The statistics are grim for entrepreneurs: 75% of startups are no longer in business after 5 years. Many sell, merge, or reorganize, but the majority of this number simply fail. What’s the biggest mistake that a solo entrepreneur makes? Undercapitalizing? Lack of planning? Failure to stick to the mission? Ineffective marketing? Lack of access to the people that can make or break the company?
The answer, of course, is that these are all just symptoms of the underlying problem. The biggest mistake entrepreneurs makes is tunnel vision. Who can blame them? They have a lot to focus on: engaging their stakeholders, paying bills, setting up their Quickbooks, mopping their floors….an entrepreneur must wear many hats. So how does a small business owner get out of this trap? One answer is to set up a Board of Advisors that can help bring a unique perspective. The main role of the board is to provide an independent, outside perspective. Members of the board 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 study (McKinsey and Company, “The Dynamic Board”) 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:
If performed well, these three roles can mean the difference between success and failure for many small businesses. So how do you recruit, set up, and manage an Advisory Board that can help you succeed?
The first step is to find the right people. Perhaps the most important aspects of the ‘right’ kind of board members for a small, green business are:
* 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 oversight, which is a crucial success factor we discuss in more detail below.
* 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 not, 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, because let’s face it: a happy board member is a productive board member.
Scott Cooney is a small business advisor for Triple Bottom Line businesses through his website GreenBusinessOwner.com, and author of Build a Green Small Business (McGraw-Hill).