Attorney, Paradigm Counsel
Unlike their publicly-held counterparts, private, family-owned businesses are nimble and can react immediately to market conditions, all while keeping focus on a long-term perspective, not quarterly earnings and stock price. But this freedom from layers of formal process is a double-edged sword, especially if it results in the loss of valuable outside perspective.
To gain outside perspective and insight, many private companies have created legal boards of directors or advisory boards with members from outside of the business and family. While you and your company may not be ready for this step, you are undoubtedly already tapping friends, colleagues, and outside contacts for their take on challenges to your business. By approaching these relationships a bit more intentionally, family-owned businesses can utilize these advisors more efficiently and optimize their valuable input. These strategies include:
Let the advisor know you’re listening: People who know that their advice is being relied upon are more apt to give quality advice. If you communicate to your advisors that their guidance is being carefully considered and applied, they’ll have increased ownership and investment in the success of your business. That, in turn, leads to better advice.
Focus on expertise: Readily acknowledging the strengths of informal advisors also serves to filter the guidance a family business owner receives from other sources, such as family members and employees. By identifying the core strengths advisors have in particular areas, a family business owner is less likely to inadvertently rely upon advice from someone without substantial expertise on the topic at hand, and more likely to reach out to those best prepared to give sound, relevant counsel.
Hold regular meetings: Establishing a regular schedule to meet with informal advisors also provides increased accountability. A recurring meeting guided by a written agenda including set goals and deadlines fosters accountability and a sense of urgency for any contributions or commitments the advisor has made, without straining the relationship. These meetings facilitate organization by ensuring that issues are not dropped and helps to drive focus on particular areas of concern. Moreover, meetings give advisors the opportunity to share insights, observations, and strategies, giving the business owner the benefit of the group’s collaborative efforts.
Record the insights gained: Create written notes or minutes of your meetings. Keep track of what was discussed and commitments that were made. Even in an informal setting, jotting down notes can help ensure that the intellectual capital produced from the advisors’ collective efforts is preserved.
Solicit and provide feedback: You’ve surrounded yourself with people whom you trust and whose guidance you value – take advantage of it. Actively solicit their input on matters pertaining to their area of expertise, and take the time to delve into and explore their suggestions, particularly when the whole group is involved. Gaining multiple perspectives, even when it’s outside the larger group’s specific arena of experience, can produce innovative, comprehensive approaches and solutions.
Also take the time to provide constructive feedback to your advisors. Loop them in on what’s working, what’s not, and how they are influencing the success of your business. By actively showing them the role they are playing in your company, you will help foster engagement, and with it trust, loyalty and accountability.
All family owned businesses already use informal advisors of one kind or another. These advisors are very important because of the knowledge, experience, and perspective that they bring to the table. By using these advisors in an intentional and efficient way, their value and effectiveness will be maximized.
Bill Weigand is a partner at the law firm Davis Wright Tremaine, where he provides strategic counsel to businesses, particularly in the food, agribusiness, manufacturing, and distribution industries. Mike Costello is an associate at Davis Wright Tremaine.