You may know about the Board of Directors, but do you know about the Board of Advisors? These are handpicked business professionals that help you make strategic and operational decisions to improve your business.
Entrepreneurship is Lonely, Don’t Go It Alone
One of the quick lessons that most entrepreneurs learn is that this is a lonely process, where all the decisions sit on your shoulders. That’s a heavy weight to bear, especially if this is your first time starting a business.
One of the biggest differentiators to success is finding a group of like minded people to help share that burden. Some people do this by finding partners or co-founders to run the business together, usually finding people with strengths that balance out your weaknesses.
Another way that some people do this is by joining Masterminds, where business owners meet to discuss issues in their growing businesses. Masterminds are great for learning how others are growing, but not so great when you need someone that knows you and your business specifically.
That’s where the Board of Advisors comes in. These are long-term relationships, with people that know and understand you and your business. It’s more personalized than a mastermind or group coaching program.
What Does the Board of Advisors Do?
The idea of a Board of Advisors is to bring strategic level thinking to your company without the formal authority of the Board of Directors. These advisors do not have the legal authority to make final decisions, but they know you and your business to provide a sounding board to you and other top level executives in the business. They can offer recommendations and provide insights that you may not be able to see.
I really cannot overstate the importance of that sounding board either. Sometimes you know you need to make a change in your business, but you don’t know how to do it. You don’t know how it will land with the team. Or there is some blind spot in your plan that you cannot see because you are too close.
The Advisors are there to poke holes in your thinking. To identify issues you haven’t thought about yet. To fill knowledge gaps because they’ve been there, done that already.
Overall, having the support of a Board of Advisors is going to give you the confidence to make decisions and execute your plans. You know that others have vetted and scrutinized your plan to make it better.
Who Should Be on Your Board of Advisors
Like so many other questions, this is going to vary a lot. It depends has got to be my favorite answer.
You want your advisors to fill knowledge gaps that you don’t have. Need help on financial strategy? Then a CFO type. Need help building out a team? Then an HR or People expert is the right answer.
I also love to bring in people from the industry or adjacent industries. People that have already built what you are trying to build. For example, if you are trying to build a large multi-state law firm, having a retired law firm owner that built a multi-state law firm is a great person to have on your Board of Advisors. If you are building a logistics brokerage, having someone that has built a brokerage already will provide a lot of know-how on building your company.
Are Advisors Paid?
The more formal the arrangement, the more likely that you’ll pay your advisors. However, some advisors are willing to mentor to give back to the business community that helped them, and you will not have to pay them.
Some of your advisors may be part of your paid team of experts. For example, as your Fractional CFO or Fractional General Counsel, I often advise on areas outside a pure finance or legal functions for my clients. I am a sounding board for larger business decisions, from whether to expand locations or layoff employees. I have even gone on location scouting trips, to find the new offices for clients, knowing their business culture and expansion plans. Obviously, I and others in similar roles are paid for those roles, but the business advice that we give beyond our roles can be invaluable to you.
Formal vs Informal Board of Advisors
An important note is that there are formal Boards of Advisors, but most operate on a more informal basis. It’s more ad-hoc, as in you seek out advice from the people around you for advice in the moment.
Even with an informal Board, it’s important to remember that not everyone is going to be operating with your best interests in mind. Board of Advisors rarely have a fiduciary duty to your company like a member of the Board of Directors. This is especially true in the case of an informal advisor. They may take your ideas and implement them on their own. They may tell your competitors. It’s important to vet your advisors and make sure that they are operating with your best interests in mind. For more sensitive topics, you may want to formally employ them as an advisor where you can get an NDA signed to protect your ideas, plans, and sensitive business information.
What if I Disagree with the Advice from the Advisors?
The good news is that you can disagree with the Board of Advisors. You don’t have to follow their advice if you really believe and trust in your ideas and plans. The Board of Advisors rarely have any binding authority over you or your company; you retain the authority to make decisions.
You may find that their advice is outdated or doesn’t account for changes in the market. Or that they don’t fit the culture you are trying to build. They also may be too aggressive, pushing for things that you are not ready for yet. It may be the right advice, but the wrong time.
I would caution you to think about the advice though, and really think about why you disagree with it. Are they telling you things that you don’t want to hear but need to hear? Are you disregarding their advice because it doesn’t fit with your plan?
I’ve had difficult conversations with business owners before. I told one business owner that the market was about to flip and go down and that made it hard to support the financials of his business. He disregarded the advice and well, it didn’t turn out well for him. (Admittedly, that sounds like bragging because I was right, but it’s true)
I want Kimberly on my Board of Advisors. How do I make that happen?
I’m honored that you would consider me for your Board of Advisors. The good news is that I love working with business owners, to develop strategic business plans that provide for sound fundamentals and a strong base for growth. If you’d like to work together, I encourage you to contact us to open up discussions on advisory services, whether as a service provider, a member of the Board of Advisors or Board of Directors, or other business relationship.