Every owner of a small to medium sized business (SME) can benefit greatly, both on a personal and professional level, by appointing an Advisory Board, as Kim Mei-Li Dennis, the Chair of SME Boardroom, explains.
AN ADVISORY BOARD is a group of advisors (typically consisting of business leaders, professional advisors and industry experts) who together or individually provide advice to a business owner/CEO. The purpose of an Advisory Board is to provide guidance, outside prospective, expert advice and support.
SME owners usually operate their business using their own limited expertise, experience and perspective. This might be sufficient to help the SME owner achieve their goals. However, an Advisory Board can help make this process much easier and quicker, and less stressful and costly. An Advisory Board provides the immediate benefit of diverse expertise, proven experience, independent perspective and quality contacts.
SME owners also have personal issues which need to be managed but are not appropriate to be shared with directors, management or staff. Such issues include exit strategies, skill weaknesses, financial issues, work life balance concerns and lack of confidence or motivation. An Advisory Board can provide effective support in this area.
SME owners are also time and resources poor and need issues to be resolved quickly with minimum effort on their part. An Advisory Board allows SME owners to learn about real issues in real time, and to apply what they have learnt immediately to address the issue at hand.
How can Advisory Boards be a benefit?
Advisory Boards may be customised to meet the needs of an SME owner at any particular point of time. The structure, the advisors appointed, method of operation and level of usage can also be adjusted as needed.
Grow the business
Advisory Boards can assist an SME owner to grow their business by helping them to:
- Increase revenue and profit
- Obtain credibility to secure customers, financing or introductions
- Make strategic business decisions
- Develop and implement growth and marketing strategies
- Develop new product & services
- Build strategic relationships to enable and support growth
- Expand the business into new geographic markets
- Recruit, manage and motivate staff; and
- Change their mindset to be an effective leader of a growing business.
Manage major change
Advisory Boards can assist an SME owner to transition their business through a specific stage or project (such as a business sale or purchase, exit strategy, restructure, public listing, recession, succession planning strategy or major business problem or threat) by helping them to:
- Obtain expert advice in relation to technical issues arising during the specific stage or project
- Access key contact to assist with the specific stage or project
- Obtain practical and strategic advice based on real experience
- Make difficult decisions smartly and quickly
- Avoid costly mistakes
- Minimise the impact the major change has on the productivity and revenue of the business; and\
- Effectively manage staff, clients and the public during the stage or project.
Operate more efficiently
Advisory Boards can assist an SME owner to operate their business better by acting as a sounding board and extension of their management team and helping them to:
- Devise or improve their business plan or strategy
- Increase revenue and profit through sound financial management
- Make major decisions regarding the management of the business
- Improve their systems, reporting and compliance functions
- Improve their accountability, time management and management of priorities
- Improve their financial, management, marketing, operational and other skill; and
- Stay focused on achieving the business’ goals and objectives
Why not use a Board of Directors or professional advisors?
The nature and legal structure of a Board of Directors mean that SME owners lose control of the decision making in the business, directors are less likely to provide broad and open advice, and there is a focus on governance rather than strategy. A Board of Directors cannot be used in sole trader or partnership structures.
Professional advisors are limited in the advice they can legally provide, generally have a lower level of commitment to the business and its ongoing success, and do not always provide advice that is consistent with the goals of the SME owner or business.
Ref: my business magazine December 2009 / January 2010 issue