A key elements of business success is the ability to change. However, it is often hard to figure out why, what, and how to change without any outside ideas. That's why many companies in the construction industry have formed advisory boards. Whether formal or informal, an advisory board can help you think outside the box and avoid making the same mistakes as others.
Unlike corporate boards, advisory boards have no fiduciary responsibility and their advice is non-binding. Separate from a shareholder or investor board, an advisory board can provide you with direction that isn’t necessarily tied to the bottom-line and their stake in things. Rather, an advisory board can provide outside guidance on key issues that affect your business related to marketing, sales, staffing, succession planning, and much more.
Jim Joyce, president of H.R. Gray, a management and consulting firm serving the construction industry, says his firm has greatly benefited from using outside advisors. “I decided to form an advisory board because we did not have any in-house experience in operating a company, but we are very experienced in the work we obtain,” Joyce says. “It was important to learn from others rather than repeat mistakes that may already have been made by others. I also wanted to structure our financial reporting to look like what other businesses were doing and what the financial marketplace was used to looking at.”
To assemble his board, Joyce reviewed and selected candidates based upon their personal experience and familiarity with the industry. Although it took eight months to assemble the right players, they were able to assemble a board with strong CEO skills, a CPA with a strong construction background, and a political consultant/lobbyist with a strong understanding of public works/contracting practices.
“It helps to have a perspective different from one another,” he says. “It provides a more complete review. Subcontractors, suppliers, and clients can give valuable insight because they see many firms in the same position as your own and can give you a best of the best/best practice viewpoint.”
Also try to pick companies with complementary services or products. Not only does such a grouping provide a chance for interaction and leads among the members of your board, but a group of competitors will likely be tight-lipped.
While some advisory boards are hands-on, meeting monthly or more, many advisory boards come together to meet only a few times a year. Still other companies operate with advisory boards that never meet, rather, the president of the company has a listing of go-to people to test ideas on.
Although advisory boards are typically unpaid positions, compensating the members in some fashion is appreciated, whether through in-kind service, gift certificates, or even leads. Also be aware that while their biggest contribution may appear on the surface to be their ideas, the greatest gift from advisory board members is really their time. As such, it is crucial that you establish an agenda, provide ample background information, and run a structured meeting.