The night of April 14, 1912, the captain of the Titanic had one advisor on board, the chief builder. The fact that he could not turn to anyone else on board to ask for advice was a handicap. Captain Smith could have used more help in planning, in safety management, in crisis management and leadership.
This is a lesson for every business owner. It may be lonely at the top, but even if you have been in business for many years, you still need the wisdom and perspective of people who have been around and have knowledge and perspective that you do not. Captain Smith had sailed the oceans of the world for more than 40 years but still ran into an avoidable disaster.
Every business owner needs advisors. The reason is clear: there are areas of business management that the owner cannot possibly know enough to even do a passable job. Human resources and tax issues, as examples, have become so complex and highly subject to litigation that an owner needs some specialized assistance just to stay out of trouble. So, who should be advising you?
The first person on the list should be a tax professional. This advisor may perform tasks other than tax preparation during the year, such as payroll and employee benefits. The essential function is to serve as a financial advisor throughout the course of the year, not just during tax season.
An attorney should be the second person an owner turns to for advice. An owner needs to have the confidence of a solid business attorney who can provide advice on legal matters including contracts, incorporation, and buy sell agreements.
The third advisor board should be an insurance agent. A business enterprise entertains serious insurance issues, and this is an important area that needs to be reviewed regularly.
Bankers are critical to any business and should be the fourth outside advisor. They can provide guidance on what their own bank and other lenders seek regarding money. Bankers are also good at connecting people.
The fifth source of advice should be coming from consultants that provide knowledge about technical areas that are probably unfamiliar: graphics, web marketing, research, pricing, sales, marketing, and public relations. While any one consultant can provide an owner with some knowledge in all of these areas, chances are a particular business will need more in depth assistance, which is why more than a single consultant is sought out.
But the best advice is going to come from fellow business owners, and for that reason alone it is wise to seek out others to serve formally as a “Board of Advisors.” This is not a formal board, as it has no ownership or fiduciary responsibility, other than to provide guidance. It can help most when the owner is trying to make a decision in unfamiliar areas and does not want to do it in a vacuum. It never hurts and almost always helps to have people around to run ideas and thoughts by for validation. That kind of “what if” thinking might save an organization from expensive mistakes.
Used properly, an advisory board can be invaluable. However, it cannot be a “paper tiger.” The owner has to be willing to listen to the advice and counsel given. It does not have to be followed, but it should be considered. After all, that is why a board of advisors is established in the first place: for advice and counsel.
Integrity, experience and open communication are critical to whomever advice and counsel is received from. Those that serve from the outside must be willing to provide candid and honest advice at the risk of losing revenue. advisers have to be ready, willing, and able to tell the truth, even if the owner does not want to hear it.
Go back to the bridge of the Titanic that cold April night. If the captain had listened to others who had crossed the Atlantic during the winter months, he just might have been better prepared for the crisis he sailed into.
