The first few years of Bill Clinton’s presidency was marked by stumble after stumble in terms of execution. It was only after a team of experienced professionals came to the White House to assist him did things turn around.
This is a lesson for a business owner. At some point you will outgrow the advisors that brought you to the next level and you will need to find new ones that can help you achieve even more. This concept is documented in the book “What Got You Here Won’t Get You There.”
The night of April 14, 1912, the captain of Titanic had a single advisor on board, the chief builder. The fact that Captain Smith could not turn to anyone else to ask for advice was a severe handicap. He needed help in safety management, crisis management, leadership and execution of an emergency plan.
This is another 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 that you do not possess. Captain Smith sailed the oceans of the world for more than four decades and 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 do a passable job. Human resources and tax issues, as examples, have become so complex and subject to litigation that specialized assistance is needed to stay in compliance. Who should be advising you?
The first person on the list is a tax professional. This advisor performs tasks other than tax preparation during the year, such as payroll, financial analysis and tax savings calculations such as enterprise tax credits. The essential function is to serve as a financial advisor throughout the year, not just during tax season.
A business attorney is second on the list. An owner needs to have the confidence of a reliable and knowledgeable business attorney providing input on legal matters specifically contracts of all types.
The third advisor is a commercial and property insurance agent. A business enterprise entertains multiple insurance issues.
A banker should be the fourth advisor. They can provide guidance on what their own bank and other lenders seek regarding capital and management of the same.
The fifth source of advice should come from consultants providing knowledge in areas that are unfamiliar, including design, web marketing, research, pricing, sales, marketing, and public relations.
The sixth source of advice is a health benefits insurance agent. Like law and taxes, health insurance is serious business and getting the right advice is essential.
The seventh source of advice is an attorney specializing in human resources and labor law. Employment law is a complex area that cannot be ignored.
Solid advice is going to come from fellow business owners. For that reason alone it is wise to seek out others to serve formally as a “Board of Advisors.”
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 saves 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 open to advice and counsel given. It does not have to be followed, but it should be considered.
Integrity, experience and open communication are critical to whomever advice and counsel is received from. Those that serve must be willing to provide candid and honest advice at the risk of losing revenue. Advisors have to be ready, willing, and able to tell the truth, even if the owner does not want to hear it.
The advisors also have to grow just as they recommend the owner continue to learn. When a trusted advisor does not stay current, when the advisor becomes stale, there is a reasonable risk that the person they are advising will outgrow them.
On the bridge of the Titanic that cold April night, if the Captain had the right advisors around him, not only might have he avoided the crisis, he would have, at a minimum, been much better prepared for what happened. That he did not have the right advisors speaks to his arrogance, isolation and perceived invincibility. Captain Smith died along with 1,516 others.
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