Secret power of advisory boards to supercharge small business

Kylie Hammond from the Director Institute says boards cam be invaluable even at the very early stages. Photo: Supplied

When launching his legal firm two decades ago, Gavin Barnes decided to invest in an advisory board. And he's never looked back.

In fact, he credits it as a secret weapon that has helped him grow Redchip to 35 staff and an annual turnover of $7 million.

Taking time away from the daily grind to meet his advisory board enables him to bring a fresh perspective to the running of the business, Barnes says.

Redchip chief Gavin Barnes believes his advisory board has been a big asset. Photo: Supplied

"I knew right at the very beginning that an advisory board would be a huge asset to us. They get to deliver the advice that can take us to the next level to grow our business without any of the commercial risk, which allows us to really think outside the square."

The advisory board has helped him implement a number of initiatives, including new remuneration models for lawyers, salary packaging, decisions around mergers, prospecting for new business and identifying and bringing on board key people.

"Establishing an advisory board is a great way to access external expertise and can really push your business to the next level," Barnes says.

Too often, small business owners put off appointing an advisory board, believing they're not big enough or successful enough yet, says Kylie Hammond, CEO of Director Institute.

Appointing an advisory board is about realising the benefits of working on your business, rather than in it. The board is also able to help ensure you have procedures in place, and ensure that everyone is on the same page about the business' future.

"This is where SMEs get out of their depth very quickly. They'll start out as a small-scale entity that requires more processes and systems, and suddenly things start to become far more complex. Before you know it, you're tackling issues on the fly, rather than sticking to a plan.

"The advisory board has your businesses' best interests at heart. They help set the strategy, ensure the business plan is being followed, and focus on growth," Hammond says.

An advisory board can work for any small business, no matter what industry.

Start by creating a list of highly experienced people you could bring to the table to help you grow your business. The list should include people who can fill skill gaps that exist within your current hires. Start small, and grow the numbers on your advisory board over time.

If you don't know the right person for your advisory board, spend some time looking through profiles on LinkedIn for people that will bring the most value into your business. You want to try to look for skills that are the opposite of your own.

Establishing an advisory board doesn't have to break the bank. You can get started with just a couple of people. Consider paying them a meeting attendance fee. These can range between $500 and $1000, and you can still expect to get high-quality and experienced board members for that, she says.

You could expect the creation of an advisory board to cost between $10,000 and $50,000 per annum.

"While most quality advisers won't do it for free, often, their motivation isn't about the money, but rather for the love of helping out small business owners. A nominal fee to cover their time will often suffice, she says.

"For a meeting attendance fee like that, you can fully expect to find good quality board members who come to your meeting prepared and are willing to share their experience, and offer advice."

The business owner needs to drive the structure of the meeting and set a clear agenda.

Protect yourself as much as you can by making sure your contract makes it clear that the appointment is for an initial trial period, she says.

And if a board member isn't working out, don't feel embarrassed or upset. Don't get caught up in ego, and deal with it immediately, Hammond says.

"A board member is very much a trusted relationship. If you find yourself unwilling to take their advice, it's a good clue that they might not be a good fit. The best thing you can do is to fire them straight away."

Appointing a different chairperson from time to time is also a great way to encourage fresh ideas, she says.

Benefits of an advisory board 
Source: Australian Institute of Company Directors

• Draw on the skills and knowledge of directors/advises who have practical experience in growing a business

• Enhance the company's reputation and credibility in the marketplace

• Increase consumer and investor confidence

• Attract superior employees by demonstrating a commitment to company growth

• Create a potential source of members for the "main" board as the company grows

• Test the quality of "outsider" contributions to the business (for family companies)