Board of advisers is great resource

Entrepreneurs encounter big decisions every day, and it's not always easy making them alone.

Having a trusted board of advisers can be a great asset when it comes to seeking advice, plotting strategic growth and tackling some of the unavoidable obstacles that arise while running your business, say experts.

"When you're a small business you can't afford to make massive mistakes," says Bob Arciniaga, founder of Advisory Board Architects in Greenwood Village, Colo., which builds advisory boards for companies. "An advisory board is going to help you avoid these."

Unlike a board of directors, an advisory board has no control over your business or any fiduciary responsibility to the company.

Outside perspective

Rather, its purpose is to help business owners gain "the depth and breadth of outside perspectives," in addition to "holding the business owner to his or her agenda," explains Richard Magid, president of SoundBoard Consulting Group Llc, a leadership development consulting firm in Boonton, N.J., that has helped develop and facilitate advisory boards.

You can create your own advisory board that would deal solely with the issues of your company, or you can join a peer advisory board or group consisting of other business owners with a shared agenda, says Magid.

If you opt to create your own board, you will have to determine compensation (i.e. a stipend, equity in the firm, etc.). Compensation is not required, but some say it certainly helps.

"If you just want people to show up for free, then don't put any expectations on them," says Arciniaga, who thinks compensation is necessary. "When I pay for it, you better believe I want to get something out of it." He pays his six-member board, budgeting annually for it. He declined to specify the amount.

Conversely, a peer advisory board generally charges a monthly membership fee. On Long Island, it varies - depending on the group, size of the business and other factors - from about $250 to $1,100.

Rick Kranz, president of OverGo Studio Inc. in Bethpage, says the fees are well worth it. The firm, which provides web video marketing and social media services, has been a member of peer advisory group Vistage for about a decade.

"I've gotten a lot of great advice," Kranz says. The group even helped him decide to switch industries about a year ago, when he sold his design and manufacturing firm and launched OverGo Studio, pursuing a longtime passion of his.

"They reaffirmed my choice," says Kranz.

There are about 12 to 18 members per peer group in Vistage, says Steve Ramerini, chairman of four groups within Vistage Long Island. There are 12 Vistage groups and 150 members across Long Island, he added.

Board anatomy

Each member is intentionally not placed in a group that may have a direct competitor, key supplier or key customer, says Bruce Gernaey, managing partner of another peer advisory group, The Alternative Board (TAB), Suffolk County. Between Nassau and Suffolk, TAB has about 150 members.

You don't want members feeling inhibited or running into conflicts of interest, Gernaey notes. That's why picking the right board mix is key.

Before you start with "who," first figure out what you're looking to achieve, says Arciniaga. This will help in the board selection process.

Try picking members of diverse backgrounds and experiences, preferably in areas you're deficient in.

Clearly communicate your expectations to the board, and if the members are not helping you achieve your objectives, let them loose, says Arciniaga, who annually evaluates his own advisory board.

"You have to be sure that they're holding your agenda," adds Magid.