A CEO explains that the best way to get low-cost, high-quality financial advice is to set up a board of directors.
What's the best way to get low-cost, high-quality financial advice? Build a top-notch, diversified board of directors, says Steve Simon of AutoLend. (See "Plan Early for Profitable Growth," [Article link].)
Simon's all-star board includes Paul Gregory, vice-chairman of Willis Corroon of New York, an international insurance brokerage; Stephen Raphael, a member of the board of directors of investment-banking firm Bear Stearns; and Dan Poryles, an auto-industry financing expert and senior consultant to GE Capital. "If any of us were on retainer and being paid hourly fees, AutoLend would be bankrupt," notes Gregory. AutoLend pays its directors a token fee and grants them stock options.
Furthermore, Simon is in touch with at least one board member almost every day. "When Steve is dealing with an issue like hiring a chief financial officer, or -- the way he is now -- investigating prospects for bank financing," says Gregory, "he contacts the director with the relevant experience."
Too many entrepreneurs refuse to set up boards, or they line up directors who will rubber-stamp the management's calls. Not Simon. He established a seven-member board that includes himself as the only insider. "I've put my ego and my vanity aside and assembled a focused team of financial advisers. If I'm making a mistake or missing a market opportunity, I want my board to intervene."