“Rain-makers, Prophets & Angels”
Wow! This sounds like the team for me. Where can I find them?
Its not a hard team to find just look around. Team members tend to carry a little grey hair, a touch of authority, plenty of business experience and perhaps the chink of available cash in their pockets.
Yes we are speaking of experienced Advisory Board Members.
As management turnaround specialists and consultants when we start to restructure a company or write a new business plan or turnaround strategy to drive profits forward we often wonder why such a potentially strong company hadn’t sought out the skills, knowledge, contacts and potentially equity of one or more sound Advisory Board Members
Businesses are often partnerships of two, three, four or however many shareholders and everyone starts off enthusiastically sharing a vision and a common goal. As the business grows so does its complexity, so do peoples roles, so does the risk profile and one or more of the partners starts to feel less sure about direction.
Being basically respectful individuals nothing is said but there again nothing is agreed upon and out through this crack in solidarity leaks direction, strategy and growth until the business suffers.
When any business reaches this stage something has to give and a positive action will usually result in a better result. Its often at this stage Advisory Board Members are recruited.
Our three tips for a positive Advisory relationship are:
PRE-EMPTION: Ideally you avoid the problem through forward thinking and planning. Manage this is by maintaining honest and open channels of balanced discussion between all shareholders and a good way to do this is to invite one or more independent skilled mentors to join your board as “Advisory Board Members”.
An advisory member is not a director in a legal sense but the directors agree to include the advisory board member in all board meetings and in all key discussions and decisions. Often the advisory board member Chairs the Board Meeting and records the minutes to help maintain independence.
INDEPENDENT CALM: If you have reached a stage at which the board is struggling to function consider appointing a qualified professional mediator who can bring a fresh and independent approach to the matters at hand and advise the board accordingly. Once the matter has been mediated you may consider asking the mediator to act as a temporary Advisory Board Member and Chairperson until you can make a permanent appointment.
THE SAGES: Smart operators don’t wait for problems to occur. They get in early and appoint an Advisory Board from the beginning. As an example, a company we advise in NYC appointed a strong advisory board when forming the company.
This board gave them credibility, depth of knowledge, skills, and contacts and made a significant contribution to the results of the first round fund raising. Three years on the company is now in pre IPO.
The Advisory Board has helped with strategy and top level management along the way.
Over the past three years the young entrepreneurial management team has been free to drive the business, implement key growth strategies, see a concept become reality and know that during the tough times, and there have been many, they had mentors to speak with and well-connected friends to help raise additional cash from time to time.
ADVISORY BOARD MEMBERS?
Who are they: They are usually experienced, successful, well connected business people who are no longer fixed into an 8.00am to 6.00pm position with a single entity. They are usually over 50 years of age and very well qualified.
What do they offer: Other than huge experience they offer balance. A little grey haired reserve to offset and complement youthful entrepreneurial vigour. They have usually experienced much in their careers and very little surprises them, a single phone call can open many doors and independent advice protecting shareholders and the company is invaluable. Little is new in the world and a really top Advisory Board Member has experienced most problems and many opportunities over their career,
What do they cost: Well how long is a piece of string? I prefer to look at what they will add but on the issue of cost it varies enormously. Most will look at working on a minimal cash basis tied to success fees and share options, others look for a fairly nominal sum valuing the challenge.
Why appoint an Advisory Board: Because on almost every level it’s a real win, win, situation. Managing start-ups or young high growth companies is about as hard as life gets, you need all of the help you can get and strong, independent, experienced help with great ideas and connections has to work.
To me bringing on board such skilled and connected advisor’s is a no brainer, it is a rapidly growing model globally and as I commented earlier offers so many win, win, benefits to all parties. Choose each other carefully, respect each other and reap the rewards.
By, Neil Steggall
The Barking Mad Blog
Business Advice with Bite