You have finally launched your business! How has it been so far? Did the performance of your start-up meet your expectations?
Whether you are very, somewhat or not at all satisfied with its performance, there is no doubt that one day, you will want to improve it. And when that time comes, you will be overwhelmed with quick tips on that matter. The Internet is full of these advice because improving small businesses performance has become a real obsession.
And among these insights, you’ll surely read the one recommending that you create your own advisory board since the benefits of such committee are being increasingly promoted.
An advisory board, does that sound complex and backbreaking to you? This is why many entrepreneurs are reluctant to jump in. They dread the efforts and the time required to create such a board.
However, advisory boards are accessible and flexible tools, and their effectiveness has successfully been proven. Despite that fact, less than 6% of Canadian small businesses have created their own because the concept is still misty to many entrepreneurs
What is an advisory board?
An advisory board is basically a pluridisciplinary group of experts who meet to provide guidance to the entrepreneur on various subjects. The meetings are held on a monthly or quarterly basis, and most of the time, the experts are providing their insights without compensation. They help the business owner for free because they care about his or her success.
This way, the entrepreneur gets access to a group of experts that analyses strategic issues touching his or her business in order to help in the decision process making. An advisory board is not a free consulting service, but rather a group of strategic thinking, giving the entrepreneur clearer orientation to develop his or her business.
Are advisory boards really effective?
In one word: yes!
Many studies have shown that advisory boards help improving small businesses performance. They usually help the business double its short-term productivity. Then, businesses using advisory boards increase their productivity by an average of 18% compared to those who don’t have one. Moreover, small businesses with an advisory board typically have sales higher by 24%. This is substantial!
Advisory boards also have a positive impact on the survival rate of businesses, on their level of innovation, their profitability and their operational risk management capacity.
With this information only, the creation of an advisory board is justified. That being said, there is another benefit to advisory boards that is even more important: the businesses that do create one are more likely to initiate growth and reorganization projects. Since small businesses evolve and expand through these kinds of projects, it is safe to say that it is the ultimate benefit of having an advisory board. The business can look at new markets or consider to pivot its business model.
Because such projects involve in-depth strategic planning, they are not easy to materialize if entrepreneurs operate their business in a vacuum. Yet, if you have created an advisory board, this kind of strategic consideration becomes standard practice and allows for expansion and reorganization projects.
The power of self-examination
A study has shown that one of the benefits of advisory boards is to help entrepreneurs challenge themselves. Even the simple action of getting ready for the board’s meetings forces them to step back and put on the table all the challenges their business is facing.
Through this meeting preparation, entrepreneurs learn to ask themselves the good questions and to identify their business orientations by themselves. This is a major advantage because it empowers entrepreneurs from a strategical point of view. They learn to think in a more strategical way and take better decisions regarding their business.
First step to create an advisory board
There is a good chance that this information inspired you to create your own advisory board, and it’s normal. However, don’t rush into things. The creation process takes time and efforts, beforehand as well as afterward.
You need to know that most advisory boards are created from the entrepreneur’s personal network. These personal relations help the business owner to find the experts that will be on the board. Therefore, don’t look any further. However, in some rare cases, board members are found outside of the entrepreneur’s network, through professional services or advertising (8% of cases).
If you wish to go ahead and create your own advisory board, the first step is to identify the strategic needs of your business. In other words, this means that you have to ask yourself what kind of experts you need. What areas of expertise are you less comfortable with? Sales? Financial decisions? You also have to identify the business sectors you are less familiar with but need to get to know better to develop your business, such as finances or charity. Once you identified your needs, review your inner circle to see who can help you. If you can’t find anyone in your immediate network, ask yourself who could connect you with the right people. After all, aren’t we always looking for the friend of a friend, whether it’s for a painting job or an advisory board?
I wish you an exciting adventure with your new advisory board. You’ll quickly see the benefits!
For those who are curious to know more: Advisory boards: an untapped resource for businesses, BDC study, March 2014
Written by: Jean-Philippe L’Écuyer, Entrepeneur-in-Residence, Futurpreneur Canada
 Christia, Chapdelaine & Filion, 2010, HEC Montréal.