After nine years in operation, Lisa Gleeson was ready to expand Lisa's Gift Wrappers, her Royal Oak, Michigan, gift-wrapping business. But when she bounced the idea of opening a new store off a few members of her "brain trust," the loosely affiliated network of seven business professionals who act as her board of advisers, they told her to forget it. "They said I wouldn't be able to sustain the expense for the two years it would take to establish the new outlet," Gleeson recalls.

Grudgingly, she opted instead to open two pop-up locations during last year's holiday shopping season. That proved to be the right approach, she says, in part because one of those pop-ups was in the very spot she had thought about expanding to, and it did poorly. Her advisers had saved her from herself.

Why go it alone?

Tapping into supplementary expertise would seem to be a no-brainer, but entrepreneurs vary greatly in their willingness to seek advice. Though nearly 30 percent talk to fellow business owners when mulling an important decision, almost a quarter of small-business owners seek no outside counsel of any kind, even about accounting, tax, and legal issues. That's crazy, says advisory-board fan Ryan Smith, co-founder and CEO of Qualtrics, a Provo, Utah-based company that makes surveying equipment and provides related services. "An advisory board can save you years of hard work," he says. "When you're running a fast-paced business, you need people who can give immediate advice about important decisions you have to make."

Even long-established companies can benefit from the specialized knowledge advisers can provide. Aaron Young, CEO of Laughlin Associates, a Reno, Nevada-based business services firm, says, "Our company is 42 years old, with a lot of tenure among our employees. That can lend itself to our not always having the freshest ideas or latest skills. Recently an adviser showed me a way to measure our website traffic against that of our competitors. I thought I knew about analytics, but in 15 minutes I learned more about that aspect of the business than I had in 10 years."

Getting it together

Boards of advisers can take a number of forms. Gleeson recruited experts from different disciplines: an accountant, a publicist, a website designer, a business coach, a writer, a branding expert, and her two sisters, one who teaches marketing and the other who works in commercial banking. Young followed a similar path, reaching out to people with expertise in marketing, events, and public speaking, "because these advisers' track records and skills are beyond where our staff is right now."

Another approach is to assemble a team of entrepreneurial peers who have grown their companies successfully, or to even reach out to execs at very large companies--if you are confident they have the time and relevant expertise. Perhaps the most common approach, however, is to rely on family and friends, which can work if they're involved in the business or have their own fields of expertise, but which may prevent you from getting the objective perspective--and honesty--you need.

Craig O'Neal, president and CEO of VantagePoint Marketing in Greenville, South Carolina, says a "try before you buy" approach works well: Develop relationships with potential advisers first, by seeking their counsel informally. "I am very deliberate about trying to understand how someone works and thinks," he says. "I want to feel confident about them before asking them to serve on my board."

Recruitment is just the start, however. "Remember that your advisers will only be as good as your ability to continually engage and energize them," says Panos Panay, founding managing director of the Berklee Institute for Creative Entrepreneurship at Berklee College of Music. "An advisory board requires work on your part. Unless you put in the time and effort, your advisers will end up just being names on a business plan."

How to get the most from your board

Get it in writing. A simple memo explaining what it means to be on your board can protect you and your advisers, says attorney Douglas S. Brown, associate faculty member of the online MBA program at the Malcolm Baldrige School of Business at Post University and executive director of the Connecticut Bar Association. Among other things, make clear that all business decisions are yours and that you won't hold advisers responsible for their advice. Nondisclosure agreements are also a good idea, says David Scarola, vice president of the Alternative Board, which helps business owners across the world set up peer boards. "Board members can't give full value if you aren't comfortable sharing all the information that they need."

Go long. When reaching out to potential advisers, leave yourself an out: Sign them up for a year of service, renewable at your discretion. That said, you really want keepers. "In terms of stability versus new blood, stability is more important," says Scarola. "Every group goes through a life cycle: They assemble, then brainstorm, and then settle into a norm on how best to work together. Once your team has gone through this cycle, try to keep it together as long as possible."

Say thanks. You don't have to compensate your advisers, but you can. Stipends or small shares of equity are common. Gleeson of Lisa's Gift Wrappers gives personal gifts, presumably in dazzling packages.

Whom do you turn to?

When 750 small business owners were asked whom they trust when making important decisions about their companies, they revealed a strong bias toward going it (nearly) alone.

  • 67 percent said a single confidante serves as their go-to source for advice
  • 59 percent of those who rely on a single confidante said that person is an immediate family member
  • 47 percent did not seek advice about the prior year's most important business decision
  • 40 percent did seek advice from a fellow business owner in the past 12 months
  • 22 percent of those who don't seek outside advicecited privacy as the primary reason
  • 16 percent said their business has a formal board of directors
From the Dec 2014/Jan 2015 issue of Inc. magazine