Podcast 9 Transcript: Advisory board - Why you need one

Written by Ian Portsmouth

Ian: : Welcome to the Business Coach Podcast, an advice-oriented series for Canadian entrepreneurs. I’m Ian Portsmouth, Editor of PROFIT Magazine and I’ll be your host as we tackle the hot issues and opportunities facing Canada’s small businesses. We’ve developed this podcast in cooperation with BMO Bank of Montreal. Over the course of the series I’ll be drawing on experts in a number of fields including some BMO experts in order to provide the credible information and prescription you need to run your small business better.

Everyone in business wants to be successful in business so unless you’re the perfect manager of a perfect business it makes sense to get yourself some success insurance. According to my guest for this episode of The Business Coach Podcast, success insurance really does exist but in the form of advisory boards. I’m joined today by Toronto entrepreneur and venture capitalist Greig Clark. Greig runs the Horatio Venture Fund and is the founder of College Pro Painters. Greig welcome to The Business Coach.

Greig: Thank you Ian, good to be here.

Ian: : Now as it happens you’ve just authored a series of articles about advisory boards for PROFIT Magazine and they’re going to appear over our Fall 2007 issues so why is this issue so important to you?

Greig: Because I found that advisory boards are just so helpful and, if they’re done well, and that comes in both from my own experience from talking to others. I mean when I was a, I started up an advisory board when I was in my last years at College Pro and I found out that helped. But when I did, when Rick Spence and I for, to write this article called and talked to a number of entrepreneurs, like dozens of them across the country, we found over and over and over again that the common theme was “I wish I’d started earlier” it just is so helpful. So its like you found this medicine you kind of want people to know that its available. There is something here that€¦ something you can take that really helps.

Ian: : Sure so tell us a bit more about this medicine, what in a nutshell is an advisory board?

Greig: In a really small nutshell it’s a group of say three to five advisors. They’re chosen by the CEO, by the entrepreneur. He hires them and ideally they meet regularly with the CEO say once a quarter and the goal is to help him or her meet their goals by helping him make better decisions €“ period.

Ian: : And you formed an advisory board at College Pro in your later years there, why did you start the advisory board and how in general terms did it help you?

Greig: Well I think the key reason for me was something that other entrepreneurs find is that it is lonely at the top and there are certain decisions that you really can’t take to anybody else. Particularly like I say people decisions, you can’t really talk those out over with other of your senior management team, especially if it has to do with your senior management team. Its hard you know to necessarily talk it over with your spouse or a one on one meeting with another fellow businessman because they just don’t know the people involved, they don’t know the business. So that’s probably the thing that, that and other life strategic changes you got to make. I read about advisory boards somewhere and it just seemed to me to make so much sense to have a regular group of people who meet with you on a regular basis, get to know your business and you get to know and trust them and you can talk over decisions with them and obviously not just in the meetings but there’s you know phone calls in between.

Ian: : Now making better decisions is obviously a critical benefit of advisory boards and something that I think every entrepreneur wants to do, are there any other benefits of advisory boards? I would presume that they certainly expose you and your business to a broader network of contacts?

Greig: Yes there are, there are other benefits. The way I look at them Ian is sort of divided into two€¦ what I call buckets. The first bucket is hard benefits and the other one is the soft benefits. Under hard the biggest one is really discipline and focus and some CEOs want this, some don’t. But it consists of the, at the meeting the CEO laying out what his goals would be say for the year or the quarter and at the next meeting, you know, reviews against it, progress against those goals and it just helps keep that wonderful thing called focus which in my studying of all the successful companies of all time is one of the key things I have to get and the earlier they get it in their development, learning what to focus on and what to not pay attention to€¦ the better success they get. Second sort of hard benefit is helping set strategy. Under the soft side of things there is the sort of advice and sounding board kind of stuff where you maybe help with people decisions. You provide support to the CEO. Somebody needs to be there to help him on those days, help him or her on those days when things aren’t going so well. Providing new ideas, as you mentioned earlier new connections. Everybody’s got their own Rolodex and overall its basically just helping making better decisions which that leads to the concept that you said earlier of success insurance. Because by working with an advisory board to my mind you improve by some percentage chance the success of your business because you increase the chance of making right decisions and reduce the chance of making poor decisions.

Ian: : So if advisory boards are so valuable and I believe as you do that they are why don’t more entrepreneurs have them?

Greig: Well probably a number of reasons€¦ I think its less so today than in my day I just wasn’t aware the whole concept existed. I just came across it. I think people are more aware of them now so I would say the two biggest impediments are that we found from the entrepreneurs we talked to they just don’t know where to start. I mean you put it on your list of things to do but you just don’t know where to start. Where’s the first phone call you make? So it just it stays on your “C” pile. The other reason which is less stated which I think is there though a number of entrepreneurs shared this with us is that there’s some reluctance to be sharing, opening up the innards of your companies to other people partially because maybe your businesses looks like a big success to the outside world and you don’t want people to see that there are some warts and stuff. But almost, I mean all the entrepreneurs I talked to had that fear where it just felt so good once they were able to do it because its good to know that other people€¦ have their warts as well.

Ian: : Exactly. Exactly. Now one of the obstacles you mentioned is that people really don’t know where to start and they probably think that they need to figure out exactly what the perfect board structure and composition is but as I understand it they really do come in all shapes and sizes and some structures work differently for different people is that correct?

Greig: Yes€¦ when Rick and I did these calls we found wide ranging and it was all there to fit what the CEO needed. I think the biggest decision€¦ I’d shy away from the word of having a perfect board because whenever you try to perfect or excellence, perfect as you know is the enemy of the good. You try for perfection all the time you don’t even get started on things. So one of the first decisions you have to make is do you want this board just purely for advice or do you want some of the discipline side to it? And yes in terms of size they range, there were a number of people that just have one board member, its really just a mentor but again there’s the regular meetings, there’s the informed going on and that part of it. And some of them got as big as seven. When they got that big they were really just there for, they’re more there for the advice part and they didn’t always meet as a group.

Ian: : That’s great advice Greig thanks for joining The Business Coach.

Greig: Thank you very much Ian.

Ian: : Greig runs the Horatio Venture Fund and is the founder of College Pro Painters.

He spoke to us today from his office in Toronto. Thanks for listening to this episode of The Business Coach Podcast. I hope you discovered a few insights that will help you grow your business. You can download this podcast series at bmo.com, profitguide.com and from iTunes.

Your feedback is always welcome so please drop me a line at feedback@bmo.com. Until next time I’m Ian Portsmouth, Editor of PROFIT Magazine wishing you continued success.

Originally appeared on PROFITguide.com