You have reached this (non-public) page as you have expressed an interest in the new service proposed by Empower Business Solutions – an Advice and Accountability Board for small businesses with a turnover in the range $300,000 – $1,000,000. This range is intended to reflect a business in the Growing Pains and Maturity phases of the Business Lifecycle and is designed to address the special issues that businesses at this stage face. I call these businesses Emerging Businesses.
This range is not meant to be prescriptive, but businesses that are a little outside this range that wish to join the board must demonstrate that they will fit with others in the board. On the other hand, not all businesses within the range will fit.
You will find on this page the expected benefits to your business from participation in such a board, as well as details of the operation, features and estimated cost.
You also have the opportunity to refine this unique new small business concept whilst still in its design phase to suit your business and other businesses at this stage of their business development.
Your feedback as well as your expressions of continued interest (to encourage me to invest in the development of the processes to support this concept) will be essential to making this work for everybody.
What I believe Businesses are Seeking at this Development Stage
Based on my experience with working with numerous businesses at this developmental stage (as well as both smaller and larger businesses, which helps me understand where they have come from and where they are going), these are the conclusions I have drawn:
1. ABS figures show that businesses with over $300,000 turnover are already larger than 60% of all other Australian businesses. To reach this stage of development, owners have achieved a great deal and should pat themselves on the back! These owners have already done the ‘easy’ stuff and know what they don’t know. They are prepared to invest in their business, if it makes sense.
2. At this stage owners have actively sought information to improve their businesses. They may have attended seminars, read lots of books, done courses and may even have hired a coach, all of which will have contributed to their achievements. What they are looking for now is an ongoing way to keep them sharp, with a constant source of new ideas and advice. The discipline to keep going. They aren’t searching for a quick fix because they know they are unsustainable and don’t work.
3. Business owners at this stage are in it to build a valuable asset. Unlike those below this threshold, the business is not a hobby or a lifestyle accessory. They have commitments to suppliers, customers and to either employees or contractors that depend on them. The business is also an important part of their income to support themselves and their families. The business is financially viable and has a great future, but it still depends on them.
4. Owners at this stage are willing to invest in their business development, BUT it must be affordable, and they must be confident that it will work.
Is this what you believe too? Is this you? (Please let me know if you disagree and set me straight if you think I am wrong.)
Why Boards Work
In any business, large or small, the owner/CEO can lose sight of the big picture. They may become obsessed with one way of doing things, in spite of repeated evidence that it is not working. They can be too internally focused and miss important opportunities. Even the best of CEO’s can miss their own shortcomings.
When Roman generals rode into towns to be welcomed by the cheering crowds, having just been liberated from the grip of their local thug-king, there was a slave placed in the general’s chariot whose job was to whisper into his ear “Remember – you are not a god”.
Who is whispering in your ear?
The board is there to cover the CEO’s back- to ensure that he/she does not miss something and to offer objective feedback on how they are doing their job. These are just some of the roles of a formal board:
- Ensuring enduring value to the sharholders
- Strategy formulation and policy making
- Monitoring performance against shareholder expectations and strategic plan
- Recruiting and overseeing the CEO
- Guide and motivate CEO/management
- Ensure the organisation meets shareholder expectations of compliance
In a formal board, this is the arrangement:
The function of a formal board can represented in the following way:
All successful medium and large businesses operate with a board that includes non-executive directors, who are uninvolved with the day-to-day operations managed by the CEO and his/her executive team. The non-executives bring outside experience and perspective to the executives and hold them to account, ensure good governance and that the interests of all stakeholders are protected. They also ensure the executives do what is agreed by the board, and monitor performance.
Smaller business, but with turnover greater than $1m, will often have Advisory Boards. The members of these boards are not directors in the company, as for larger businesses, but provide advice and accountability. The primary difference to formal boards is that these advisors can not enforce actions in the way that a board of directors is legally obliged to do – as non-executive directors in a legally constructed board can be held financially accountable for the failures of the executives if they have not fulfilled their fiduciary duties. As a result of this responsibility, these boards have the authority to sack the CEO for non-performance.
The Advisory Board is a great arrangement for these small business owners as they do not want to dilute their control. Also, to attract directors who will be prepared to take on the legally required responsibilities is a much higher cost than bringing in advisors without the legal burdens of a director. A business at this level may have 3-4 external advisors on their Advisory Board.
The Advisory Board has weaker accountability than a formal board as the ultimate decision on whether to proceed with a particular course of action recommended by the board is that of the executives (owners). However, if the owner keeps ignoring the board, and performance deteriorates, the advisors won’t hang around for long. Even though they have no legal liability, the advisors would not want to be associated with such a business as it will damage their reputation. (On the other hand the owner who ignores their advisory board, and is continually proved right should sack their advisors!)
The reason why smaller businesses don’t have their own Advisory Board is the cost. For even just a half day meeting once a quarter with four advisors, the cost could easily exceed $30,000 per year. Monthly meetings with a private Advisory Board would obviously be considerably more costly.
Advice and Accountability Board for smaller business owners
Clearly there is significant value in having ongoing advice and accountability for a business owner – no matter what their size. However, for businesses with turnover less than $1m, neither of the above board models is appropriate or affordable.
The Advice and Accountability Board concept is an alternative designed for Emerging Businesses. It is low cost because the advisors are their carefully selected peers who will provide their objective views on the owners performance, make suggestions for improvements as well as ensure accountability.
The accountability of this board does not come from legal enforcement – it comes from the fact that the owner will be expected to stand up and give a formal report to the rest of the Advice and Accountability Board. If they don’t carry out their stated intentions from the previous Board Meeting, they will be expected to explain themselves to their peers, who will have heard and probably used before, all the excuses for not doing what they have said they would do. This peer pressure will be formidable. Owners who regularly fail to do what they say they say will ultimately be asked to leave the board.
A key part of this process is to instil the disciplines that are essential for success in business. Participants will be required to implement processes that will enable them to report on their performance each month and use the board for objective opinion on how to address the issues in their business. This will assist the owner in addressing the issues in their business and create a great foundation for future growth of their business. It will also be highly motivational.
Benefits of the Advice and Accountability Board
At this stage of their development, businesses have poor reporting systems and do not regularly review performance against a plan. Membership of the board will assist owners to:
- Create budgets
- Develop performance measurement systems
- Review the effectiveness of their current strategies
- Have an opportunity to see how a diverse range of other strategies have worked for other businesses
- Receive advice on the issues that affect their business
- Create business discipline
- Get a regular dose of motivation and a reality check with a kick up the butt if appropriate to keep them going and on track
This will enable the owner to grow their business, achieve their business goals, create a Saleable Asset and have a business that runs without them.
Another, unquantifiable benefit is that as they learn about the businesses of others, their successes and disappointments in a forum of trust, their business know-how will just skyrocket.
At some point, as the business grows, this board will enable the owner to have in place the systems and processes that will allow them to graduate from this board to their own private Advisory Board.
Details of the Board Operation
The meetings will be about half a day a month (11 times a year – none in January) and held in central Melbourne at a venue that is suitable for such meetings with comfort and amenities (after all you will be members of a board). It will be scheduled to start and finish at times that avoid peak hour. At the moment I am planning for this to be held in the second week of every month so that full reporting of the previous month’s results can be made to the board
There will be a formal agenda, and formal board reports will be given by each board member. The rest of the board will review each owner’s performance, give advice and assist the owner in creating a forward 90 day plan. This will be all fully documented and minuted and will become a part of the board papers for the following meeting. (There will be a Board Secretary.)
The intention is to use many of the processes that would be part of formal board operations, without the legal structures that must exist in such boards.
To ensure confidentiality, all members will be required to sign a confidentiality agreement so that members will feel to speak frankly. A process will be provided so that the businesses’ financials can be discussed in relative terms without revealing absolute details. This is important as there can be no review of a business’ performance without some type of financial review.
Members will also have access to the Australian Business Coaching Club, plus such other materials that I may decide to make available. This includes unlimited email support and a private coaching session once per month.
My role will be to Chair the board and facilitate discussion, and participate in the reviews and provide my own advice. (See additional detail below.)
As part of the board meeting, there will be presentations on key business topics, either from myself or guest experts. Topics can be suggested by members, and where they have expertise, they may be the speaker.
Members will be able to guide the content and operation of the board (within agreed boundaries) to ensure its operational effectiveness is optimised. (This also happens in formal boards.)
Businesses will have to formally apply to become board members, and will be required to fill in a questionnaire, and will be interviewed to ensure that their business fits with the development stage of other businesses on the board, that they don’t compete, are prepared to put in the work between the meetings and that they have the attitude and commitment to stay the course.
Beyond your investment in time, there will also be a financial investment. This is to cover the following:
- Selection of members
- A return on the development of the Intellectual Property of this new service
- Secretariat costs – administration and program support
- My time both within the meeting and between meetings
- Private Australian Business Coaching Club support
- Venue costs
There will be a one off joining fee of $970 (only payable to those selected to become members) – however, for the first board the joining fee will just be an advance on the first quarter’s membership fee. Businesses that join later will be required to pay this fee, particularly as a private induction meeting will be required before their first board meeting.
There will be a monthly fee between $500-$1000, depending on the final scope of the service and the numbers in the board. This fee has yet to be finalised, but will be within this range. Note that the board size will be strictly limited to no more than 10 businesses to ensure its effectiveness. The fees will be payable quarterly in advance.
Membership of the board will be a major commitment. The initial commitment to board membership will be for 6 months to ensure continuity and minimal disruption to other members. It is also the minimum time that would be needed to see visible results from this type of program. (Private coaching is faster – but is more expensive.)
If there is sufficient interest in this concept, I would like to hold the first board meeting in October.
My Role and Background
Beyond the description on the About Empower page on this website, these are the experiences I bring to this Advise and Accountability Board. I have worked on many boards of different types around the world as well as reporting to boards as an executive. I also have a Masters of Business Administration and a Diploma from the Australian Institute of Company Directors. With many of my clients I have acted as an advisor for their businesses with monthly and quarterly meetings which were informal board meetings. I have also used a retreat format where we used a board framework to present strategies to the rest of the participants for review so I know how powerful this concept is and that it works.
While my chief role during the meeting will to be its chair, I will also be an active participant in the review process for each member and giving advice.
Outside the meeting, my role will be to provide the resources for the secretariat for the seamless operation of the board and to ensure that the processes I have created are continually refined to meet the members’ needs.
I will also be providing additional support through private coaching within the Australian Business Coaching Club.
Please let me know what you like about this innovative concept, and just as importantly, what you think could be improved (whether you intend to apply for membership or not). Please also let me know if you would like to be considered for membership of this board once details are finalised. You can contact me here with your feedback and interest.
I believe that the Advice and Accountability Board is filling an unmet need for business owners at this critical stage of their development and would like to know whether you agree.
May Your Business Be – As You Plan It!
Dr Greg Chapman
CEO – Empower Business Solutions.
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