The transition phase from entrepreneur to a stable and strategically aligned company is critical, but many family businesses never do. Family managers can be excellent operators/marketers/producers in the present but are relatively unknown at planning for the future. With the company in a stable state, families can’t seem to find their next big idea or find themselves desperate for operational issues, rather than looking long term and directing the initiatives needed to do business there up close. Stagnation can occur at this stage.
This is where the family advisory in the UK can be a key player in taking the family business to the next level – by breaking the dynamics of planning and implementing sound strategic advice.
Increase the reach of management knowledge
Advisory board members are usually selected based on their in-depth knowledge of the company or specific aspects of the company, such as its operations, marketing or financial results, and the industry in which it operates. They should be able to assist in evaluating business ideas and opportunities and even in developing corporate inheritance and transfer programs. Their experience and often their skills must provide a comprehensive scope that greatly expands the managerial capacity of today’s companies.
In practice, research shows that most CEOs use their boards to hold multiple mandates. Some of the most common include defining strategy, such as providing a soundboard for ideas, guiding one’s skills to other leaders, and offering and evaluating new ideas for business development.
A typical first position on an advisory board may consist of accountants, attorneys, one or more owner-managers, industry consultants and possibly family members or non-participating shareholders. As the company grows, the level of expertise required can drive changes in board membership.
Outside board members can help restore ailing or struggling businesses; can help new entrepreneurs avoid mistakes that can lead them to overdo it or struggle to survive. In short, they can provide thoughtful advice that a less experienced management team lacks.
While there is little research to date showing a direct relationship between advisory board work and growth indicators, there is increasing anecdotal evidence from research and business articles that growth-oriented family businesses see as a key factor in improving their skills. By bringing together this information about how the board works, it is possible to suggest a number of factors that help the advisory board add value to the business.