Utilizing Advisory Boards and Boards of Directors

Benefits

There are a lot of reasons for family-owned businesses to utilize boards and advisory board support and resources. Boards represent a balancing point to assist owners and managers with their respective plans and a crucial element in achieving alignment of their interests. Another area where boards can be helpful is when businesses are in transition or when entrepreneurs want to sell their business. The development of strategic plans and budgets represent a critical area where boards can be invaluable to business owners.

Boards provide a platform for owner managed businesses to gain access to outside talent and expertise that give them a fresh look at the problems, needs, and challenges of their business. Tapping independent experts allows companies to gain access to financial and other experts that frequently are not a component of the management and ownership teams. I think that problem solving is enhanced and results in better decision making.

Family Issues

Boards can be helpful in resolving disputes and disagreements between family members with a resulting improvement in communication between generations. Family-owned businesses have a tendency to adopt a narrow view of the business and boards can help to expand the horizon and perspective of the business. There are many related issues which include emotionally based decision making, questionable business motives, and a imprecise assessment of ownership and management talents. Boards help business owners slice through these issues and bring reason to the table.

Boards help make sure owners and managers adhere to the planning schedule and effectively assess the analysis contained in the plans. Many times, boards assist in hiring, evaluating, and setting compensation for senior managers as defined by the owners. They also help decide if payment of dividends is prudent and appropriate. Special matters where boards provide support in approving acquisitions, mergers, sale of assets, and other actions that are outside the ordinary course of business. Board members don’t get involved in day to day operations and they do not develop the owner’s plan.

Board Qualifications

Board members need to be capable of handling sensitive issues and confidential information. They will almost certainly have extensive business experience and many will have financial expertise. It helps to have board members would are capable of dealing openly and forthright with family dynamics, business problems, and business opportunities. A board can consist of one or more members depending on the desires of the owners. The key point is for companies to get the outside and independent assistance needed to guide owners and the management team.

Guidance

Starting out slow and becoming comfortable with the board process makes a lot of sense. I can help with the board process based on my extensive experience working with and serving on boards of family-owned business. Give me a call and schedule an appointment to discuss the available options associated with forming either a formal board of directors or an advisory board.