It takes time to put one together, however, you want to think of it as an extension of your management team, a team that shares your goals. With that in mind, a highly functional advisory board should be flexible, engaged and willing to work together to help propel your organization. It’s imperative to think strategically about the process of identifying, organizing and managing the advisory board. The concept of assembly an advisory board sounds simple enough, but today we’ll discuss some of the best practices and identifying the need for an advisory board, the members and setting expectations to improve the chances of success. One key element to success is having the right mix of both skills and personalities. Today’s presentation has a significant focus on understanding your company needs before one person has been invited to join the advisory board. What’s the first step? It’s a look within. It’s about the goals of the organization. We all know that a fundamental key to business success is goal setting.
That’s a given these days. Goal setting is a continuous process of setting, measuring, evaluating and adjusting. You want to begin with a thorough examination of the overall goals and vision of your company. How will those goals and the vision impact your organization? First start with, what are the goals? Is the goal to take the organization from local to statewide or international? Are your sights bigger than that? As in moving from a national presence to an international presence? Multiple offices? Hundreds of employees? Think about the aggressive level of the goals. Aggressiveness can be determined in part by the time frame. Doubling revenue’s over a one year time frame is much more aggressive than doubling those same revenue’s over a five year time frame. Look at the goals over the course of time, set your goals and your vision for one year, five year and ten years.
Then think about how these goals will be achieved. Can you get there with organic growth? Is this through merger-acquisition? Is this introduction of new products or service lines? New markets? Geographic expansion? Other kind of expanded presence, as in the number of offices or number of employees? Then what are the capital requirements to get there? Company goals and your vision have a direct impact on whether or not you need an advisory board, as well as the overall composition of that board in terms of skill-sets, experience and role. Thinking back on some of the questions that I asked, if you’re moving from a national to an international presence, a strong advisory board member will have done that. Will have international experience, not just national experience. If you’re looking at this aggressive doubling of revenue’s over the course of one year, you need advisory board members who know how to get there, who’ve been there. Who’ve achieved that same kind of growth rate.
If it’s the introduction of new product line or you’re creating new services or products, it’s a really R&D-heavy, focused goal, then it’s imperative that you have advisory board members who reflect the type of goals you’re trying to achieve. Once you’ve clarified the goals, and then shift your attention to the current organizational structure. Can the structure itself sustain the goals you would like to implement? Will the reporting structures support assertive growth? Look at all aspects of your organizational structure. Identify the bottlenecks. A good exercise is to diagram the existing structure and create a diagram of the type of structure needed once your goals are achieved. For example, if you have said that the organization will double in size in two years, diagram the current structure, how it works today, and then diagram that structure that is needed once you have doubled in size. You want to think about the skill-sets, the reporting lines, lines of communication.
If the plans are to expand from one location to ten, something so seemingly simple like communication can quickly become complicated, particularly in organizations with informal cultures. Keeping the future organizational diagram in mind, then look at your management team. Do you have an appropriate executive structure in place? What skill-set does your current management team have? Are those skill-sets scalable? It’s not uncommon for an organization to outgrow its original management team at some point in its life. If your goals are reflective of this kind of structure and this kind of change, then the advisory board members should also be a reflection of those types of changes. Consider some other scenarios. You currently have three locations with 200 employees. What if achieving your goals means having ten locations and 1000 employees? What areas of your organizational structure are impacted? Can your current management team handle the growth?
It’s important to be fully aware of all implications, to think through all the “What if’s”, as you visualize the impact the goals will have on the organization, make a list of the skill-sets and experience needed. Then identify gaps from where you currently stand. It’s not just the structure that’s impacted. Consider the financial ramifications of your goals. If it’s growth, consider the investment you’ll need to make your plan become reality. An advisory board, with the right set of skills and the right experience, can help temper expectations or consider any potential pitfalls in your budgeting process, in your capital allocation. For example, if the goals include extension expansion that requires an infusion of capital, the skill-set and experience needed for the board should include capital raising and venture capital experience. It might include banking or other financial-type of experience. It might include also legal experience. Someone with experience identifying and presenting to venture capitalists or other capital sources will be of great value if that’s where your company is headed.
You may need someone who’s experienced in structuring a deal, knows which questions to ask. If the goals mean assuming debt, then a totally different skill-set may be required. That would include someone perhaps with banking or investment backgrounds. At this point, you should have a basis for what changes are necessary from a structural perspective. The next thing to consider is distribution channels. In many cases, growth demands new distribution channels as expansion occurs within product or service lines, or in market expansion. Using the goals for the basis of this analysis, define the changes in distribution channels that are needed. For example, product-based businesses may move from selling through mom and pop stores, to being on the shelves of big box retailers. Getting your product on the shelf of a small, independent retailer is a much different process than getting it on the shelf of a national retailer like Wal-Mart, Target or Lowe’s. Expansion plans that include big retail, not only impact production and working capital, but it may include other processes or distribution changes as well.
Big retailers often have requirements that impact invoicing, real time ordering systems, etc. In other words, that type of expansion can have an impact on your IT infrastructure as well as your logistics. Expansion into new geographic regions could mean significant changes to your business development or sales team as well. Regardless of the channels, make a list of the skill-set and experience needed and the changes they’re for as it relates to your distribution channels. Consider the people, financial and structural components and then look back at the other elements as far as your communication channels are concerned, your organizational structure. You may actually go back a couple of times as you’re thinking through some of these elements in these areas of change. Now that you’ve thought through the impact of goals, structure and distribution channels, you’re most likely seeing some trends in terms of gaps. Before you started extending invitations to join the advisory board, consider also the impact on your locations. Currently, you may be located in a single office, but will that be enough to sustain your growth goals?