Sal Caroniti, CPA has some advice for any business owner considering an advisory board to assist with their company:
It’s no secret to a business owner that small businesses often face resource limitations. For example, the small size of the company may mean there are not enough margins to be able to absorb full time, executive-level personnel. Because of that, many small business owners today rely on an outside advisory board for valuable insight and steering of their companies.
Members of this advisory board traditionally consist of their outside accountant, attorney, retired or former board members or owners, trusted friends with knowledge of a particular industry, or just someone with good business acumen. The frequency of meeting with an outside advisory board depends on the needs of the company. How often important issues need to be addressed is a factor, special projects or other unique requirements of the owners may require outside advice.
More often than not, much of the interaction between a business owner and an outside advisory board consists of a standardized list of items that are routinely reviewed in order to give the advisors a sense of the current state of affairs of the company. Many of the items reviewed consist of historical financial statements, sales forecasts and projections, cash flow analysis, evaluation of current sales backlog, any potential operational or employment related issues, management and/or company culture issues, and more. Once these items are reviewed, the outside advisors’ role should be to advise on any pertinent problem resolution, evaluation and assessment of any risk factors, and review of opportunities. The list of high-level business issues and opportunities that an outside advisory board can assist with is endless.
Business owners are intelligent people and understand their limitations when it comes to running their company. They know that their leadership skills and dedication to the company and people that work for them will naturally keep them focused on their day-to-day tasks at hand.
When it comes to taking a step back to evaluate the overall, big picture of their companies, relying on the advice of an outside advisory board is an excellent way to get proper guidance at a reasonable cost, without adding full-time personnel.