Q: As an entrepreneur, what are some of the ways to use advisers?
A: In the early stages, business founders frequently take information from various people they trust. One person won't have all the answers necessary to drive a successful business, so start with a handful of individual advisers from your network.
To build beyond that, join groups that offer personal engagement with other executives in forums for business management discussions. Consider organizations like the American Marketing Association, National Association of Women Business Owners or chambers of commerce. The dynamics differ greatly, so test out a few.
Another important early move involves finding an accounting firm that understands the nuances of expanding a business; your network should help locate several of these.
Business consultants (such as marketing communication agencies or operations management specialists) also offer good recommendations, often making the value exceed the cost over time.
Evolving beyond random acts of advising often comes when the CEO realizes the value and needs to settle on a few advisers in a slightly more formalized relationship.
A business owner may let these designated advisers see what happens behind the curtain, so consider a nondisclosure agreement. It protects your business and the adviser. Eventually you can gather your advisers into an advisory board. These group discussions of your business challenges and successes uncover opportunities and pitfalls the siloed advisers can never fully reveal. Advisory boards usually meet regularly and fully disclose business financials.
Moving to a formal board of directors represents the final stage of evolution from solo entrepreneur to mainstream corporation. This board is elected by shareholders, not by the CEO. Inherently less flexible due to legal considerations, the formal board focuses on the needs of the company and increasing shareholder value in an objective way. The more formal director format provides documented management oversight, which can better prepare a company's transition in leadership whether due to retirement, a merger or acquisition.
Mike Porter is the faculty director of the MS in Health Care Innovation at the University of St. Thomas Opus College of Business.
