Why should I bother with an advisory board?

There’s increasing recognition that effective advisory boards provide excellent support to business owners for a minimal cost. Instead of asking why you should have a board, you should be focused on the best ways to establish one and how to find qualified advisors.

Effective boards can bring huge benefits to small and medium-sized businesses, but for that to happen, you need the right people.

Staffing your board

Advisory boards exist primarily to add value to the business. This means ideally, they should be staffed to complement the abilities of the entrepreneur who runs it.

Before seeking out potential candidates, you should do a quick SWOT analysis to understand your company’s strengths and weaknesses, as well as the opportunities and threats it faces. That makes it easier for companies to identify areas in which complementary skillsets are needed.

Trust is also a key factor. To provide valuable input, advisory board members need to know as much as possible about what is going on in the business.

The more an entrepreneur trusts his advisory board members, the more open he is likely to be with them. They will be in a far better position to provide constructive advice.

The ability of a potential board member to diplomatically challenge an entrepreneur’s ideas and to help the company navigate through periods of growth and change is also highly prized.

What’s in it for the advisors?

While listing the ideal qualities entrepreneurs want in advisory board members is a good start, attracting qualified candidates is much harder. One major problem: Entrepreneurs don’t generally have the budget to pay the fees that larger companies do.

As a result, companies are best off trying to recruit candidates who are not in it for the money, but rather have a genuine desire to see the owner do well.

Potential advisory board candidates can often be found among the owner’s personal contacts. You probably know the sort of high-calibre business executives, university professors or professionals who would make ideal advisory board members.

And don’t forget the growing numbers of retired business executives. Many remain active and interested in business and are itching to make a contribution by attending advisory board meetings and offering their experience, wisdom, and advice.

Formal boards of directors may be required

The stakes rise considerably when businesses shift from using advisory boards to statutory boards of directors.

This usually occurs when businesses either transform into public companies or when they take on investors—such as venture capital funds or private equity firms—who want board representation to represent their interests.

Members of statutory boards will generally have slightly different profiles than advisory board members. You will generally favour someone with “C”-level management experience. That means a Chief Executive Officer, Chief Information Officer, Chief Financial Officer or someone with equivalent experience.

Recruitment can be difficult

In addition, not all skill sets are easily recruited.

Because of the influence that complex Sarbanes-Oxley corporate governance legislation guidelines have had on reporting standards, audit committee members are increasingly in demand.

Entrepreneurs faced with more stringent requirements for director qualifications and the potential for liability will need to follow a formal recruitment process and offer higher compensation.

Use these tips to get the most out of your trade show investment

Trade shows provide face-to-face contact with people who are looking for products, expertise, and solutions.

So how can you tap into this rich source of potential customers? What investment is required and what return on investment can you expect?

Veteran trade show consultant Jonathan Denman shared these six tips.

1. Calculate what it costs

“Booth rental is really only part of the total cost of exhibiting,ˮ Denman says. “There’s travel to the show, customer hospitality, and many other expenses.ˮ

Denman is a member of the CAEM (Canadian Association of Exposition Managers) Hall of Fame. The association provides the following cost breakdown for a typical industrial trade show. This data can be used to estimate your total show cost.

So for instance, if booth rental costs $5,000, your total cost is likely to be around $17,250. Sounds expensive. But let’s say over three days you discuss with and acquire contact information for 150 good prospects, your cost of acquisition per lead is $115. You can further apply your conversion rate to give you an idea of your cost per sale. If your conversion rate is typically 10% (10 leads to get one sale), then you can expect to have 15 sales at a cost of $1,150 which may or may not be unreasonable for your product.

2. Find the right shows

“Every year there are between 14,000 and 15,000 trade shows across North America,ˮ Denman says. “You need to focus on specific shows that attract the right audience.ˮ

“Given enough time, the Canadian Trade Commissioner Service can sometimes provide you with market information and contact lists for the geographical area covered by a trade show,ˮ Denman advises.

The Canadian Trade Commissioner Service maintains a list of major trade events around the world. The Government of Ontario also maintains a list of international trade shows.

3. Design your booth for maximum impact

You may not have a big budget, but what you do have should go toward maximizing the impact of your back-wall signage. “The sign at the back should take up 70% of the back wall and feature your company name and what your company does,ˮ Denman says.

• Don’t clutter it up with small photos and descriptions. Choose one good image to blow up and make sure your company name can be read from afar.
• Keep your table and chairs away from the back wall and make sure there’s enough room for visitors to move around inside your booth.
• Try to get as much frontage as possible and try to be situated near high-traffic areas.
• If you have the budget for a big booth, you may be able to include a quiet corner or even an office to negotiate with potential customers.

4. Make sure you have enough staff

Show organizers should be able to provide you with the estimated number of visitors to the show. From that, divide the number of visitors by the number of show hours. That gives you the average hourly flow-rate, which can help you decide how much staff you need.

It’s really difficult for one person to engage more than six visitors per hour in meaningful conversation. So, plan accordingly and remember there will be peak times when you may be swamped, and there will be times where there are no visitors at all.

“The challenge for the small exhibitor is they will only be able to have two or three people managing the booth,ˮ says Denman. “They can only talk to 12 people each hour. If the flow rate is 600 people per hour, they’re missing out on important opportunities.ˮ

5. Staff your booth with experienced people

This isn’t a typical sales environment. “Most salespeople are trained for one of three things: Either they’re on the road, or on the phone or in a showroom,ˮ Denman says. “Trade shows require a different approach. ˮ

“You’ve got to have an opening line… something like ‘have you seen our product before’ or ‘are you familiar with our company’… something to draw visitors into a conversation.ˮ And once you’re conversing, you have to have something to say. “Unfortunately, many exhibitors staff their booths with junior people who may not know a lot about the company or its products.ˮ

“Imagine a buyer who’s an engineer: This person needs technical advice. They’ll be disappointed if the only information they can get is a pamphlet that they could have downloaded from your website.ˮ

So it’s better to staff your booth with technically proficient, senior people.

6. Always follow up

Remember, at the beginning and end of every sale is a person who wants to feel good about his or her purchase: They may want a deal but what they’ll remember is the way you made them feel.

Before the show, you can demonstrate you’re thinking of your customers’ needs by sending a personalized invite to the show—perhaps with a redeemable beverage ticket.

After the show, a good way to show that you’re working on finding them a solution is by sending a follow-up email within 72 hours.

Trade shows can be cost-effective venues for establishing face-to-face relationships. A little forethought and preparation will go a long way to converting booth visitors into buying customers.

Developing good connections with suppliers—sometimes called supplier relationship management—is critical to business success.

Businesses are increasingly relying on suppliers to help reduce costs, innovate, improve quality and reduce lead time. Good relationships with suppliers can provide a competitive advantage.

In fact, the most successful Canadian entrepreneurs rank relationships with suppliers as their most important business relationships, according to a recent survey of 1,000 Canadian small and medium-sized businesses.

Nearly one-third of the most successful firms said supplier relationships were critical to their success, in contrast to less than one-quarter of less successful companies.

Continuous effort needed

First-rate supplier relations require a continuous, long-term effort. Start by identifying the few vital suppliers that contribute to your company’s advantage over your competitors. You have a vested interest in their success. Focus on building and maintaining partnerships with them.

He divides the process into several steps:

1. Evaluate all suppliers—Make sure they are the best ones for your business and that their products meet your needs. You want suppliers who are aligned with your strategy.
2. Integrate key suppliers into your business—Learn how they operate and make sure your systems work seamlessly with theirs in areas such as invoicing and order fulfillment.
3. Collaborate on quality improvement, problem-solving and product development—Work together to improve capabilities and adopt best practices on both sides.
4. Measure performance continually—Have structured ongoing discussions with your key suppliers about how to improve.

Ultimately, the idea is to work together as partners so both sides prosper, sometimes companies focus just on the short term and only demand cost reductions from suppliers, rather than thinking strategically. That doesn’t help in the long run.

Do’s and don’ts of supplier relationships

1. DO—Take a long-term approach to supplier relationships. Commit to shared prosperity and mutual development. Help suppliers boost their technical and problem-solving capabilities.
2. DO—Understand in detail how your key suppliers work. See how they operate and learn their culture to ensure mutual trust and strong partnerships.
3. DO—Periodically evaluate the performance of key suppliers with scorecards, and periodically scan the market for better and/or more cost-effective alternatives. While you want to nurture strong relationships with suppliers, you don’t want to become captive to them.
4. DON’T—Focus only on short-term goals, such as cost-cutting. Don’t insist on unreasonable payment terms or pressure suppliers to assume the cost and risk of holding the bulk of your inventory.
5. DON’T—Focus your efforts on all your suppliers. Save your special collaboration for only a handful of key strategic partners. Anything more is unsustainable.