Small Business Advisor

Jerry Useem, while an editor at Inc. magazine, once wrote: “…most (entrepreneurs) are no more in touch with the reality of failure than say, the average 16 year old is in touch with the reality of death.” This bulletproof attitude of most entrepreneurs can be a major liability in today’s rapidly changing business world. It can also bring a quick end to a business in crisis.

That is the reason entrepreneurs need to have a small business advisor, or some form of counsel, they can trust. This does not necessarily mean you need to work with formal groups or prestigious people. A formal Board of Directors sometimes works fine for corporations, but if you do not have a board of directors (or you have one that is not helpful), there are a number of other sources for a small business advisor for today’s entrepreneur. Here are some popular sources for outside advice:

For the small business, one of the most popular forms of a small business advisor today is the Advisory Board. An Advisory Board can either be a totally separate activity from the Board of Directors, or it can be an adjunct to the Board of Directors and function in concert with them. Or, it can simply be a small group of business people (or an individual) that will sit down and talk with you about how you are running your business. (A business owner cannot have a thin skin in this setting.)

An Advisory Board is recruited by you, the business owner, and is generally made up of a few experienced business people from your community. A small business advisor may or may not be your friends or acquaintances, but they must be willing to be open and honest about their assessment of your business and where you are taking it. By mixing the membership of the Advisory Board, you can acquire a good cross-section of expert advice.

Unlike a regular Board of Directors, the Advisory Board has no powers, or legal obligations to either the business or the owner—just a willingness to be open and forthright regarding how each small business advisor thinks you are running your business. Typically, members of an Advisory Board serve without meaningful compensation, and since they have no formal connection with the business there is little liability exposure.

Business people sit on Advisory Boards for any number of reasons—to network with other business people; for additional experience in a different business; because they sit on each other's Advisory Boards; or perhaps it's a chance for some older executives to repay the advice and counsel they received when they were just starting out.

In many cases a good small business advisor, or Advisory Board may be able to see serious trouble coming before you do, and persuade you to take corrective action before a crisis develops. In addition, if a crisis emerges suddenly, members of an Advisory Board can usually offer unbiased advice and recommendations on how to deal with the crisis. In extreme cases the Advisory Board may also be in the best position to help select an outside specialist to come in and help with the crisis—if that is your desire.

Small Business Consultants

Another source of independent business advisor is the management or small-business consultant. Although more expensive than an Advisory Board, the use of a good small-business consultant can sometimes be invaluable. The consultant can do a fast, detailed analysis of your operation from an independent point of view, and inform you as to the seriousness of the situation. If a crisis is emerging, the consultant will say so.

When handling the crisis turnaround yourself, a consultant can offer specific and meaningful recommendations in a timely manner. If you do not feel confident in executing your turnaround program by yourself, a consultant can either serve as an advisor, or recommend a specialist who can guide you through it. Some larger consulting firms often have a person on staff that specializes in crisis turnaround situations.

Be aware though, that you have to follow the consultant's advice and counsel, otherwise you are just wasting your time and money. It is all too common for a businessperson to pay for a consultant’s involvement and then not implement that consultant’s recommendations.

Existing Counsel

If you do not have an advisory board, or at least one small business advisor, and if you are approaching or experiencing a crisis in your business, you must discuss your situation with a small business advisor outside of your business. Oftentimes the first place to start is with your accountant or attorney. They can assist you in organizing your thoughts and analyzing your alternatives for making changes and improving your business. If you are faced with a full-fledged crisis, these advisors can often direct you to consultants or specialists whom they have worked with in the past, or who have been recommended to them by other clients. Quite often your existing legal and accounting advisors will talk with you on a Pro-Bono basis, or will delay billing you until your business is improving.

Colleagues and Associates

Occasionally, something as simple as sitting down with a trusted business friend and discussing your problems will give you the insight and perhaps the impetus you need to take action and begin a turnaround program. Discussing business situations and problems with any outside business advisor can be surprisingly beneficial. This is especially true if you know someone who has been through a situation similar to what you are currently facing. The biggest problem here is overcoming your ego. Most business owners rarely want to admit to anyone (especially to friends and colleagues) that he/she may have a crisis on their hands.

The important thing to remember, is that all forms of an outside small business advisor will provide information and recommendations to you, and their input must be acknowledged as just that; information input. Outside advisors cannot provide any missing entrepreneurial spirit, dreams, or drive—that's your responsibility. Just don't let your ego stop you from taking advice from outside advisors when you need it most.

After you have determined that you actually have a real crisis, determined who will be in charge of your business turnaround, and discussed the seriousness of the situation with your small business advisors, it is time to get down to business and start working on your crisis.

The first place to start is with Cash. Getting absolute control of your cash is the first thing that any small business in trouble needs to do. To help with this, I have prepared an entire report on cash, titled Cash Flow Control. You can access the Cash Flow Control report here.