How to Assemble a Board of Advisers

3. How to Run the Meetings
Your board should meet two to four times a year. (Ward prefers three times, because it gets you out of the quarterly cycle, with its emphasis on earnings -- the board, he says, should be looking forward, not back.) Try mightily to maintain the board's strategic focus: If you can't meet at the company offices without interruption, borrow a meeting room from another company or a hotel or restaurant. Meetings should seldom last more than three hours.

Structuring the Conversation At each meeting, focus the board's attention on a few core strategic matters. Don't follow the stultifying pattern, set by large corporations, of reading the minutes, reviewing the previous quarter, etc. Eisenhut suggests devoting an hour to each of two major topics and half an hour to each of two follow-up or future topics. Ward recommends that the CEO ask himself or herself in advance, What's the biggest unanswered question facing our company today? That topic starts the meeting. In any case, put the agenda in writing, and state clearly what you expect the board to contribute to each item. Help your advisers prepare by sending a week in advance the information they need to digest. Keep it short, thoughtful, and processed -- don't send raw data. Between meetings, keep them updated on any developments.

It can be difficult for an entrepreneur to face a board frankly over difficult issues. But the advisers, having been there themselves, will recognize this and guide the CEO, says Ward. He suggests asking one to co-facilitate the meetings, at least to start. "After the first meeting, it gets easier."

Advisers or Directors?

The Case for Directors: If you can spare the time and the expense of the reporting requirements that accompany a statutory board of directors, then you might consider establishing a directorate, says Northwestern's Ward. "When it's a legal commitment, the directors feel a deeper, broader sense of responsibility to the company, to all the stakeholders, and the well-being of the company and the institution -- to the continuity of the enterprise," he says. "Especially when there's an emergency."

The Case for Advisers: Still, Ward concedes that you'll get 80 percent to 90 percent of the benefit of a directorate from informal advisers, and most of the longtime small-business counselors Inc. interviewed recommended against chartering a board of directors. Even a company with a corporate structure that requires a formal board of directors might still want an advisory board, says Hansen. "On a board of advisers, I can give my best advice and not be constrained by the possibility that it's going to come back and bite me. It does change people's perspectives."

Advisory Alternatives

If you are unable to devote the time and resources necessary to a full-fledged board of advisers, there are alternatives:

• A board of professional advisers: If nothing else, convene your paid, professional advisers (including, perhaps, your banker and a consultant if you have one) a couple of times a year just to bring them up to date on the business. Some entrepreneurs may find this threatening (and expensive, if the advisers are billing). But, Ward is quick to add, "these are smart people who see lots of businesses and are going to raise questions." Moreover, preparing for the presentation forces you to do your homework. Because you are already a client, the arrangement can also ease disclosure fears.

   

   

• The ad hoc board: Instead of constituting a board with regular meeting times, approach potential mentors individually, meeting with each for coffee occasionally or corresponding by e-mail. Or recruit a board for a short-term project. Either approach can serve as a tryout of sorts for a more rigorous approach later on.

   

   

• The task-specific board: Some experts, including Eisenhut, believe advisory boards are best constituted for a specific purpose and a limited time. In this view, when convening a board for a strategic objective, "you need to have 60 percent to 80 percent of the framework in place," he says. "Then you go back to the board and have them put the final touches on." Each member of the board should have a particular area of expertise: finance, operations, purchasing and supply chain logistics, and a variable--regulatory, say, or real estate knowledge.