When you form an advisory board is it customary to pay them some type of compensation for their efforts?
Submitted Jul 29, 2009 11:44 AM
We have had an advisory board for many years. The result has been a pre-2009 twenty year annual sales growth rate in excess of 20%.
Our board started with three advsiors; accountant, attorney and banker. It now has eleven. All are consultants to our company and available to our teams on an as needed basis. They are paid a consulting fee for the time spent with our teams.
In September and October, all teams draft an annual report including goals accomplished and new goals for the next year. They are compiled in a bound document and sent to each advisor. The team scribe places their e-mail address on their report. The advisors then read them and contact the team scribe if they need further information.
In November, we host our annual advisor meeting. This is a very elegant dinner party held in our facility. After dinner, each advisor has 5 minutes to point out areas that need improvement. No praise is allowed. If praise is given, a bell is sounded and their time is up. Notes are taken by our leadership team on the advisor's remarks. We do not pay a fee for this meeting, but give the advisors gifts.
The result last year, was a twelve page document sent to the advisors two weeks after the meeting, explaining how the specific problem areas would be corrected.
Over the years, we have replaced advisors that have been outgrown. All advisors share the same morals and ethics that are stated in our core values. They are all principals or high level officers of their companies.
It is my opinion, that successful entrepreneurs have a product and a market. Successful sustainable entrepreneurs also have a great culture driven by their staff and excellent advisors.
Submitted Jul 29, 2009 12:05 PM
An easy way to get all the benefits of an advisory board is to become a member of a group such as The Althernative Board (tabboards.com), which organizes boards comprised of owners of non-competing businesses. A Facilitator handles the administrative issues and finds candidates for vacancies if they occur. You also get the benefit of business coaching between board meetings to add to the accountability factor and keep you moving forward.
I've owned seven small businesses in my career and am now a Facilitator for The Alternative Board because I saw so clearly that, if I had an advisory board to help me with my own businesses, what a difference it would have made. I know firsthand that feeling of "being alone" when it comes to tough decisions, and how easily an owner can get sucked into daily operations and away from strategic planning and thinking. An advisory board forces you to step out of your comfort zone and look back into your business to take steps required to have a company that delivers on the vision that you had when you opened the doors.
Submitted Jul 29, 2009 1:03 PM
I have been on several non-profit boards and started my own non-profit 2 years ago. The key to effective boards for me is finding people as convinced of your vision as you are. Then be strategic about what areas of your business need strength to offset your weaknesses. My board consists of (2) accountant types, 1 of which is a tax specialist, (1) financial investor, (1) computer expert, and several friends who are hard working individuals. You should be selective and know what you want ahead of time. Also take the time to write down the requirements to be a part of the board. Most effective board members are already busy individuals and would like to know the level of commitment. My board has been invaluable and are not compensated in any way financially. They are obviously as committed to the vision as I.
Submitted Jul 29, 2009 2:43 PM
Can anyone suggest a book / audiobook to read more on this topic?
Submitted Jul 29, 2009 4:40 PM
Thanks for the great information, Thomas! I can see the impact of having an advisory board.
Submitted Jul 29, 2009 10:39 PM
Can board members, whatever type also bring in business for the enterprise or is their role strictly confined to offering advice?
Submitted Jul 30, 2009 3:35 AM
as a small construction company would I try to choose board members in my business, say a mason, carpenter, electritian, plumber? or would it be better for me to choose professional trades, such as the accountant lawyer marketing professional?
Submitted Jul 30, 2009 1:35 PM
Respondent to item #6 by: David G.:
Read The Board Book: Making Your Corporate Board a Strategic Force in Your Company's Success by Susan F Shultz--available at amazon.ca
Thanks and good luck!
Submitted Jul 30, 2009 5:56 PM
Reply to #10
Ryan, I think having someone with construction knowledge would certainly be helpful, but you definitely want to cover the other "non-technician" areas of your business: e.g. sales/marketing, accounting/finance, technology, etc.
When it comes down to it, every business aims to sell a product and make a profit. There are likely a lot of people across all sectors that could help you.
Submitted Jul 31, 2009 9:40 AM
I am not in business yet but in the planning stage; although the business plan is completed. When I am ready I will begin seeking financing for $150,000.
At what point in time would you suggest I actually (assuming I have found the proper persons and they have agreed to be on my Board) have the first meeting?
Also, could you give me some idea of what I would have to pay each of them, and for what period of time? Should the money to pay them be earmarked and identified in the business plan?
Submitted Jul 31, 2009 2:05 PM
Thank you guys. I have learnt a lot from all your advices. Does anyone know what the board for fitness industry should include other than attorneys, accountants, and fitness experts?
Submitted Jul 31, 2009 6:10 PM
What is the down side, if any, to having people who perform services for you on your board? Jack
Submitted Aug 1, 2009 10:02 AM
I am in the baby stages of working on my business plan. My business is very complex and I am having difficulty with the business plan. Due to its complexity I am seeking help through a 3-day workshop on marketing the business. I have an accountant, a financial advisor and a video person on my current team. My accountant has advised me that I should ask for a capital investment of $2000.00 each to accomplish two things: to keep my team accountable in case they decide to walk in the middle of the planning stages and the second to use the money to my advantage to pay for upcoming expenses such as incorporating, web design etc.
My question is, if there is a capital investment from the aforementioned people would they automatically be on my board? They are already part of my team but the video person doesn't necessarily have to be on my board; therefore if I create a board and have some as capital investors and some not, how will that affect my board of directors overall if that information becomes public?
Submitted Aug 3, 2009 10:15 AM
Before you hire a consultant as a board member remember to ask yourself: What is it that I want from this individual? Many of us feel that by getting an advisor we are getting someone's support. Often it is the other way around. Advisors and consultants, particularly, incent themselves to stay on much longer than they are actually needed. Most of all you need to have faith in yourself and apply your intellect....As Michael Gerber says" What is your primary aim?" Then stay true to yourself on your way there.
Don't forget to read "The Board Book" by Susan Shultz.
Submitted Aug 3, 2009 6:57 PM
Take a broad perspective when establishing your board, especially if you are considering going public in the foreseeable future. At the smaller business stages it is great to fill in the knowledge gaps, but it is also important for at least some of your board to have a very good understanding of the business you are in - perhaps a retired CEO of a company in a similar line of business. As you move forward, another great tool is to determine a list of skills that your board, as a whole should have, then look at your current members and determine what skill set you should be on the look out for to supplement your board.
If you would like to chat with me about this, I am on twitter at @SylviaGroves.
Submitted Aug 12, 2009 3:16 PM
This article is timely, I think having a board would provide fabulous support and direction, and networking. I am currently on a non-profit board for a ballet group - if it had not been for our collective expertise, firm handle on the finances and the connections we have brought the dance group would not have been as successful or even been around.
I have an incorporated company Canada 1 Property Pages and am sole shareholder here in Canada - I had not thought to apply this idea of an advisory board to my business - thank you for the article!
Submitted Aug 13, 2009 9:36 AM
I'm the only owner of an "S" corp and I have several questions:
1. Should I be a member of my own board?
2. Should the members of the board be local people or can they live in another city or country? With tecnology nowadays are over the phone meetings or internet meetings allowed?
3. How important is it to get the board organized when a business is not making enough money to have employees on a regular basis?
Submitted Aug 17, 2009 11:10 AM
I'm fascinated by this idea, and it's very relevant to my current situation. However, I seem to be missing something relating to compensation. In #4 you imply that 80% of board members are uncompensated, and that many of the other 20% are given a relatively meager sum. Assuming these board members aren't relatives (who always seem to be willing to give free advice), why would the rest of the members want to be on the board? It doesn't sound very win-win.
Submitted Aug 19, 2009 4:57 PM
I guess the answers above did not clear it up for me regarding what should a board member get for..... being on the board?
Submitted Aug 19, 2009 9:18 PM
24, 25, 26 - another way to phrase this idea is that it is a way to build your resume.
As an entrepreneur you may not think you need a resume ever again, but you probably will, and more importantly, you need to keep building one. When you are looking for a loan from the bank, line of credit from a vendor, introduce yourself to a new customer, run for government office, leadership in a community organization a resume is a great way to summarize your hard won wisdom and show you can share that wisdom with others.
Being on board of directors is a way to state to others that you know how to help others, and some leadership skills and can add the results of what the organization accomplishes as part of your accomplishments. This is based on having others who know you choose you to help lead them towards success.
These reasons and more are why many want to be able to learn and grow from working with other companies and help them to success. In essence you get to 'brag' about the success of the company without having to do 'ALL' the work of running the business on a day to day basis.
Submitted Sep 9, 2009 1:44 PM