advisory boards—a great resource for your small, green business

8/2/2019 Advisory BoardsA Great Resource for your Small, Green Business

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ADVISORY BOARDS

A GREAT RESOURCE FOR YOUR SMALL, GREEN BUSINESS

G R E E N B U S I N E S S O W N E R

Business Services

S a n F r a n c i s c o , C A i n f o @ G r e e n B u s i n e s s O w n e r . c o m w w w . G r e e n B u s i n e s s O w n e r . c o m

C o p y r i g h t G r e e n B u s i n e s s O w n e r 2 0 1 0
http://www.greenbusinessvillage.com/http://www.greenbusinessvillage.com/


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Executive Summary 2What Are Advisory Boards? 2Advisory Boards for Small Green Businesses 2Document Summary 2

Part 1 What Can You Expect from a Board of Advisors? 3What a Board Can Do For You 3Exhibit 1 Roles of the Advisory Board 3Exhibit 2 Why an Entrepreneur Would Want an Advisory Board 5

Part 2 How To Set Up and Launch a Board 5Who Are the Right Board Members? 5How To Find Terrific Board Members for Your Small Business 6Exhibit 3 Effective Ways To Find Board Members 6Exhibit 4 Example Board of Advisors for a Green Coffee Shop owned by Jill, a

fictional eco-entrepreneur 7Part 3 How To Manage Your Board 8

So You Have a Board Now What? 8Exhibit 5 An Illustrative Example of Jills Board Meeting in March 9Managing the Downsides of Having a Board and Avoiding Common Problems 9So What Is in It for Them, Exactly? 10Final Comments 10

Appendix 1 Glossary of Terms 11

G r e e n B u s i n e s s O w n e r A d v i s o r y B o a r d s

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Executive Summary

What Are Advisory Boards?

Not to be confused with a board of directors, advisory boards are extremely helpful resources for small business

owners. A board of advisors is an entity that provides advice to managers and owners of businesses. Boards can

help shape your strategic goals, give you invaluable financial advice, and ensure you stay on track with your values

and mission. Perhaps most importantly, however, the board can open doors for an entrepreneur sheerly from the

connections board members have. The relationship is actually quite informal a board has no authority, nor any

legal or fiduciary responsibility. Make no mistake, however, having such a board can be the difference between suc-

cess and failure. Whether you are a solo entrepreneur or a small multi-employee business, a board is useful in pro-

viding you much-needed independent advice and helping you avoid common mistakes.

Advisory Boards for Small Green Businesses

This may be one area where being green is really easy. People love sustainable businesses, and you may find that,

unless you are careful, you end up with an advisory board that is enormous. Many people will want to volunteer

their services, and if you can use this to your businesss advantage, you will gain a crucial competitive edge for your

small, green business.

Document Summary

This document will introduce you to boards of advisors and discuss how you can effectively utilize them to the ad-

vantage of your business. In Part 1, we discuss the benefits and drawbacks of creating a board of advisors and dis-

cuss the roles that an advisory board may play for your small business. In Part 2, we discuss setting up your board of

advisors, including how to find the right board members that lend complementary skills to your organization. In

Part 3, we discuss how to manage your relationship with your board of advisors for long-term success. We discuss

various options for engaging your board members, including what you can offer in return for their service. The

document closes with a glossary of relevant terms for your reference, both current and future.


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Part 1 What Can You Expect from a

Board of Advisors?

What a Board Can Do For You

Traditional belief holds that having a strong business plan, a committed staff, and a well-developed management

style are all you need to run a successful business. Board members bring an element to the table that you may strug-

gle to get anywhere else: a qualified, yet independent perspective. No matter how experienced and knowledgeable

you and your staff may be, you will always be constrained by the inherent myopia that comes from running a busi-

ness day-to-day organizational politics, short-term needs that dictate your role, and the immediate demands of

your stakeholders. In other words, seeing the forest for the trees is one of the greatest challenges to running a

business.

Enter, a board of advisors.

The role of the board of advisors (hereafter, the board) is to provide an independent, outside perspective. board

Members should be experienced professionals whose opinion is informed and intelligent. A well-managed board can

give you strategic direction, help you answer the tough questions, and always ensure you stay true to your business

plan and your core values.

A recent McKinsey & Company study1 interviewed the directors or board chairs of 32 of the 100 organizations named

as top performers by Worth magazine. The survey concluded that high-performing boards play three distinct roles:

Exhibit 1 Roles of the Advisory Board


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1 McKinsey and Company, The Dynamic Board


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1. Shaping Your Direction

The first major task you will have as an entrepreneur is to determine your organizations mission. Sound easy? Think

again. Take the Walt Disney Company as an example. A traditional mission statement might read: To make car-

toons. In contrast, a powerful and strategic mission statement would read: To make people happy. Do you see the

difference?

Determining your true mission and packaging it in a compelling sentence that will inspire your staff for years to

come is no easy task. A board can be key to helping you determine your true mission and create a compelling story

for your organization.

Beyond a mission statement, an entrepreneur must develop a strong strategy and a set of long and short-term tactics

that will allow employees to implement the strategy. Each of these steps is complex and riddled with risks. Having a

board forces you to spend more time on these tasks and helps you develop a well-thought out business plan for your

company.

2. Ensure that Leadership, Resources and Finances are in Place

Good boards can add critical skill-sets to your organization: from legal skills (e.g., help drafting your legal docu-

ments), to financial prowess (e.g., expertise on the best ways to fund your business), to environmental know-how

(e.g., environmental engineering).

Moreover, boards can provide access to information and experiences you might not otherwise be privy to. For exam-

ple, the Deputy Director of the Natural Resources Defense Council notes that For us to be successful, we need the

board to open doors and introduce us to policy makers.

3. Monitor Performance and Ensure Corrective Action

All companies must keep a close watch on their performance metrics and take corrective action if the business be-

come unprofitable or goes in a misguided direction. But this is even more important for mission-based businesses.You will have to make trade-offs in your time as an entrepreneur and difficult decisions will be impossible to avoid.

A board can help you navigate those tough choices and keep you on track when you err on the wrong side.

A board should continually ask the following questions:

Is a firms financial exposure sustainable?

Is the organization structured to deliver the best results?

Are employees (including the CEO) compensated fairly?

Is the mission and vision of the organization being upheld in all strategic decisions?

A board is the best safety net you will find to keep you from making mistakes you will later regret.


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Exhibit 2 Why an Entrepreneur Would Want an Advisory Board

Part 2 How To Set Up and Launch a

Board

Who Are the Right Board Members?

This is the single most important pre-requisite to ensuring your boards success. Getting the right individuals for thejob means the difference between extremely valuable advice, and distractions from your business operations. How

do you tell who is right for a job? Here are some general guidelines:

They should see eye to eye with you on the mission of the company.

They should have a specific skill set that you need in your company. This criterium goes a long way toward

assuring that they stay on task as well, and not try to overstep their role, which is a crucial success factor we

discuss in more detail below.

They should be able to tell you the truth - positive AND negative. Their feedback may feel harsh at times. If

it never does, they may not be giving you the advice you need for your business to succeed.

They must understand and agree on the role you expect them to play.

They must have sufficient time to meet your requirements. This may be only a few hours a year, but some

high-profile people may not even have the bandwidth for this. If they dont, they will be a distraction to you

and take up valuable time and energy in scheduling and rescheduling.

They should enjoy the task at hand.


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Exhibit 4 Example Board of Advisors for a Green Coffee Shop owned by Jill, a fictional eco-entrepreneur

Jills board has 4 members - Henry, Tish, Tom and Beth. From Henry, Jill gets the experience of a veteran in the field,

and has learned to manage his desire to be the manager of the new company. While his experience is extremely valu-

able to Jill, what worked for Henry in Portland may or may not work for Jill in the new company. In addition, Jillwants to do some things differently and have a unique brand for her coffee shop, and therefore she sets well-defined

boundaries of control with Henry. From Tish, Jill gets free legal advice and terrific business acumen, as well as help

with setting up her tax structures and making sure all her legal filings are in place. Tom helps Jill by connecting her

to industry players in the coffee business, and educating her about the processing, ordering, and maintenance of her

supply chain. From Beth, Jill gets tremendously valuable financial planning and strategic advice. With all of these

people, the things they know and could do in their sleep would take Jill by herself many hours and potentially cost a

lot of money in development, research, and mistakes.

A logical question might be what these individuals get from the experience. Well cover that in Part 3.


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Part 3 How To Manage Your Board

So You Have a Board Now What?

The last thing you want to do is to assemble a terrific board of advisors and then not know how to leverage their ex-

pertise (or worse, to waste their time!). How do you ensure that your boards time is used effectively? How do you

leverage the experience and skill sets of your board optimally?

Even once you have a strong set of individuals who agree with your vision and are supportive of your cause, you

must provide extraordinarily strong leadership in order to get the desired results from your board. That leadership

must necessarily come from you or another leader of your business, whether its a partner or a high level manager.

A few strategies are recommended:

1. Create a robust agenda for each meeting. A written agenda that is distributed to board members before the

meeting ensures that you stay on target and discuss the topics that are most important. Distribute this be-

forehand, and allow participants to add to the agenda if you have missed an important component. But al-ways be in charge of what you need from your board members and what you hope to get out of the meeting.

The agenda can be as simple as a bulleted outline, so long as it covers the major topics that will and, just as

importantly, will not (by virtue of their exclusion from a written, pre-distributed agenda) be covered.

2. Run meetings effectively and with a purpose. In some cases, board members may be older or more experi-

enced than you. But as the CEO, it is your responsibility to be in charge of the meetings and to stick to the

agenda. Do not allow the board to get derailed by non-relevant discussions, or allow one individual to

dominate the discussion. Finally, ensure that the meetings are enjoyable for all members and respect your

boards time limits.

3. Communicate with board members regularly outside of meetings. Waiting until a meeting to distribute

documents and updates does not allow your board members enough time to form thoughtful perspectives.

Send updates regularly as events occur and keep your board members abreast of your companys news. If

something is important to the success of the company and its ongoing operations, err on the side of over-

communicating with your board.

4. Meet with board members individually. Periodically schedule a one-on-one meeting with each board mem-

ber, whether in person or by phone. This will allow you to discuss in-depth topics with the relevant expert at

hand (e.g., legal questions with your legal expert) without taking time from all other members. It also allows

your board members to voice opinions they might feel uncomfortable discussing in front of others.

5. Ensure social events that revolve around your mission to keep board members passionate. Remember that

board members are likely volunteering their time to help you. Make sure you give back to them by provid-ing a fun and collegial social environment, and one in which their passion for sustainability and justice is

catered to. Host an organic dinner at your cafe for your board and their families. Plan a hike or camping trip

once per year as a corporate retreat. Find out what your board members favorite hobbies are, and plan

some activity around one or more of them.


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Exhibit 5 An Illustrative Example of Jills Board Meeting in March

Managing the Downsides of Having a Board and Avoiding Common Problems

Though we advocate heavily in favor of having a board, we want to draw your attention to common challenges advi-

sory boards may harbor and how to best protect yourself. A board is not right in every situation and can be detrimen-

tal to your business if they are not created and managed effectively.

Common risks to consider:

Time: As a solo entrepreneur, you should consider the amount of time you have and prioritize whether hav-

ing a board is the best use of this limited resource. Managing a board is no easy task and will consume at

least a few hours per week, and sometimes a lot more.

Speed of decision-making: Boards will slow you downmostly this is for the better as your decisions will

be more deliberate and thought-through. But in some circumstances, being able and willing to make quick

decisions that are controversial and unintuitive to outsiders, is the mark of a successful entrepreneur. Know-

ing when to ask your boards advice and when to follow your internal compass is key.

Disagreement: Though board members offer good advice, you may disagree with them more often than not.

As an entrepreneur it is in your nature to be decisive and have a strong sense of what you want your busi-

ness to be. Managing disagreement and ensuring board members know that their advice will not always be

implemented is one of the most important factors of success if you choose to have a board.

Confidentiality: If your businesses plan is highly confidential or proprietary (e.g., new patent, innovation,

new market niche), you should choose board members you trust or avoid having a board until you have

carved out your position in the market. Though boards are expected to keep confidentiality, it is hard to pre-

vent or punish the duplication of your business plan.

Agenda for Jills Organic Cafe Board Meeting, March 14.

Time Topic Who5:00-5:30 * Update on this months results Jill to present5:30-6:15 * Green Business Issues: Check-in on the Jill will review practices, discuss Corporate Mission solutions. Board recommendations?6:15-6:45 * Financial Strategy Beth presents financial plan Time for comments6:45-7:00 * Open debate, suggestions for next meeting7:00 * Organic dinner at Jills Cafe, closed to the public


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Bad apples: Not all board members you select will turn out to be right for the business. In discussing the

initial relationship, you should always mention that you have the right to ask the board member to leave.

Board members should be useful to you their criticism and feedback should not become an unwelcome

burden. If a certain board member is not pulling his/her weight or is distracting progress through unpro-

ductive feedback, you should use your rights as CEO to ask them to abdicate their post.

So What Is in It for Them, Exactly?

A good board can be a tremendous asset to a small business owner. However, what is a small business owner to offer

a board member to recruit them, keep them engaged, and maximize their interest in the company? Serving on a

board has a number of potential benefits to the board members themselves that you can leverage to build and retain

the best board for your company.

1. There is little to no risk. An advisory panel is looser than a board of directors. A board of directors has greater

obligation, liability, and requirements of time than a board of advisors. Therefore, you can make that pitch

that theyll have less skin in the game...theyre just giving advice. Theres no legal structure to tie them

into, and if the ship goes under, they lose nothing.

2. It is an opportunity to shine. Everyone likes to feel important, and this is a great way to give board members

something to put on their resume and tell others about. Most people love to be asked their opinion (and give

it).

3. It is a networking opportunity. Part of keeping people engaged is to make it worth their while professionally. If

you can connect people professionally, or somehow open a door for them, youre well on your way to hav-

ing them be indebted to you.

4. It may be a social opportunity. Several of the people we interviewed for this paper said that the top reason

they joined a particular board is that there was someone else on the board they knew, trusted, and enjoyed.

5. In some cases, it might make sense to pay someone. For the absolute right person, that board member that

can open a critical door for you, you might consider putting them on an annual retainer with your company.

6. Its an opportunity for them to be promoted externally. Promote your board members! In some cases, your

board member may be interested in exposure for their own career. For instance, if you are running a small

magazine, an author may want to be on your advisory board in exchange for free advertising in the maga-

zine.

Final Comments

Many entrepreneurs make the mistake of underestimating the powerful role a board can play. As you see, boards can

help you throughout the entire life-cycle of your business. Do not miss this opportunity to enhance your companys

success with this extremely inexpensive resource.


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Appendix 1 Glossary of TermsMyopia Known colloquially as tunnel vision, myopia describes a challenge faced by many small business own-

ers, who cant see the forest for the trees. They and their partners and employees are buried in the business, andtherefore having a board of advisors who can provide an independent, outside perspective is extremely valuable for

breaking this myopia.


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advisory boards—a great resource for your small, green business

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