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Small business owners these days have a lot of worries and too many worries. Incredibly high borrowing costs, aggressive inflation, a slowing economy and tighter credit conditions are keeping them on their toes.
Along with your fellow entrepreneurs, you’re probably working overtime, doubling down on your efforts to increase revenue and going into overload mode. Here’s one more thing for your to-do list: form an advisory board.
Whether you’re a builder, restaurateur, online retailer, or any other type of small business, you need advisory advice. Relationships with trusted advisors will help you weather a recession or economic shock, something that has happened more and more often over the past few years. Uncertainty, first of all, is the slogan of this year.
Related: 10 Reasons Top Entrepreneurs Join a Peer Advisory Board
Who is on your board?
Advisory boards are usually made up of local representatives from various industries who care about you and your business. They can help you solve problems, develop strategies, and even analyze regulatory changes. Why would they give you their time? First, they can directly or indirectly benefit from the growth of your business. Chances are they will learn from you too.
Typically, board members are financial professionals, including bankers, accountants and consultants, as well as lawyers and human resources professionals. They can even be competitors if everyone is interested in sharing industry knowledge. It would be nice if someone was connected to the Small Business Development Center, the local chamber of commerce, or the SCORE network of retired entrepreneurs.
Think of this loose coalition as your personal “shark tank” mentors – but even better. While Mark Cuban and other venture capitalists from the hit TV show are buying stakes in small companies from members in exchange for their advice, you’re not giving up stock.
Your advisory board is also yours sounding board. It’s like a group of five to ten friends that you can call on the phone for expert advice in a niche that you can never master on your own. In addition to advice, you can create a community around you that grows with your company.
Related: ‘I’ve Had a Few Disappointments’: Barbara Corcoran Reveals Behind-The-Scenes ‘Shark Tank’ Secrets
How to do it
Once you’ve decided to form it, it’s time to choose your players. The interview process is key. Here are some questions: Are you able to meet face to face at least once every three months? Are you prepared to take impromptu calls should a situation arise? It’s about laying the groundwork for your business needs, beyond any paid services they may provide to your company.
First of all, you will need advisors who will be frank with you – even extremely honest. They should seek to break you out of your isolation to see the bigger picture – the hidden risk, the potential missed opportunity. Relatives and friends are often poor advisers because their judgment is clouded by their loyalty to the business owner rather than the business. There will be times when difficult advice will be difficult to hear, so a neutral, trusted voice is best.
Your board members can play the role of risk managers, talent scouts, and trend followers. You’re too busy to follow industry, local, state and federal regulations on everything from tax code changes to labor rights and product regulations. That is why a group of experts in their field will complement your own knowledge and skills.
Today’s new high interest rate normal may be new for business owners under the age of 40. Funding has become difficult. While the loan might have been enough when rates were close to record lows, a stock-for-cash swap might make more sense today. You can be sure that a financial professional who works with other companies in your industry will tell you the pros and cons of each option.
What’s more, consultants can help you plan ahead so you don’t get caught off guard, for example, if you don’t have enough money. As with other aspects of life, it’s about maintaining an ongoing relationship that keeps you in control.
On the subject: Stop Throwing Money Away: 5 Tax Credits Your Business Is Missing
Too busy? Think again
A small business owner may say they are too busy to add five to ten people to their business circle. It is important to remember that every entrepreneur works and on business and V business. Many focus on the latter. But as the company grows, the founder must delegate to others and use the extra time to think about the vision and overarching strategy.
After all, as a business grows, new needs appear. There will be different tax ramifications for a larger or more diverse company. Superprofits, which are good to have, put us in a difficult position: what to do with excess cash – pay off debt, invest in equipment or invest money? Communication with a financial professional, lawyer and accountant is of great importance.
You might think it’s hard to complain about the success of a small business. But at the stage of growth, everything changes. More real estate, hardware, software and employees may be needed. And the resulting need for additional funding. The last thing you want to do is leave money on the table.
Your small business advisory board will help you deal with these challenges. As you win, so will your team members.