By Andrew Petrozzi
Small-business owners in British Columbia should not only rely on their own wits and entrepreneurial instincts but also tap the experience and know-how of those around them.
Establishing an informal business advisory board is one step entrepreneurs can take to deal with tough economic times and help their businesses save money and time by avoiding common pitfalls.
“When you are running a small business from end to end, you can’t possibly be an expert in everything,” said Eric Nielsen, vice-president and general manager, small-business services Canada for American Express Canada. “Having access to the right set of experts that they can call on over time can put them in a position to navigate an uncertain environment and be prepared to address new opportunities or turning points.”
What is most important in selecting an advisory board, according to Nielsen, is finding the right set of experts to provide perspective on the business and on the opportunities facing the owner.
The composition of the board can include friends, family and individuals from similar businesses, he said. “Even within one’s industry there is an opportunity to find non-threatening players to get advice from.”
The advisory board can either meet as a group or provide individual advice and guidance.
Said Nielsen, “The term advisory board, when it relates to small businesses, which we know are very nimble, is one to be used fairly loosely.”
While such boards can provide important and useful information, small-business owners are ultimately the ones who are taking the risk and have the final say.
“The business owner is certainly going to benefit from the perspective that a board of advisers can bring, but ultimately they are going to make the best decision based upon the risk/reward that they are facing.”
The most recent American Express Small Business Monitor found that Vancouver business owners (31%) are the mostly likely in Canada to be very confident about their business prospects overall during the next six months compared with 18% in Montreal and 10% in Toronto. About 58% of Vancouver small-business owners expect revenue growth in the next year. The national average was 24%.
“Any planning that a business owner can do – writing a formal plan or simply engaging in conversations about the future with a trusted set of advisers – is going to increase one’s sense of confidence, and that will translate into being in a position to move more quickly when opportunities arise.”
Brian Bonney is the Canadian Federation of Independent Business’ (CFIB) director of provincial affairs for B.C. He said that while establishing an advisory board is considered best practice for small-business owners, entrepreneurs cannot get carried away with it.
“You’ve got to make sure you don’t let it control your business or control you or the amount of time you put into it,” said Bonney. “It’s got to be easy for you as a businessperson to do, but then absolutely it has to be easy for other businesspeople to sit on your board and provide that kind of advice.”
He offers some tips for those establishing an advisory board:
- Make sure meetings are announced a year in advance. Hold them at the same place and time every month. Take July, August and December off. Keep them small and manageable with three to five people.
- Always provide an agenda in advance to each member to outline what is being sought from board members so they have time to think about it.
- Recognize your board members with a complimentary lunch meeting and more formal recognition from the company itself in the form of a certificate or public acknowledgement.
When it comes to finding board members, “always ask a busy person,” according to Bonney. They are most likely the best individuals to provide “relevant input.”
Rotary clubs and chambers of commerce are also good recruiting grounds.
The composition of the board should include young and old, as well as someone unfamiliar with the business to provide an “outsider” perspective.
Using social media such as Facebook can also help build rapport and stimulate discussion among board members. “Be willing to talk opening and freely about some of the things you are thinking of doing in your business and ask for people’s feedback.”
Good entrepreneurs will have done their homework before launching a business and consulted with colleagues, friends and industry contacts. Once the business is established, those same individuals can be approached and asked to join a formalized advisory board.
According to Bonney, one thing entrepreneurs have to be careful about is putting too much time and energy into those practices when they really need to be focusing on the “must-dos” to get their business off the ground.
“They have all got to make up their minds on what they think is going to work for them and what is not going to work for them,” he said. “Show me an entrepreneur that decided not to have an advisory board and their business became a huge success and I’ll show you an entrepreneur that … got themselves into some pitfalls that potentially an advisory board could have warned them about well in advance.
“When you explain it like that to a small-business owner, they will see very quickly the wisdom in putting together an informal advisory board.”