After you risk everything, fight the emotional and financial battle, and make it into the 10% of businesses that survive the startup phase, you find out it can be very lonely! This graph (by Derek Halpern, founder of Social Triggers) portrays the roller coaster of emotions an entrepreneur goes through probably on a daily basis. The million dollar question is: Who do you turn to for advice while you’re on the ride?
Who understands what you’re really going through? Most of your family and friends don’t know what it is like to have the bank or clients breathing down your neck on Tuesday before payroll. Where can you turn for a listening ear that DOESN’T have a vested interest in swaying your decision?
The usual suspects…
If you are like me or most entrepreneurs, you turn to a select few people that have witnessed your journey or have been along for the ride. This could be your spouse, a mentor, a professional advisor (like a CPA), or one of your first employees who had blind faith and trusted your vision as you crawled your way to where you are today.
Your business and life changes (and so do the problems) as you grow from an entrepreneur into a mature business owner. You may not be able to go to an employee for advice or feedback even if they are a friend and have been there since the beginning. You have to look out for what is best for the business and also for your personal situation above anything else.
My clarity on who I could actually go to happened when we started making some decisions on whether or not we were going to sell the business. My Director of Sales couldn’t be the one giving us the true objective feedback that we needed. He wanted a job and a future that was stable. No matter how much he cared about us, his opinion and perspective would be viewed from his worldview. It is neither right or wrong… just the facts of the situation.
Why you should formalize your advice
Hopefully your situation isn’t as complicated as our’s ended up being… If I could do it over again, I would make sure to surround myself with people that had wisdom, diverse life experiences, and professional objectivity. People that could give me real, raw feedback when it was needed most.
My father and I found a business peer group called Vistage back in 2012. We joined a local group with other business owners from non-competing industries that were around the same size as us. This became one of our main outlets to discuss our numbers, employee issues, business plans, and exit plans with people that were unbiased. Everyone was in it to help each other achieve business goals.
You may have heard of owner peer groups and mastermind groups before. There are a lot of different kinds of peer groups, and a peer group is not the only way to build your ideal support system.
Understand your professional options
Once you make the decision to commit the time, effort, and possibly money to surround yourself with people that will elevate your life and business, then you have to determine what is the best way to do this.
There are 3 main ways to formalize your support team:
- Join a Business Owner Peer Group
- Choose a Board of Advisors
- Hire a Board of Directors
Business Owner Peer Group:
A business owner peer group is an amazing experience as I described a little bit about above. Regardless of which peer group you look into, each is a variation of the original mastermind group concept from Napoleon Hill and his book “Think And Grow Rich”.
Hill’s definition of a mastermind group is “the coordination of knowledge and effort of two or more people, who work toward a definite purpose, in the spirit of harmony.”
Peer groups are usually structured with 6-12 business owners that do not compete or solicit each other for business. The goal is to meet once a month and share your business and personal ideas, problems, situations, and provide the same feedback to others that you hope to gain. A facilitator is usually present who will help move conversations along and make sure that one person doesn’t monopolize all of the time and attention.
What you will get:
- Business owners you can relate to
- The advice and skills of others
- A wide array of life experience to provide various angles of perspective
- A place to share things in confidence
- Instant feedback
- Accountability
Board of Advisors:
Choosing a board of advisors is a more intentional way to surround yourself with people that have specific skill sets that fill gaps of knowledge or experience you may not already have. In peer groups you don’t always get to choose who is in the group… and you can’t show up and be the only one that talks the entire time. A board of advisors have agreed to specifically HELP YOU and ONLY YOU!
Advisory boards are not directors in the formal sense. They do not have any legal responsibility or voting rights. They don’t have any power to hire, fire, or change anything in the business. However, they are there specifically for you and your business. Their role is to give advice and feedback that will help you and your business progress and accomplish the goals you have established.
The type of advice that you can expect from a board of advisors is more involved, hands-on, and topic specific than either a peer group or a board of directors. Each person is chosen for the board to fill a role or knowledge base needed (i.e. technology, law, accounting, ex-entrepreneur, banker, marketing, etc) to help you and the business.
There are different ways to hire and compensate your advisory board members. We’ll get into that more in a later post.
Board of Directors:
A board of directors is the most formal way to structure your advice as a private business owner. The board acts as the governing body of the business, and when structured as so, they have a fiduciary responsibility to the health and well-being of the company. The setup can vary a bit but usually a spot on the board of directors comes with voting rights and the ability to hire and fire the CEO.
The hiring and payment of a board member is much more stringent. The shareholders hire the board members and the members are usually compensated with equity, a monthly retainer, or on a per meeting basis.
The advice that comes from a board of directors is less hands-on then the other two categories of advice. This is due to the fiduciary responsibility and the natural tendency to mitigate risk of incorrect advice or opinions that could come back to haunt the member. The only thing that the members should focus on is the health and well-being of the company…even at the expense of the CEO if necessary.
However, the formal and legal structure of having a board of directors can help eliminate conflicts among companies with multiple owners where self-interest and motivations may wander.
The bottom line:
Whatever path you decide, make sure to take the time it requires to find the right mix of people and structure to surround yourself with. You will need help along your entrepreneurial journey. Getting advice from a bunch of like-minded or less intelligent people will not benefit you or your business. Spend the time and effort it takes to build your team of advisors that can take you and your business to the next level.