Q: How big does my business need to be before I set up a board? And how much will it cost me?
A: If you're thinking big, start building a machine to go there. People make a business go.
A board should start early. Once you have an idea and some traction in figuring out if it will work, start looking for external advisors. Look for people who can add something to the mix, not just people you like or people who will give you an excuse to pat yourself on the back.
Beyond a few tidbits of advice, identify individuals to ask onto an advisory panel. This should be people who can help you make inroads into your first markets and guide you through to the next stage.
The best analogy I have heard on this is from Wayne Norrie, an experienced senior IT exec and director. He likens advisors to spotlights on your car as it drives full speed through the night.
In other words, they are people that will illuminate the way forward, help you dodge potholes, make things clear and let you do the driving.
As you develop your business your governance will develop alongside it, to the point where you may look at incorporating a formal board of directors.
Every business should look for people that believe in where it is going. It should not be about how much you pay them to be there.
So on cost I'd suggest finding advisors who get your mission, your target and your ethos and are willing to give up a couple of hours a month to be involved.
That is not to say this should be free. If they donate their time, look after them. A small meeting fee might be in order, and if they understand what it takes to push a small business forward, they aren't going to ask for much of your cashflow.
Goodwill only goes so far, and recognising the value they add is up to you to figure out and express. Discuss it with them. If they are true fans they may look for a piece of the company, or they may simply seek enough to make it worthwhile giving up time with their families or such.
- Nick Churchouse is the venture manager at Creative HQ, Wellington's entrepreneurship and startup incubator CreativeHQ.co.nz
A: All businesses will benefit from effective advice and governance. In the simplest form this could be meeting regularly with another business owner and discuss each other's business on a quid pro quo basis.
As soon as you can afford it I would suggest paying for an external party to help you with your business and establishing an advisory board.
Get two external people so you can effectively debate issues. There is a great NZ book called "changing gears" by David Irving. Read it.
I always recommend making at least a token payment (say $400 per month) to buy commitment from your advisors and from you. Advisory board services range from Free from Business mentors NZ, to professional help ranging from $500 - $1500 per month.
Your advisory board should be the highest performing team in your business. Validate the people you select. If it's not producing results change it. Never sign up for fixed-term contracts.
- Mark Robotham is an SME business adviser. Website: growthmanagement.co.nz
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