Does your small business have a board? What kind of board you ask? A skateboard, boogie board, snow board, bill board? Of course, I am referring to a Board of Directors.
Most large companies have a Board of Directors and all publicly traded companies are required to have a Board of Directors who advise executive officers on matters including but not limited to executive pay; strategic planning; financial reporting; mergers and acquisitions; dividends; budget control, company personnel, etc. The executive team and primarily the Chief Executive Officer of the company are accountable to the Board of Directors. Typically a Board will consist of experienced businessmen of which no more than 50% are employed by the company. The idea is that the Board should operate independently in order to maximize the returns for the company’s share owners and stakeholders.
Many small business owners cannot afford a formal Board of Directors; instead they benefit from having a set of trusted advisors by being part of a Peer Group. Typically the Peer Group is comprised of a group of six to twelve small business owners from various industries who meet regularly to consider each other’s challenges and successes and to advise each other accordingly. The Peer Group members function as each other’s Board of Directors by providing input to ensure desired outcomes and to hold each other accountable for the changes they agree to implement. While the President or Owner of the company is not obligated to follow the suggestions made by the group, l have found that the synergy and respect that permeates the group setting is quite influential.
Imagine, if you will, a Peer Group of small business owners sharing and challenging each other to analyze and grow revenue, solve human resource challenges, embrace new marketing and social media ideas, etc. Here are two actual examples of the benefit of the Board or Group’s insight and input in Peer Groups I have facilitated. Harvey H. owns an electrical company and has just lost his highly productive and effective sales Manager, Justin, who has been Sales Manager for twelve years. During that time the company’s sales have grown exponentially. Harvey asked the Board to provide insight in the recruiting process to maximize his potential in finding the best fit for Justin’s replacement.
Monique S. owns an online custom order pet supply business. Revenues in her business have declined consistently over the past year; Monique sought turnaround advice from the Board.
Each of the Peer Group or Board members brings a challenge to the meeting. Together they utilize their knowledge and experience to provide feedback and advice. The Peer Group facilitator keeps the Group on track to maximize productivity and results. In Harvey’s situation the Board helped him identify the traits that have made Justin successful and provided feedback on tools to use in vetting his search. With Monique, the Board analyzed her 2012 sales and marketing to determine if there was a correlation in the declining sales. They determined that the drop began when Monique pulled back on her online advertising and retargeting campaign. Monique agreed to rev up these marketing campaigns immediately. One of the Board members offered to work with her on reenergizing her Social Media efforts.
Sometimes the answers are obvious; other times more research is needed outside the meeting time. In any event small business owners who are part of a Peer Group find having trusted advisors or a Board of Directors increases their business success. At the annual IFA convention in February, an executive with a senior care company shared that small business owners with whom he works, are part of a Peer Group and these owners increased their revenue 123% over a period of 12 to 18 months; those who added coaching with their Peer Group experienced increased revenues of 184%.
The power of a Peer Group is no small matter in the success of a small business. By embracing advice from each other, (the Board), and being held accountable to the changes they agree to make, business owners agree that the best board is a Board of Directors.