Having been both a leader and entrepreneur in the finance industry for the past 20 years, I’ve learned the value and importance of an advisory board. Entrepreneurs thrive on developing ideas, products and strategies on their own terms and at their own pace.The charge-ahead, get-it-done mentality is second nature to this group of individuals. Especially in the equipment finance industry, entrepreneurs come in many shapes and sizes: sole practitioners, division managers or even CEOs. Surrounding yourself with a group of professionals you can rely on for sound advice and direction will not only improve your chances of success but also keep you sane.
An advisory board is different than a board of directors or managers, who are really responsible for the fiduciary responsibilities of the business. Advisory boards can take many forms, ranging from formal CEO roundtables that require a membership and monthly fee for access to their vast network, to a group of friends from diverse industries whom you meet with monthly to brainstorm ideas.
In 2002, I was asked to run a family-owned, asset-based lender and factoring company called Hennessey Capital. As the sole employee for several months, I had to lean on a team of advisors who could guide me through the process of being a one-person company. It was an interesting process. I did not have the vast resources I had with my previous employer. As I added key staff, I was able to use them as a sounding board, but having outside assistance was very valuable. Hennessey Capital became part of Hitachi Capital in 2012 and although I have more internal resources, I still rely on key staff members and outside advisors to help test my thought process and keep me on track.
In working with clients and various investment opportunities, I have explained the necessity of advisory boards by how they work and why they work. Here are a few thoughts that I believe can be helpful in creating an advisory board.
How They Work
Advisory boards are usually made up of three to seven individuals from diverse industries with a variety of experience. Members can consist of your professional advisors (CPA, attorney, banker, etc.), friends, fellow business owners, mentors or even key staff members. The key is choosing individuals who are strategic to your business and who don’t mind challenging the status quo. Unlike some company boards, advisory board members are usually willing to give their time at no cost because they enjoy helping others. I find members of advisory boards are usually entrepreneurs and business owners themselves. Meetings can range from monthly coffee sessions addressing specific topics to annual, offsite strategic planning sessions.
Why They Work
I find entrepreneurs get “stuck” working solely in the business so they have very little time to work on the business. Having an advisory board that can help you think about the possibilities is critical and it helps entrepreneurs feel like they are not tackling the world alone. Members are not immersed in the daily operations and can provide feedback that is refreshing and insightful. Advisory boards can help keep owners accountable to their strategic plan. We all know that plans are better executed when they are reported on to others. One of the key components to an advisory board is access to a network, which may not be obtainable on your own. Having the right members as part of your team can provide access to contacts and the business opportunities can be priceless.
Based on my experience starting a company and then becoming part of a larger organization, having a close group of business advocates truly does help put things in perspective. Many of them have faced similar situations in their own business endeavors. They see challenges and opportunities from new angles and their insights can turn what feels like an insurmountable battle into an “ah-ha” moment. Business is similar to sports. Surround yourself with great teammates and leverage outside coaches to help get you to the next level.