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Kent Lewis, an Entrepreneurs’ Organization (EO) member in Portland, Oregon, is the founder of pdxMindShare, an online career community focused on Portland professionals. We asked Kent how small businesses can benefit from the input of an advisory board, and how to build one. Here’s what he shared.
Shortly after joining Entrepreneurs’ Organization in 2007, I attended a learning event about the benefits of building an advisory board for your business, which is particularly valuable for smaller, high-growth businesses. While I’d served on multiple advisory boards for startups, nonprofits like SEMpdx, and companies like PacificWRO, it didn’t occur to me to create my own.
A few years later, I built an advisory board for Anvil, which existed for nearly eight years. Following are my insights into creating and managing an advisory board based on my experience as a business owner, advisor, and marketer.
Advisory Boards 101
If you’re unfamiliar with advisory boards, they are designed to help protect and grow a company while holding the business owner accountable. Creating an advisory board can be both affordable and require minimal management, but the insights and actions driven by the advisors can have exponential impacts.
Boards do come with challenges, however. The most common issues include a lack of consistent communication, meeting regularity, undefined roles and expectations, as well as a lack of preparation.
Traditionally, advisory boards are designed for one or more strategic reasons, including seeking funding, refining operations, building a network for sales or partnerships, or gaining relevant industry expertise from experienced professionals who have already been where you want to go. Less commonly, advisory boards may consist of potential or existing customers, employees, or partners. The key is to create an advisory board overview document addressing all aspects of the program that may also double as a contract. That approach worked well for our boutique marketing agency.
Play to Strengths and Weaknesses
An advisory board can provide you with insights into areas where you may have blind spots. I have a solid grasp of what I don’t know, don’t like, and disciplines in which I lack talent. As a result, I stacked my first advisory board with financial and operational gurus — including a bank co-founder and the president of a much larger full-service agency — which helped tremendously. A few years later, I refreshed the board to include a business development expert to help bolster our lackluster sales processes.
The results were instant and impactful; the new advisor coached me on outbound sales strategies, which led to securing the largest client in our 22-year history. My weak spots, including operations (anything with math), outbound sales, and HR, were strengthened by my advisory board. Other common areas where an advisory board may contribute include diversity, equity, inclusion, and belonging (DEIB), and generational, industry, or economic issues requiring additional expertise.
Make the Numbers Work
The first question to ask when building your advisory board plan is: How many board members do you want to secure? I recommend a critical mass of five to ten members due to inevitable schedule conflicts. Another best practice is to maintain a 3:1 ratio of advisors to employees present in meetings. Compensation is also a factor. I don’t believe in giving away equity for advisory positions, but I do believe in compensation.
I’ve received payments as an advisory board member, ranging from $500-1,000 per meeting. A stipend ensures everyone is invested in the concept, and you only pay for performance (meeting attendance).
Another important number is board tenure. I recommend two- to three-year cycles for advisors. That will balance their understanding of the business against the natural path toward the status quo that occurs when you’ve outgrown the advisor, or they become complacent. It’s a best practice to bring in fresh perspectives and energy regularly.
To address advisory board challenges, set expectations up-front for all parties and ensure that scheduled meetings are on-time and on-topic. For starters, schedule quarterly meetings a year in advance to maximize attendance. Create a standardized agenda which can evolve based on feedback and insights. For example, I found that I talked for two hours straight in the first year of meetings, leaving almost no time for discussion. I moved to creating and distributing pre-meeting materials (primarily financials and operational updates) for advance review, allowing more time for strategic discussion. It’s important to share meeting recaps routinely, including action items, timelines, and owners.
To streamline meetings, aim to keep meeting dates, times, and locations the same for each quarter. The less everyone has to think and plan, the better. Since my board was pre-Covid, we rarely had remote attendees, but I recommend being flexible. Hybrid remote meetings provide an opportunity to record the meeting for those not present and to reference in the future.
Encourage advisors to challenge your decisions and actions. If they don’t, you’re setting up an expensive exercise to validate your “genius.” One regret I have is failing to include networking and team-building into the first few meetings in order to quickly build connectivity, alignment, and trust.
While advisory boards require time and money to create and manage, the return on investment can be exponential. I found that the more I reached out to my advisors for advice and ideas, the more value I created for all parties involved. While I never scheduled emergency meetings, I recommend keeping that option open, as many fellow EO members have benefitted from advisors and fellow members in times of crisis.
Your best advisory board
Your best advisory board is always your customers, but shoring through the myriad of customer opinions can be overwhelming. Our clients have found that defining their required deliverables, when interacting with customers, and having us develop a mystery shopping form using those deliverables, gives them a very focused customer based advisory board. Can we help you focus your customer feedback to make it more actionable. Give us a call, we’d be happy to help you.
BY ENTREPRENEURS’ ORGANIZATION AND CARL PHILLIPS