for your board.
  2. Quality, not quantity. Don't focus on surrounding yourself with a large group of people. Spend time to find people that add real value and have the appropriate skills set. The people you select should also be accessible, easy to contact, and willing to share their knowledge.
  3. Appreciate and compensate. Members of your board should be compensated for their time and input. It is important for advisors not to feel underpaid, but keep in mind that remuneration shouldn't impact on the financial stability of your business.
  4. Regular contact. This is important to ensure that you stay on track with your business goals. Schedule meetings well in advance as the members of your board might be busy people. Be flexible about arranging meetings as they don't only have to take place around the boardroom table. Ask your adviser if they would prefer meeting for breakfast or a quick coffee at your business.
  5. Variety. She says that business owners don't only need CEOs of big companies on their boards. Ask other reputable small business owners who have progressed beyond the startup phase, a supplier, your accountant, or even a retired business executive with time to spare. Social media such as online business forums can also connect business owners with a range of people. Business owners can also create WhatsApp groups where they can discuss their challenges with other entrepreneurs. 
  6. Stay humble and take advice. The people on your board should also hold you accountable to meet your goals and help you to become a better leader.