Could Your Family Business Use an Advisory Board?
Business owners continue to debate whether organizing an advisory board -- a group of outside professional advisors -- to help run a family business is worth the time and cost. During the past several years, family businesses increasingly have used advisory boards, but with mixed results. As usual, the answer seems to lie in your company’s unique needs.
Are internal conflicts preventing your family business from succeeding? Do you need a fresh perspective to help expand your operations? If so, your family business may find an advisory board useful. But be careful, advisory boards have their pitfalls as well. Let’s look at the pluses and minuses of this important issue.

The Basic Idea
An advisory board is a paid group of nonfamily professionals that meets regularly to discuss family business topics. Advisory boards focus on “big picture” issues -- such as compensation and succession planning -- rather than day-to-day operational difficulties. Obviously, the board’s goal is to provide sage and objective advice.

Once, many family business owners viewed advisory boards as a somewhat desperate measure. The businesses that first used them needed immediate help and conferring with others who had experienced similar difficulties seemed a stroke of brilliance. But today, even successful family businesses face increasing technological and logistical challenges, making advisory boards a more widely accepted strategy.

Understand the Minuses
The family business community’s mixed reaction to advisory boards is not unfounded. One major problem is finding appropriate members. After all, many family business owners have few professional contacts beyond family members or friends already helping the business. And the time commitment involved often discourages prospective members. Other business owners, or even outside professionals, may not have the time to devote to an advisory board. If retired, outsiders may lack the energy to productively serve your board. Or you may simply find it difficult to find available professionals who are truly qualified to advise you.

You may also encounter morale issues when trying to implement an advisory board. Other family members may view an advisory board as, literally, an outside threat. Suspicious family members may discredit the advisory board’s suggestions, possibly insulting the board members and creating conflicts beyond the typical interfamily squabbles. Thus, many well-intentioned advisory boards fall apart before they begin.

Use the Pluses
You’re probably saying, “With all these potential problems -- why should I even begin to consider an advisory board?” But remember, when implemented and operated correctly, an advisory board can offer a family business invaluable perspective and advice. To begin your planning process, specifically identify your advisory board’s functions. Focus on distinct issues, especially those you and your family members do not have time to effectively resolve. Ask the board not to deviate from these issues until it reaches acceptable solutions. And don’t feel pressured to make your advisory board a permanent part of your business. If you feel you won’t need its services indefinitely, make the advisory board a temporary but renewable entity.

In the past, many family businesses excluded their regular advisors (such as their accountant, lawyer, financial planner and insurance advisor) from the advisory board. This may still be wise – especially if you fear professional conflict. But, if possible, consider including your regular advisors in advisory board meetings. After all, they can bring experience to the table and even help get your advisory board up to speed faster and with fewer problems. And including them may lessen their fears and uncertainty regarding the board. Discuss the matter with your regular advisors and assure them that you are not supplanting them but rather need their cooperation to fulfill your advisory board’s potential.

Finding Board Members
So where are all these helpful outside professionals? Contact local and national professional organizations relating to your business type for help finding prospective members. For example, The Executive Committee (also known as TEC) and Rennaisance Executive Forums have many local chapters. The Service Corps of Retired Executives (www.score.org) is another excellent resource. Although these groups may not always have immediate access to appropriate references for your company, they can often direct you to an organization that does.

Don’t restrict yourself to just your local area. Experts and business owners from other cities and states can help you think outside the box – way outside the box. Also, your regular advisors may find them less threatening because of their physical distance. And, as a business owner, you may find revealing your firm’s information to out-of-towners less intimidating.

Do You Need Perspective?
Like most business improvement strategies, advisory boards come with risks and challenges. But if your family business needs perspective, bringing in some outside professional assistance can help solve persistent problems and introduce new ideas into your company’s knowledge base. Even if your family business is not struggling, these benefits can significantly increase your success.

For more information on advisory boards, please contact us. We can assess whether an advisory board is feasible in your unique situation and, if so, help you smoothly incorporate the board into your company. We would welcome the opportunity to help you.

Calling In a Specialist
If an advisory board seems an overwhelming concept, consider a family business consultant. These unique professionals come from many different backgrounds, including psychology, management consulting, law and accounting. They can integrate family dynamics with business improvement strategies without an advisory board’s logistical difficulties. Many family business consultants can:

• Help family businesses establish crisis intervention and dispute resolution policies,
• Provide interim, transitional and bridge management,
• Assess employee performance and compensation levels,
• Enhance profit-improvement measures,
• Establish succession planning and wealth preservation programs, and
• Design business retreats focusing on family values and communication barriers.