Even if you have a working partner that may fill one or more of these roles it is always a very good idea to have an advisory board, especially if you are just starting a business. It is ok for you or your partners to fill these roles, but it is unlikely that all of the roles of the advisory board can be filled by management nor is it wise to do so. Even if all of the advisory board roles can be filled by management it is still a very good idea to have people outside of management to bounce ideas off of.
Today there are many opportunities to have an advisory board that will either cost nothing or very little. Develop a relationship with the following professionals and have them part of your advisory board:
CPA’s
Lawyers
Insurance Agents
Part Time CFO’s
A Technical or operations person
When we come back after our 80 second break I will go over each member that I am suggesting be on the advisory board and where they would have value. We will be right back
Ok we are back – Once again here are some of the members you could have on the advisory board.
1. CPA-You are going to need a CPA to prepare your tax returns and possibly to perform a compilation, review or an audit. Usually if you hire a CPA to do these things they will be part of your advisory board. Usually they will be on the advisory board for nothing if you give them the aforementioned tax preparation business and you develop a good relationship with them. CPA’s can also refer you to funding sources and other support services including referring to you more business. A CPA also can give great business insights.
2. Lawyer - You should develop a relationship with a good business attorney. It must be a business attorney. One of the perils of business is that it exposes you to legal situations. Certainly do not use attorneys if you do not have to and there are other opportunities to get more cost effective legal advice like Prepaid Legal Services and others, but you want to get an attorney on your advisory board. Therefore it is a good idea to develop a relationship with an attorney who you can trust and will bill you in a professional manner. I have seen some attorneys bill me $75 for sending a fax! It can get that crazy. Don’t let me get off on that tangent because I will be here for days talking about legal bills. However by developing the right relationship with the right attorney you can have a trusted and valuable advisory board member who you can call when the need arises for legal assistance. Lawyers can also be a source of support services, funding sources and may refer more business.
3. Insurance Agent - There are several situations in business that call for specialty insurance and special protection. A professional insurance agent will be able to identify perils and risks that need to be insured but can also give you sound business advice and can identify risks at the same time. It is important to have an insurance agent because when someone comes up with a unique idea the insurance agent can ad input as to whether the idea will require insurance or if insurance is even available. I used to run a tents sale which was a four day retail sale that occurred in a tent outside of the stores. I never knew that weather insurance was available, but I had an insurance agent on my board and that is how I knew it was available. One year a hurricane hit one week after the sale!! I decided not to buy the insurance that year. Sometimes it is better to be lucky than good!
4. Part time CFO - By using a Part Time Chief Financial Officer you have the opportunity to get a number of financial services on an as needed basis. In addition you have a valuable advisory board member because the CFO will have insight as to the financial ramifications of any idea proposed by the Board.
5. Technical or operations professional depending on your industry - This is where you add someone to your advisory board that has the operations or technical expertise related to your product or service. You may have someone in management but once again it is always a good idea to get perspective from someone outside of management if available.
These professionals on your advisory board may charge a fee. I would be leery of this. My suggestion is to do everything you can to build the right relationships and to promise giving business to these professionals down the line. Do not feel the need to establish the entire group all at once, maybe for now you just have a CPA and an insurance agent and you can begin with them while you are developing other relationships with a lawyer or a technical person.
I have a business associate who says he never has or never worries about any problems in his business. The reason is he gives all problems to his advisory board and lets them figure out all of his problems and lets them assume all of his worries. Advisory Boards can be very helpful and it is worth the time and energy to build the right one.
Another creative way to create an advisory board is sometimes referred to as a “Mastermind Group” This is a group of 4 or 5 business people who become advisory board members for each other. For example you would meet once per month and each meeting is dedicated to only one members business. There is also an organization called Vistage and these are groups of CEO’s from different industries who get together and discuss each others businesses in an objective way.
Another great way to get business advice is through non-competitive peers. When I was in the Ski Retail business I belonged to a buying group. The buying group was made up of fellow ski retail business owners from around the country and of course since most of them were in many different states and therefore were not competitors. I always used to solicit the opinion of many of my comrades in the buying group. You can also do this by simply going to national trade shows. Certainly there are some business segments like manufacturing where everyone in the country is a competitor, but if you are in that situation you can go to trade shows and visit or have an employee visit your competitors booths. You will be amazed at the feedback and ideas you will get from buying groups and trade shows.
