Fox Business| Fox Small Business Center | Jan 20, 2011 10:36 AM EST
Tips for Creating an Advisory Board

Advisory boards can be one of the most resourceful components of a company, yet entrepreneurs often stumble in putting this team together. If assembled correctly, an advisory board can help fill talent gaps, build networks and gain validity in the eyes of potential investors.

“As a first time CEO I need an advisory board to mentor me, to reassure investors that there is financial oversight and to have someone to go to when I need to make the right connections,” said GridTest Systems CEO Neal Roche.

Roche’s three-month old company tests technologies at electric-vehicle charge points. Over the next six to 12 months, Roche hopes to put together an all-star advisory team that will help the company grow. “The challenge is that it is one of 80 things you have to do as an entrepreneur,” said Roche, “and you are talking about building relationships with successful people who already have full agendas.”

Eric Chen, assistant professor of Business Administration at St. Joseph’s College and advisory board consultant, suggested entrepreneurs find active advisors who are respected in the industry. “You are judged on the company that you keep,” said Chen, “Once you are able to attract one or two of the very best [in the field] the rest will come.”

Great credentials, however, are not worth much if the advisor just sits there. Chen warned, “Choose those who will open up their networks to the company, those who will help coach your executives, those who will not hesitate to roll up their sleeves and get their hands dirty and those who will spend the time to periodically review the business and offer suggestions for improvement.”

Roche wants his incoming advisory board to serve as “a shadow executive team.” “I need someone who has had CFO experience and someone who represents industries I am going after” said Roche. Filling a need can be one of the most basic functions of an advisory board. “If there are holes in the management team, then look to fill them,” said Chen, “Ask, do we have the right team that can provide a lot of value for us?” Chen also suggested making sure entrepreneurs show their appreciation to the advisory board. He added, “Even if it’s a holiday basket, let them know that you care.”

Because advisory board members often work for free it can be difficult to hold them accountable. Consultant Bert Martinez of Bert Martinez Communications warned, “You might need to fire a few advisors to get the right people on your board.”

The interview process for an advisory board member can be similar to staff hiring. Martinez suggested entrepreneurs compile a pre-set of questions that lend to their industry. “The one question everybody should ask is ‘what are you expecting from this and why are you doing this?’” said Martinez, “You want to make sure that the person helping you out is motivated by the right reasons.”

Just as the entrepreneur needs to set standards for its board members, he or she also needs to learn how to work with this team. Susan Hammond, author of “Advisory Board Kit” warned that the entrepreneurs must

* •be able to take constructive criticism
* •be willing to open up all aspects of the business to the advisors’ scrutiny
* •be aware of his or her own strengths and weaknesses and those of the senior team as well as the opportunities and threats facing the business
* •have a vision of where he or she wants to take the business that can be articulated to prospective advisors
* •clearly delineate the roles and responsibilities of the advisors, the entrepreneur and the business

It seems like everywhere I go lately, I get asked the same questions. Business Owners and Entrepreneurs ask me:

“How can I increase my sales?” or “How can I increase my business?” or

“What’s the best strategy to survive our economy?” or something along these lines.

Everyone’s looking for answers and they want to know how to continued to prosper in good times and in bad. I may not have all the answers, but I can share with you my formula for success. Simple strategies you can use to grow your business:

1. Questions are the Answers –
Ask better questions, do you want to survive or do you want to thrive? If you’re asking the wrong questions your solution maybe be wrong too.

So start asking what can I do to grow my business? How can I obtain more from my existing customers? These questions start you down a path for growth.

2. Take Charge -
It seems like the media and everyone is saying, “The economy stinks” and they seem to be saying it all the time. It’s true for a few business segments but if you really study these businesses they were hurting when economy was great, now they have an excuse. It’s might be a little tougher out there. But if you’re making excuses, you’re not taking charge for your success.

Our economy is the ideal time to find out what really works, how you can not only survive, but how you can truly thrive. Leaders look for solutions. They develop action plans to put sales and profits back on track. Here’s one you can use to generate more leads, sales and profits.

3. Build Success upon Success
“A man only learns in two ways, one by reading, and the other by association with smarter people” – Will Rogers

One of the first things I realized when I started out in business was how little I really knew. One of the first things I learned and I’ve been doing ever since was to associate with people I wanted to be like and learn from. Find out whom the successful people in your field are, what associations or groups are they members of and join those groups, to accelerate your learning and therefore your success.

Take a shortcut to success, associate with people who at your level or above.

4. Systems
I have you ever flown in a plane and did you peak inside the open cockpit door? Notice the pilot and co-pilot going through their checklist to make sure everything is working?

Pilots rely on systems to keep the plane in the air. While no system is 100% perfect, plane travel is one of the safest and most reliable ways to get around the world.

How about your business? Do you have a system to keep your profits soaring on schedule?

The key to consistent success is not to invent your marketing strategies as you go along. The key is to develop and use proven systems to bring in profits and effectively run your business in good times as well as tough times.

Discover the most cost effective system for increasing your profits.

What would happen to your business or your profits if you had to be gone for extended period of time? How fast can your company grow if doing all the teaching and training?

You need to develop systems that are simple and teachable.