By aga merx, Vice President and SBA Department Manager, Bank of American Fork
A recent trend in the small business world is to create an advisory board. Many business owners realize they are experts in one area and that they can leverage the knowledge and expertise of other professionals to make well-rounded and informed decisions. Having routine meetings with an advisory board helps small businesses run more efficiently, tackle challenges and plan better for the future.
Advisory boards are often comprised of professionals with expertise in marketing and sales, attorneys, accountants and bankers. Some business owners meet with their advisors quarterly, some do monthly webinar calls and some meet over lunch as the need arises. An advisory board does not have decision-making authority; rather, the members serve as a “sounding board” for the small-business owner and share opinions and insights to improve the business strategy and tactics.
Regardless of the stage of the business, there are four areas of business operation an owner should discuss with his or her advisory board.
Strategic planning. Every business owner should know where she is and where she wants to take her business in the next five years. Consider using an advisory board to set goals and establish metrics. Based on where the business will be in five years, goals are often set in annual increments. Advisors may share great insight on the strategy for expansion. Oftentimes, company growth is accomplished by introducing new lines of business, identification of new market opportunities or physical expansion, like opening more offices and retail stores. I have observed that successful businesses are successful by design. They do not haphazardly sell more or grow their clientele faster. Good business owners plan and strategize. When a business is doing well and begins to coast, proactive business owners may want to sit down with their advisory board and establish new goals so they can push forward to accomplish even more.
Tactical execution. Establishing goals is only half a success. It is imperative to find the best ways to reach the strategic objectives. An advisory board can help identify the most pertinent marketing campaigns and salesforce efforts. Members may even have contacts that might help small-business owners to implement growth tactics. While networking and marketing are being developed, advisors may be able to provide insight with regards to organizational and staffing development. Making sure the company has the proper infrastructure to handle additional orders or business growth is instrumental in the life of the company. There have been times in retail industry when marketing and sales efforts provide additional orders, but the company does not run like a well-oiled machine or does not have enough employees to handle the new influx of orders.
Business growth is often accompanied by the need for additional capital. Most small-business owners do not retain enough liquidity to support the growth stage of their company. As such, taking into consideration the expertise of a banker is of great importance. An accountant and banker can help structure the financial model in anticipation of working capital financing needs.
Process streamlining. In addition to planning, there are the day-to-day operations that often need refining. While many small businesses run well, an advisory board can help identify inefficiencies and help in developing systems and internal controls to support leaner operations of the company and the future growth.
Reviewing the metrics to assess progress towards the goals could be accomplished through the implementation of different software. Service-oriented businesses have, over the past few years, been more reliant on customer relationship management and sales pipeline management software to track performance of salesforce and the effectiveness of marketing campaigns. Another effective tool incorporated by many business owners is the development of written procedures and manuals. These help with duplication of efforts and standardization of processes.
Challenge navigation. In business, not everything will go smoothly. Some of the challenges encountered by small-business owners are personnel issues, compliance requirements and technological innovations. Changing tax laws may also heavily affect a small business and the way an owner wants to recognize income. These are times when it is likely that a small-business owner is an expert in one area, but leveraging the knowledge of the advisory board could be of great help. I worked on a loan for a company that provided software and services to financial institutions. A member of the advisory board was familiar with the banking industry and pointed out to the borrower that there was a company providing similar services in another area of the country. The borrower adjusted the marketing strategy and arrived at ideas to distinguish himself from potential competition.
Some businesses grow. Some grow faster than others. Some appear lucky and some grow because of the owner’s determination and focus on goals. The better organized the business is and the more advice and ideas the business owner receives from her advisors, the more beneficial the advisory board is for the business. Running ideas by diverse thinkers and advisors with expertise in areas that a business owner may lack can help an owner optimize her business. It is said that smart people learn from their mistakes. Really smart people learn from others’ mistakes. It is evident which small-business owners utilize the knowledge and the street smarts of seasoned advisors. Reliance on expert advice and guidance is an intangible benefit that generates tangible metrics and results for a small business.
aga merx is a vice president and SBA department manager for Bank of American Fork. Her extensive experience with the Small Business Administration started when she worked for the Small Business Development Center, an SBA-approved agency to help small businesses apply for loans, prepare to meet their lenders and prepare business plans. A challenge in SBA lending is keeping updated on constant change in procedures and news from the SBA, so merx keeps up on changes and educates and coaches other loan officers. She is a board member for Community Health Charities, an umbrella charity that focuses solely on health charities like the Huntsman Cancer Institute, Camp Hobé or the Arthritis Foundation. She is an ambassador for the Women’s Networking Group. She is also a board member for Westminsters Women’s Development Program, an organization focused on developing the business skills of the female students and the alumni of Westminster College. merx prefers not to capitalize her name.
This article first appeared in The Enterprise.