When Do You Create a Board of Advisors

There comes a time when assembling a group of experts to help grow your business is considered smart leadership and a business best practice. When you reach a stage in your business where you have exhausted the collective internal experience, knowledge and skill to achieve your next phase of growth — create a Board of Advisors.

Every purpose of creating a board will differ for each organization. A business owner may be faced with great opportunity for rapid growth or significant challenges from conquering the next ascent in revenue, market or product expansion. The appropriate time to consider assembling a board is when the business path forward is less clear or cluttered with obstacles that could derail you from achieving your business goals. You have reached that period in your business when their is more “unknown” and you fear what you don’t know.

A Board of Advisors is different from local peer groups, leadership councils, service providers and executive mentors. Your board is a committed team of individuals working on your business. Advisors should have congruent skills that compliment your leadership. As an example, you may find that by adding a distinguished industry expert or technical guru best serves the next phase of your business  Adding market or sales expertise can open new doors, while a finance or legal expert can provide insight to reduce risk.

Experienced executives want to help entrepreneurs, startups and leaders that seek advice to grow their business.  It validates their business “wear and tear”, while providing meaning and value to their experience. The board should round out your executive court, as these advisors are typically not available to hire as full-time employees and can be “unaffordable” for smaller businesses. They also may be those exclusive experts that will always be in a role of advising and never work for a single entity.

The reason you bring experts together as board members is to increase effectiveness and efficiency in decision-making and strategic planning. A board will perform best when there is an exchange of ideas in an organized environment, centered around a single business issue. The board format is designed to solve problems. Each board member brings a different set of experiences, viewpoints and resources. Having a board working together with you to assess challenges and discuss opportunities, gives you invaluable advise that can save you significant time and money versus the “learn as you go” approach.

Board of Advisors are not in a role of governance. They do not have fiduciary responsibility to protect shareholders or investors, though they should be very responsible in providing any guidance related to financials or spending company money. Only an elected Board of Directors for a public corporation or non-profit have governance over a company. The Board of Advisors is a non-binding group of mentors and experts that work collectively with company leadership to achieve your business goals.

Advisors should be completely aligned with your goal and mission and also be able to challenge you by providing recommendations and views that will differ from your own. You do not want a board that agrees with all your ideas or thinks as one. Why waste your time.  They should differ in expertise and have the ability to assess short-term and long-term strategies, out load in a group discussion, without fear of reprisal.

A board is typically five to six members, excluding the CEO or business owner.  A Board of Advisors should consist of experienced and skilled individuals in varied areas where your business is lacking in comparable talent. In the early stage of a business, Board of Advisors are typically unpaid and may or may not have a long-term financial commitment through future equity.  As a business leader, be cautious of giving away ownership in your company early, this could be a note of contention with future financing.

The commitment of an advisor should be a minimum of two years.  It is valuable to set a term limit in reviewing board members, as you company is expected to grow and you need to be able to add new board members with different skills during later stages of your business.  Board members must also be committed to attend meetings.  A small business will typically meet with the entire board every 8-12 weeks.  If a board member misses more than two meetings a year, consider replacing the advisor.

Board members should not be family members, employees, contractors or service providers you pay for other functions in your business. It creates conflict of interests. Though a board of advisors are not employees, you should treat your advisors as accountable members of your C-suite. Set expectations, ask for help and use your board to help you achieve your goals.  If you simply assemble your Board and provide an update report on the business, you are wasting valuable resources and time.

Board of Advisors are trusted members of your inner circle. You can share with them confidential information and discuss highly sensitive matters that are not open for discussion with anyone else in your company. Your board should consist of credible experts that will provide insights you can not gain from any other resource. They should open doors, help you gain new customers or strategic partners and provide actionable ideas to help you achieve success. If you want to grow, create a Board of Advisors.

“You sit at the board and suddenly your heart leaps. Your hand trembles to pick up the piece and move it. But what chess teaches you is that you must sit there calmly and think about whether it’s really a good idea and whether there are other, better ideas.” – Stanley Kubrick

Jamie Glass, President and CMO at Artful Thinkers @jglass8

Investing in Co-Selling Partnerships to Grow

Small businesses and entrepreneurs can greatly benefit by selecting co-selling partners to drive revenues. Utilizing another company’s sales and marketing resources may be a great channel to aggressively extend reach and acquire new customers.

Co-selling partnerships with businesses selling complimentary products and services to your target customer can be smart business. These partnerships can cut existing sales costs and even accelerate growth in market share. The best sales partners create a synergy between respective offerings. There should be a “natural fit” of how the products and services add value for the customer. The buyer should inherently understand why you would partner, not question as to why you did or if there is any benefit in buying from a single vendor.

Co-selling partnerships can reduce sales costs. There is a required investment in sales and marketing to grow a business. The costs of a sales team can be crippling for a new venture or small business.The overhead expenses that enable a sales person to be trained, productive, and armed with the right marketing tools, technology and product support can be onerous in the earlier stages of an organization.  Lack of initial investment often produces lack luster results and can actually cost the business even more with unexpected turnover or lengthy sales cycles. Businesses need a specific budget and defined cost of sales to properly staff, train and equip a sales organization to get results.

Time-to-market and time-to-close can be reduced through co-selling partnerships. A new sales hire ramp-up time can be 3-12 months, depending on price of goods to be sold and anticipated sales cycles. Ramp-up requires an “blind faith” investment of time and resources. A business has to invest in sales with nothing more than the anticipation and belief that something is going to be sold. It is a huge price to pay and has great risk. Utilizing a trained and experienced sales team through a co-selling partnership can help you bring revenues in while you invest in building your own sales team.

Co-selling is not free. There are costs of co-selling partnerships. A strong partnership requires investment in training and account management resources to keep top-of-mind awareness with your co-oped sales team. You also need to provide sales and marketing tools to properly equip the team to sell your goods and services. You need to be available when they have questions and to support them throughout the entire sales process.

You also need to create an incentive as to why a sales person in another organization should throw your offering into the mix. Higher commissions, faster time-to-close and value-add to the customer, are all good reasons; however, remember — sales people need to be sold too. If you extend the deal time or complicate the sales process, it will never work. Make it easy and valuable for the sales team through your co-selling partnership.

Incentives matter in co-selling. If the paired companies benefit but not the people selling, the partnership will fail. You need to set up a partner agreement for commissions and shared revenues.  A typical commission in a co-selling relationship starts at 10% of net revenue on the deal for a qualified lead pass. This type of agreement puts the burden back on you to close the deal. You are basically paying for marketing and an introduction. If the partner does all the work, including closing the deal, you may provide an incentive of 20% or more just to get that customer on your books. The structure of the agreement and commission rates should be based on your financial projections and cost of goods and associated expenses in managing the customer post-sale. 

What doesn’t work? Relying on commission-only sales teams and partnerships that are by name only. There are business owners that believe they can get a motivated, committed sales person to work for free. The odds of making this type of relationship work are close to nil. The relationship between a company and it’s sales team, whether a direct hire or partner, is measured by the commitment from both sides. Small businesses may have to tier commission levels based on the ramp-up of sales or find ways to create early non-cash incentives; however, no one should be expected to go out and sell without a financial commitment. The words “you get what you pay for” should ring loudly if you are thinking about commission-only or finding people to sell for you because they like you.  Sales people that are really good at closing deals are expensive because they have a huge ROI.

Attributes of great co-selling partners to consider are the size of the partner’s sales team, market reach, relationships with your customer and available support the sales team receives in training for new products. The partner must have the means, connections and existing relationships to introduce your products to market. Co-selling means they will take an active role in selling. Again, partners by name only often produce little value.

If you choose to use co-selling partnerships, embrace the model and build support for the partnership. Show your loyalty through your commitment to make the partnership last and benefit everyone including the customer, the sales person and the partners. Create value by talking about the partnership and promoting the relationship. The results you get from this co-selling will be directly tied to the amount of time and resources invested in the partnership. You have to give to make it work and really pay off.

“In reality, the only way a relationship will last is if you see your relationship as a place that you go to give, and not a place that you go to take.” – Anthony Robbins

Jamie Glass, President and CMO at Artful Thinkers @jglass8

Related to a series of posts on partnering.  Also read: Sales Referral Partners Lead to New Customers

Prepare for a Happy Business New Year

There are only a few weeks left that will define how your business performed this year. Are you happy with the anticipated results?  If the answer is yes, are you prepared to deliver the same performance next year or go to the next level?  If the answer is no, are you prepared to deal with the obstacles and challenges that prevented you from achieving your goals this year?

There may be little time to change the results of 2012. There is plenty of time to prepare for changes in 2013, if you start now.  Pivoting from your current trajectory requires strong leadership and preparing a detailed plan to execute starting the first day of the new year.

Reviewing the past several months, is your business foundation strong enough to build the next phase of your expansion?  Your foundation needs to be durable, providing the necessary support to accelerate current business practices that will generate more revenues and improve overall performance.  A business that is built from repeatable practices for product development, sales, operations, marketing and service, is a business that is ready for sustainable growth.

In your evaluation of the past year, if you are not convinced your business is running at maximum capacity or operating efficiently, it is well advised to spend the final weeks of the year to identify the primary obstacles and demands your business require to get on track for better performance in the coming year.  In other words, now is the time to invest in your business to get it on track for growth.  Do you need to invest in people, products or infrastructure?  What will it require in time and finances to build a strong foundation for future growth?

One of the biggest challenges for small business owners is to look outside the day-to-day operations to see the threats and opportunities for growth.  If you do not have an advisor, seek help from peers who can give you an objective assessment.  You want to have a comprehensive plan with orientation toward your business goals and tactics that can be executed upon by your committed team members at the start of the year.  Your plan needs to be opportunistic and realistic.

Now is the time to plan for the coming year.  How much do you need to invest?  Will you need to pivot from plans that have not provided expected results in the prior months?  Your team is waiting for your definitive plan of action.  They want to know where they are headed so they can meet your expectations.  Take the steps necessary to get ready for the best possible outcomes in the coming new year.  The action you take today, will impact where you end up next year.

“If you don’t know where you are going, you’ll end up someplace else.” ― Yogi Berra

By Jamie Glass, CMO & President of Artful Thinkers and Managing Director of Sales & Marketing Practice at CKS Advisors.

Be in Your Business Now

As a business leader, you have three options of where to put your focus. The Past. The Future. The Now. Being present in your business now, gives you better leverage to improve from your past with the valuable foresight to manage risks and opportunities in your future.

21st century businesses require real time accessibility and responsiveness to meet the changing tides of immediate customer demands.  Innovation is quickly driving businesses forward and leaving many behind. Being disciplined on the point of convergence of past and future, enables you to put 100% of your business efforts into the business now.

It is important to know who you are, where you are coming from and where you are going. The past provides insights that can help your business pivot and shorten learning curves.  As a leader, you depend on the knowledge gained through good and bad experiences to improve performance and business outcomes.  There is only one path to progress.  You have to move from the past to the future through your business now.

Living in your business past, with regret or admiration, does not give you the necessary focus to be centered in the now. “When one door closes another door opens; but we so often look so long and so regretfully upon the closed door, that we do not see the ones which open for us.” ~Alexander Graham Bell

Leaders that spend time relishing in their great accomplishments may be ignoring the unknown threats or countless competitors looking for better, faster ways to knock you off your pedestal.  Put the plaque on the wall, file the kudos and at-a-boys and know that your business needs you to be working on what’s next – now.

Likewise, if you are spending your business now redefining vision statements, missions and the company’s next BHAG (Big Hairy Audacious Goal), you may be missing the bumps and obstacles that threaten you from achieving important milestones in your daily, weekly, monthly and quarterly journey.  Your revenues depend on you to zero in on the now.

One way to keep you in the now is to have a mission statement that puts you squarely in the present moment.  Starbucks puts its’ employee, partner and customer focus in their business now with their simple mission statement.  It says, “Our mission: to inspire and nurture the human spirit – one person, one cup and one neighborhood at a time.”

There is no arguing that you need business goals, strategies and plans.  The only way to work in the business now is to know where you are headed.  Every business needs short and long term goals.  There is a big difference in working in the future or working on the future — now.  You can be working on inventions that will change the world.  If you focus on how the world will be versus your invention, you will lose your edge in getting the invention to market.  A daydreamer trap for the creative mind.

Have you ever met an entrepreneur that has hundreds of ideas.  When you talk to them, they focus on all the ways they can improve on an idea, open new markets and make millions and billions — in the future.  They have 20 solutions for every problem.  Yet, there is always one thing that is missing in their enthusiasm for what’s ahead, their business now.

How is your business today?  What is holding you back this week?  What challenges are stopping you from being that billionaire NOW?  When you are steadfast on living in future, you are probably not paying attention to the work required to get you there.  If your employees always see you so far ahead of them, they often lack accountability to what they need to do to make the business a success today.

There is a fragile difference between a vision and an illusion.  Apple is a perfect example of a company dedicated to the business now.  We often look at each new product as ahead of it’s time.  Some will remark, how visionary!  Apple looks at their new products as another completed project. The next Apple inventions we will be enamored with are already in production.  Apple is constantly improving products ahead of their time by working in the business now.  They do so with an eye to the future, short term and long term goals; however, they produce and service in the now.  Innovation is part of their work culture.  We, their consumer, are focused on their future. That does not deter them from meeting our demands now, it only keeps us loyal.

Use your past to better predict your future.  It is good business intelligence.  Being present for your customers, employees, partners today is what has the greatest impact on revenues now.  Investing in your future, is working on your business now!  Don’t ignore what’s right in front of you.  What you uncover by working on the business now could define you and your company evermore.  

“Forever is composed of nows.” ~Emily Dickinson

By Jamie Glass, CMO & President of Artful Thinkers and Managing Director of Sales & Marketing Practice at CKS Advisors.

Ready to Hand Over the Keys to Your Business?

Business owners can easily be consumed by the short term activities of day-to-day operations.  Sole focus on immediate outcomes exposes any business to long-term financial risks.

Every business leader needs to mitigate risks associated to being the one in charge.  The value of a business is built upon the sustainability of the operating plan, with or without it’s leader.  As an owner or CEO, have you asked yourself the “what if” question?  Are you fully prepared to hand over the keys to your business today?

You may have imagined that some day you will be transitioning your leadership to a partner, an investor, the next in line or even family member.  You may see your fabulous retirement life through the eyes of selling your business in multiples above your investment. In order to realize your dream, you need to spend time and commit resources to adequately prepare for a favorable transition. When? Now.

Succession planning is critical to an effective transition.  Achieving optimal outcomes in transitioning a sustainable business requires years of preparation.  How confident are you in handing over control of your business to your successors today?  A successful transition plan gives the new leaders a complete operating manual.  They need to be adequately prepared to operate the business day one.  They need to be able to take your business forward to protect your investment and to benefit your employees, stakeholders, customers and partners.

Some owners avoid planning for the end of the business because of the time it takes away from working “in” the business right now.   The lack of preparedness puts your business value at risk. It is never too early to prepare for an exit.  Whether you are a small owner-operated business, mid-market company or family-owned enterprise, you need a definitive succession plan.  It should be part of your standard business.

Here are some tips on how to start your succession planning:

1.  Document company processes and procedures.  Everyone is not replaceable. Unfortunately, when a person leaves the business they take institutional knowledge.  Key personnel that do not document their knowledge or share it with their direct reports, cost your business long-term and expose you to great risk.  This includes the owners and founders.  You can mitigate that risk by making sure every employee documents their processes and procedures.  Start with key roles.  This is not a job description, it is a “how to” operating manual for every role in your company.

2.  Review your wealth preservation strategies with your advisors.  Meet regularly with your personal and professional financial team members to analyze your current situation and review your short and long term goals.  Be “in the know” at all times of where your business stands financially.  Use strategy and growth advisors to help you pivot the business, so that you can exceed your goals.  Update your business evaluations annually.

3.  Build a culture of knowledge sharing.  Create internal social exchanges and information sharing networks.  Use your company meetings to have one department or key player provide a highlight of their role and what it means to the business.  Reward employees for creatives ways they educate others.  Commit one hour a week per employee for education and cross-training.

4.  Host quarterly strategy updates with key personnel. Spend time with your “next generation” of leaders to share business plans, KPIs, lessons learned and company strategies.  They are the future leaders of your business and they may be executing your business plan.  Keep no secrets.  Share your wealth of knowledge.  Sharing keeps people engaged and actively participating in achieving business goals.

5.  Reward excellence in execution.  Find opportunities to reward performance for those that take initiative and demonstrate they are prepared to lead.  A business full of up and coming leaders, results in sustainability.

Exit planning helps you increase the value of your business today and in the future.  Investors and bankers should ask to see your succession plan.  As you plan your beginning, you need to plan for the end.  Make your investment of time and energy pay off more than you imagined.  Plan today to realize a profitable, rewarding and fulfilling end.

Jamie Glass, CMO & President of Artful Thinkers and Managing Director of Sales & Marketing Practice at CKS Advisors.