Carl Gould is a business transformation expert with 7 step advisors. Its methodologies are practiced in more than 71 countries.
In the beginning, many entrepreneurs devote all their energy to getting their business off the ground. They lean into the roles of lone wolf and single decision maker. That’s why they feel a great sense of accomplishment. After all, it’s hard to start a profitable business, and they’ve done it largely on their own.
But even after starting a business, founders remain in a risky position. Indeed, the skills needed to start a business differ from those required to grow one. And the statistics confirm it. According to the US Bureau of Labor Statistics, while about 80% of new businesses will survive the first two years, only half will survive beyond the fifth year and only 25% will last 15 years or more.
In my experience, one of the best ways to beat the odds is to form an advisory board. This board should include experts from various fields. By finding the right mix of professionals and formalizing their roles on a board, a founder can amplify their company’s skills and experience.
Who should be on the board?
Any board should have a diverse set of perspectives. A board of directors should include a qualified business lawyer, a tax advisor and an accountant. Even though the same person can handle two of these roles, it’s wise to consider keeping these roles separate. This way, each person stays focused on a specific part of the business. Their opinions will differ, providing a more comprehensive approach to trading decisions.
The board will also need someone who understands key performance indicators and critical paths to success. This professional will provide context for goals, growth, and success. They will compare company performance with others in the industry and be able to spot challenges and opportunities early on.
As a company grows, it may identify a need for additional board members. Retired CEOs, other business owners, and industry experts are all great additions. Adding these types of experts can be a great investment.
Finally, make sure you have a strategic advisor in place. It can be a mentor or a coach. This person serves as a sounding board for your ideas, but should also have facilitation skills as they will be leading board meetings.
Why should a facilitator lead board meetings?
The facilitator creates agendas for each board meeting, with input from the owner and each board member. Sessions will include discussions on all facets of the business, allowing every board member to collaborate and contribute.
Having a facilitator lead the sessions allows the business owner to step back and be a team player rather than a leader. As a facilitator, the councillor’s job is to encourage all council members to share honest ideas and opinions. Often, the advisor will play the “bad cop” so the owner doesn’t have to make unpopular comments, put ideas aside, or close tangents.
The advisor must be able to see the big picture, allow all voices to be heard, and make informed decisions about next steps. This is a particular set of skills, but essential for the continued success of the business.
How can the tips help you avoid critical trading mistakes?
Remember that only 50% of companies reach year five. Successful companies rarely do so without the help of a team of specialists. Without expert advisors, it’s easy to make minor mistakes early on that turn into insurmountable problems later. Are you wondering what decisions to entrust to the directors? Here is a list of common issues they need to address:
- Your company’s unique selling point and its place in the competitive landscape
- Competitive research and updates
- Industry research and news
- Comparative analysis of sales, profit, expenses and growth
- Capital investments and payback times
- Growth and expansion opportunities and associated risks
- Pricing and offers of products and services
- Profit and loss reports, invoicing, inventory and shipping strategies
- Tax compliance, structures and possible savings
- Legal Concerns, Compliance, and Changes in Laws and Regulations
- Staffing, Benefits, Retention Rates and Hiring Needs
Already have a team? Formalize the board structure.
Many companies already have the necessary talent on staff or under contract. When this happens, it’s tempting for an owner to casually discuss issues with key team members and then make decisions on their own. But that can be a mistake. Formalizing roles on a board and using a facilitator allows the team to develop strategies together. It also reduces the chances of the Founder developing an unprofitable case of tunnel vision.
So embrace the value of an advisory board. Remember that the owner doesn’t know everything, and neither should they. When a business allows a team of experts to improve the business, it dramatically improves its chances of not only surviving, but also growing and developing beyond year five.
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