It's tough for anyone who runs a business to remain completely objective. You have so much invested (time, energy, money), and you're so close to so many minute details, that a sizable amount of subjectivity is bound to enter into everything you do. It's for this very reason that many companies - and not just public ones - turn to boards of directors. In private business, the board simply serves in an advisory capacity.
A number of our clients have found advisory boards helpful. They are often used as a source of a fresh perspective on a problem or help validate a difficult decision. In many instances, entrepreneurs will use an advisory board as a means of holding themselves accountable for following through on an initiative. I have personally served on some of these boards and found them to be quite useful for the business. It is very easy for the business owner to get caught up in the daily grind of the business and having an advisory board can help on focus key issues.
The purpose of an outside advisory board is to provide objective insight, fresh advice, business wisdom and expert counsel on many important matters without getting involved in day-to-day management. Some areas where a board can be especially helpful include:
- Technological advancements
- Industry challenges,
- Product development,
- Financing alternatives,
- Entering new markets,
- Internal growth,
- Handling performance issues with personnel,
- Onboarding key employees,
- Expansion planning,
- Mergers and acquisitions, and
- Succession planning.
An advisory board can also help increase professionalism and accountability within your business and provide greater credibility with stakeholders. And for closely held businesses that are considering going public or raising outside equity, board members who've been through the process can be invaluable.