Big Picture - March 2020 - 19

other areas, it's nice to have encouragement and confirmation
from an objective group of business professionals.
PROS:
* A formal platform for feedback. A board of advisors
provides a more formal approach to gathering important
feedback. Your board of advisors should meet regularly,
whether it be monthly, quarterly or even annually. While I
would certainly recommend meeting more often than once a
year, the frequency of your meetings should be based on how
much interaction and input you'll want from your advisory
board. Some of your advisors may have experience serving on
other boards and could offer advice on how often the board
should meet and how the meetings should function.
* Access to a variety of expertise. A formal board of
advisors gives you the opportunity to find skill in several
areas. These may include strategic, legal, finance, operations,
marketing, human resources, or other areas you may need.
Choose your advisors carefully so you can establish a board
that complements your company's weaknesses. A strong,
diversified board of advisors can become an extremely
valuable asset in growing your business
* No direct control over your company. Although your
board of advisors can provide a tremendous amount of advice
and feedback to you as a business manager, they ultimately have
no control over your company. You have the choice to either
follow or ignore their counsel. This is an important distinction
between a board of advisors and a board of directors.
CONS:
* Be prepared for tough conversations. If you choose

the right kind of advisory board, chances are you'll be asked
some rather challenging questions and receive some feedback
that's difficult to hear. But this type of advice is exactly why
you should build the board in the first place. If you aren't
prepared to hear constructive criticism about your business,
you're wasting your time with an advisory board.
* Be willing to pay. A quality board of advisors should be
compensated for their time and expertise. There isn't a
magical number in terms of compensation for your advisors
- just make sure they feel appreciated.
OPTION 3 - CREATING A BOARD OF DIRECTORS

You will always have the right to switch
out board members and replace them if a
situation arises.
CONS:
* Managing your board can be difficult. When you

choose highly qualified people to serve, you will inevitably
deal with high levels of self-confidence and even ego. This
isn't necessarily a bad thing, but it can create some challenges.
Often, a few board members will be more outspoken than
others and can dominate. You have to be aware of those
situations and manage them. Additionally, your board may
tend to micromanage some aspects of your business. This
dynamic can be addressed when forming the board and
determining their level of involvement.
* Legal and financial ramifications. A formal board of
directors can have some corporate, legal liability attached to
it, so you'll need to set up indemnification clauses in your
corporate by-laws to indemnify your board members for
officer and/or owner liabilities. Make sure you engage with an
attorney to help create these documents. Like a board of
advisors, your board of directors will also need to be compensated. Do some research here to get an indication of what
makes sense for your company.
Choosing to engage with trusted associates to build a
network of more informal business advisors may be perfect for
your organization. On the other hand, if you formulate a board
of advisors or a board of directors, you've inherently involved
more people with your business, which can be intimidating.
And yet, it may be exactly what your business needs.
Remember, you ultimately control your company and the
direction you're going. If you formulate a board of advisors or
a board of directors and things don't work out, you can always
make a change. You will always have the right to switch out
board members and replace them if a situation arises. I
suggest rotating members every three to five years to get
some fresh perspective on your business. Engaging advisors
to help your business is an optimal way to ensure your
company's success in the future.

BIGPICTURE.NET

The decision to implement a board of directors is very
important and should be weighed carefully. This past year, our
own business, Signs.com, went through some significant
changes in terms of management, strategy, and direction. Over
the past several years, we've debated whether to form a board
of advisors or a board of directors. We felt like either choice
would be an asset to our company. Ultimately, we decided we
would form a board of directors to help us manage our strategic
direction and future decisions. As recommended above, we
invited a diverse group to join our board; each member
provides expertise in a variety of ways. Although having a
board of directors to oversee our business operations has had
its challenges, our decision to engage with them has proven to
be a significant benefit to our company.
PROS:
* The advantage of group expertise. The greatest benefit
is the help you'll receive from your board members when

faced with difficult decisions. The right board will be able to
assist you with some of the challenging, strategic decisions
you may be currently facing.
* Hold yourself accountable. By implementing a board of
directors, by default you'll be held accountable for your
actions. Without either a board of advisors or a board of
directors, you'll have to hold yourself accountable. Knowing
you'll report to a board of directors can make you think long
and hard about some of the important decisions, which is a
good thing.
* Legitimize your business. Frankly, it makes your
business more professional. Bankers, attorneys, accountants,
suppliers, officers, and even competitors will respect your
shop even more.

http://www.Signs.com http://www.BIGPICTURE.NET

Big Picture - March 2020

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