Why Every Small Business Should Have a Board of Advisors

It is the essence of being an entrepreneur that we believe in ourselves and we know what is best for our business. We are dogmatic, fearless, stubborn and decisive.

These are the qualities of our character that give us the courage to establish businesses on our own, rather than seeking steady incomes by working for someone else.

In my own entrepreneurial journey, I have also learned that these admirable aspects of the independent, business-owner character, while so vital in the start-up stages of our firms, can lead to its downfall if we allow ourselves to believe we always know best.

That is because no one person has a corner on all the relevant knowledge to growing our business. No one person knows all the angles or can anticipate all the issues that could impact us.

When we are so busy “doing” and driving the company along the direction we believe it should evolve, sometimes we miss things. They may be insignificant minor things, or they may be the tips of huge icebergs that end up capsizing our companies.

To survive and prosper we must avoid becoming stuck in our own little “fishbowl” world.

The reason entrepreneurs avoid directors

When we establish our companies, many of our associates suggest that we set up a strong board of mentors or a board of advice-givers but we often balk at that.

We fear that these advisors may dilute our authority as the founder and owner and chief strategist of the company. Many entrepreneurs had years of working in big corporations before they go out on their own, and the last thing they want to do is sit around board tables and have their decisions questioned by others.

We don’t want challenges from others and we don’t want their interference. We don’t have time for more meetings and if they want to be paid, it will be just another expense we don’t need to incur.

When we want another opinion, we’ll think up one. 🙂

These reasons are all in sync with the character of many entrepreneurs. The trouble is, they are also the reasons why we can be blindsided by events in our industry or our own business as we grow.

Why we should consider a board of directors

No matter how driven and brilliant you are, you can’t know it all and be it all. That is just the stark reality of life. Your own strong-mindedness can save you, but it can also ruin you if you can’t see the reasons why change is sometimes needed. If you aren’t open to listening to information from other knowledgeable sources in your field, you may also miss information that predicts trouble heading your way.

A well-operating board of directors is like a safety blanket that protects your company from actions that could cause its downfall.

In an ideal setting, the board works closely and supportively with the company CEO or owner to support them and give direction as required.

At the same time, it has the gumption to challenge the CEO when needed to ensure that they stay on track with the strategic direction of the company and fulfills its plans.

What you need in your directors

If you decide to establish a board of directors for your small business, stay away from friends who think just like you, friends who will say yes to you no matter what, and family members who want to reinforce your brilliance by always agreeing with you. As loving and pleasant as all of these people may be in your life, they are not what you need as your business advisors.

You will be better served by people who, although they may agree with the strategic direction of where your company is headed, are not afraid to share their opinions if they think you are moving off track or if they have information that makes them think the track itself needs changing.

These directors should not be financially dependent on you or your company so that they can make their business decisions independently, not on what they want to hear or see.

Most importantly, they need to be people who know things that you don’t know.

The challenge here is that when you are searching for people for your advisory board, you tend to want to bring around the table who you are really comfortable with. But what you need are people who are unperturbed about making you uncomfortable if they believe you are heading in a direction that is not best for the company.

Key components in building a board

Besides personality differences, you need to seek out directors whose knowledge base and skillsets are different from your own and from other people who currently sit on your board.

For example, if you run an accounting company, don’t ask three more accountants to sit on your board. Look instead for someone with strong communications and marketing skills, someone who has a broad base of knowledge on technology trends, and perhaps an expert in logistics or human resources.

It just won’t work if you invite people only from your industry who have the same skillsets as you, and generally the same opinions.

Two heads are only better than one when they are not both connected to the same body of knowledge.

Building a good board of directors is a smart move. While it may mean finding the humility to accept that you are not the smartest person on the planet, it also means having the smarts to realize that bringing together trusted advisors from a varied background has the potential to make your company much stronger than if it is built to the dreams and knowledge of only one person.

Remember the saying – “if you look around and you are the smartest person in the room…move to another room.”

As gifted as you may be, you cannot have a diverse enough pool of knowledge to be all things to all aspects of your firm.

Remember at the end of the day that you don’t have to follow the guidelines of your board, but at least you will gain insight into the opinions and skillsets of others.

And if you assemble the right team of directors and you work constructively together towards one goal, you have a much better chance of getting to the finish line safely.

Finally, if you believe you are not yet at the stage where your business can accommodate a board of advisors then at the very least hire yourself a coach, a mentor or join a mastermind group. We hired our business coach almost eight years ago (we still work with him today) and it may have been the single smartest decision we ever made. I can tell you with utmost certainty that we would not have the business we have today and certainly would never have won the Firm of the Future if we had not made that decision those eight years ago.

Thank you for your time. Until next time take care.

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