Louise Broekman CEO and founder of the Advisory Board Centre explains how to successfully incorporate an advisory board into your business exit planning process.
In this episode of the Small Business Banter podcast I'm joined by Louise Broekman, CEO and founder of Advisory Board Center. We cover the importance of strategic decision-making in business, but specifically the role of advisory boards in exit planning.
Key messages for #businessowners #founders #familybusinesses from Louise include the importance for shifting from on-the-run decision-making to a more thoughtful and how Advisory Boards;
"To grow means that the business needs to be different, which means that the way that we make decisions on day-to-day things needs to be different" - Louise Broekman
Louise has a compelling 20+ year journey as a business owner, entrepreneur and advisor.
Timestamped summary of this episode:
00:01:18 - Background of the Advisory Board Center,
Louise explains that the Advisory Board Center is a professional body for the advisory board sector, focused on best practices and ethics. They offer membership and certification for advisory board professionals, and operate in over 25 countries.
00:03:35 - What is an advisory board,
Louise distinguishes advisory boards from governance boards, explaining that advisory boards are focused on problem solving and thinking, rather than decision making. They provide business owners with a second set of ears and different perspectives to help them make confident decisions.
00:08:41 - Types of businesses using advisory boards,
Louise discusses the wide range of businesses that use advisory boards, including startups, mid-sized businesses, family businesses, partnerships, and those looking to exit or scale. She emphasizes that the market is growing and that businesses are starting to adopt advisory boards at an earlier stage.
00:15:07 - The Importance of Making Decisions,
Making decisions on the run can be addictive and fulfilling, but to grow a business, different decisions need to be made. An advisory board can provide the space and time to think through decisions and explore different options, transforming it from a working capital discussion to an investment conversation.
00:16:45 - The Addictive Nature of Busyness,
The busyness of running a business can feel satisfying, but it's important to focus on the top strategic issues that will truly change the way the business operates and performs. The key is to concentrate on the decisions that will have a significant impact and prioritize them over other tasks.
00:18:14 - The Need for Guidance and Confidence,
After experiencing a challenging business situation, the guest realized the importance of having good people around her and gaining confidence in her decision-making process. By creating an advisory board, she sought outside perspective and support to make more informed and strategic decisions.
00:23:17 - Using Advisory Boards for Exit Planning,
Advisory boards can play a crucial role in exit planning, whether it's evaluating the decision to sell, preparing the business for sale, or maximizing the asset value of the business. They can provide external perspective and guidance to help owners make the right choices and achieve successful outcomes.
00:26:57 - Exploring Alternative Exit Strategies,
Exit planning shouldn't be limited to a binary decision of selling the business. There are various options to consider, such as staged exits.
00:30:42 - The Importance of Having a Clear Plan,
It is crucial for business owners to have a clear plan and some ideas about what they would do after selling their business. Without a plan, an identity crisis can occur after leaving the business.
00:31:24 - Shortcomings of Exit Planning,
Exit planning often focuses on financial aspects, but fails to address the question of what the owner wants to do afterwards. It is important for owners to seek advice from others who have been through the experience and explore different options.
00:32:10 - Alternatives to Selling,
Some business owners may fall back in love with their business after preparing it for sale, leading them to reconsider selling. Other owners may choose to maintain a smaller business or scale back to focus on income rather than revenue.
00:33:46 - The Value of Advisory Boards,
Advisory boards can bring many advantages, such as a network of contacts, industry experience, and unemotional detachment. They can provide objective frameworks, accountability, and help owners see their business from a buyer's perspective.
00:37:21 - The Importance of Outside Counsel,
Owners should consider seeking outside counsel to help them navigate the challenges of running a business. It is important to have someone who can hold them accountable, provide objective advice, and help them focus on what really matters.
The resources mentioned in this episode are:
@Advisory Board Centre - there you can learn more about their services, how they can help your business and explore the membership model offered by the Advisory Board Centre to become a credentialed advisory board professional and join a global community of like-minded individuals
Connect with me here:
@michaelkerr @smallbusinessbanter
So welcome into another edition of Small Business Banter. Very pleased to be joined today by Louise Broekman, who's the CEO and founder of the Advisory Board Center. Big thanks for coming in today, Louise. Nice to be here, Michael. We had a discussion about twelve months ago.
00:00:18
We certainly touched on advisory boards, but we also talked about broadly the levels and types of support available for business owners, right. From free mentoring by your local government agency to informal boards. So it was quite a wide ranging discussion. Today I'll get you to recap exactly on your background and what the Advisory Board Center is all about. But we chatted offline, we want to talk specifically about advisory boards and how they relate to the process of let's call it exit planning.
00:00:52
So when owners are thinking about selling, how might they use an advisory board as part of the process to get their business in better shape, potentially before selling? So been very briefly but very significantly. I'll cover your kind of background. 20 years as an entrepreneur advisor. You licensed the model internationally to eight countries, which is an extraordinary achievement.
00:01:18
Looks like Advisory Board Centers is growing again on that sort of same with the same momentum, your insights and challenges as a business owner yourself, you're kind of parlaying that into how you can help other business owners to go global, to create succession and to be more successful through the use of advisory boards. But if you could just recap on the Advisory Board Centre where that business is at and what you're aiming to do there. Sure, Michael. So the Advisory Board Centre has been established as a professional body for the advisory board sector. When I started researching advisory boards, I was looking for the professional body that was bringing the sector together and one didn't exist.
00:01:56
So we decided six and a half years ago, once we had five years of research, test and validating the market, to actually establish the only professional body in the world that still today is the only professional body to really be the caretaker of best practice and ethics. So if someone's going to put together an advisory board or sit on an advisory board, they do it well. It's impactful, but then it's also safe from a governance perspective because governance can be really tricky. Right. So you want to make sure that the advisory board construct is really purposeful, it's impactful, but then also safe.
00:02:30
So we have things like we have a membership model. So individuals get credentialed as an advisory board professional through a chair certification process, and then they join a global community of other like minded people that are really dedicated to best practice advisory boards. So we operate now in over 25 countries. We select in our membership less than 10% of those that apply because advisory boards the individuals. That's right.
00:02:55
Yeah. And then they then build advisory boards into their portfolio of work. They do or they use that best practice methodology to implement inside their own business or the organization where they may be an executive in. So the advisory board profession itself is very broad and it's also very deep. Yes.
00:03:14
I mean, it sounds incredibly impressive six and a half years into being 25 countries, but with the background you had in that other business, I'm kind of not surprised. Simple terms, what is an advisory board and how might an owner use an advisory board? Yeah. Thank you. So an advisory board, let's talk about what it's not to start with.
00:03:35
So where people might think where it is. Advisory boards and governance boards are generally misunderstood about what their role and what their relationship is. So a governance board, where it's a board of directors, is a decision making model, and it's binding. So they're there to set the strategy and then they are also responsible for it. And so as a director, they make decisions and they're binding, and they're binding on the individual where they can go to jail for the decisions that are made or not made at the governance board table.
00:04:04
But it's also then binding on the business itself to implement based on those decisions. And so business owners generally will informally operate as directors. As business owners, they will blend the role of being a director, as well as being an owner, into their role in the way they make decisions. An advisory board is different. Advisory boards do not make decisions.
00:04:26
It's a problem solving model and it's a thinking system. So having advisory board members that around you as a business owner or as an entrepreneur to really help you with your thinking and road test your thinking before you commit to make decisions is a really important thing. So most advisory boards where they don't make decisions, the owner does. So they separate the conversation around problem solving and thinking things through, pulling it apart, road testing it, putting it back together again. But the business owner maintains their own right to live and die by their own sword, by the decisions they make.
00:05:03
That's why I had an advisory board in my previous business in the first instance, because I wanted the support, I wanted the accountability, I wanted to step up, but I didn't want to lose control of the business that I had worked so hard to build. Right. So tain that independence, but you're getting what most of us need, which is counsel or mentoring or a second set of ears to listen to the questions you have about what you're going to do with your business. Yeah. And the beauty of the power of it is that it's not just one voice.
00:05:37
And so this is problematic where you look at where advice is provided and where it's consumed. When you're a business owner, expecting one person to have the answer to everything for your business is problematic at some point because potentially, Michael, I might be asking you might have a finance background, right? And then I've got an issue around marketing in my business and we've built so much trust together that I start asking you about things in my business that's not your domain expertise. And because we work so well together, you'll say, I'll try and help you because I just want to help ethically. We've both gone over that line.
00:06:13
And so an advisory board is generally made up of an independent chair and two external advisors and they'll meet four times a year. But you've got different voices around the table that are independent of you as an owner, but also then independent of each other. So that escalates trust because there's no second agenda about why someone is saying something. And that is what we call the power of three. And that really builds confidence in the way that you're having the conversation to then ultimately what advisory boards are about.
00:06:43
It's not about the construct, it's about the purpose. And the purpose of any advisory structure, whether it's advisory boards or other advisory structures, is to ensure someone is really confident about the decisions that they're making and really proud of those decisions that they're making. And so when you're dealing with three independent voices around a table, that escalates that trust in that conversation to be, first of all, vulnerable but also to be able to listen to other people as well, to have that different point of view. Yeah. So that takes a couple of things, doesn't it?
00:07:14
Certainly it's trust and being vulnerable, but also I suspect that there's no set formula for who makes up an advisory board. It's about the people that you choose to go on. The board might be chosen on the basis that our biggest problems are, for example, marketing or are, for example, finance. So you pick advisory board members that do bring that particular expertise for that situation. Absolutely.
00:07:43
And so when you look at most business owners, when they say, I need an advisory board, they go straight to thinking about the people. That's actually the last thing you think about. And there's best practice principles that underlie what good looks like. So first of all, it's about that purpose. And as you said, what are the key priorities for the business, for what they're wanting to do with what's next?
00:08:04
Not now, but what's next? And then what's the structure that's going to really suit where our businesses is at today and where we want to take it? And then what people do we select that are going to meet those needs around that purpose. And generally, most businesses will choose three priorities that the advisory board focuses on. And you get those now, where the Michael is, where the market has changed significantly just even the last two years, where all of business advisory boards is, where most businesses traditionally have had an advisory board which might be up to three years to focus on growth and change and transition.
00:08:41
We now have this new market which is now bigger than all of business advisory boards that we've never seen before, and that's project advisory boards. So 53% of new advisory boards are now project based. It's not about the strategy, it's about a strategy. So it might be about let's have an advisory board to focus on commercialization of a new idea, entering a new market, improving our profit margin, managing our exit, support our succession planning. So these are really specific.
00:09:11
So it's not about everything, but it really then gets a really targeted specialist approach. Yes. And I can see how this is in stark contrast to you described the governance type of board, which is most typically in public companies, I think, would that be? Or NGOs or government organizations. Yeah, corporate organizations, three year time frame.
00:09:34
Or whatever it might be. And broad objectives around this is very much getting down to not problem of the day, but almost tactical in the sense that every business evolves has a different set of problems and you need a different team to go after those problems and solve them. So the kinds of businesses and I'd encourage anyone listening to go back and in the notes I'll share the episode number and link for our last discussion because it was about twelve months ago. But the kinds of businesses and owners that you see seeking out or implementing advisory boards, what do they look like? Really varied.
00:10:13
Michael, the market is very wide for the way advisory boards are adopted. So you get the startup and scale up market that have very flexible advisory board structures like advisor panels and on demand panels. Really smart way to really focus on scale. The mid market, where the business sector is the homeland for advisory boards at 1.5 to 100 million dollar turnover businesses, they are generally focusing on what's next. But the purpose of advisory boards do shift by the different complexities.
00:10:45
Just a smaller business is not less complex than a larger one, it's just different. So the most common starting point for a business with an advisory board is still relatively small. So it's between one to $1.5 million in revenue, which is the most common starting point for an advisory board. And I'm so excited by that information about where the market is because they're starting early in being able to access advice in a quality way. So you get that one point five to ten million dollar revenue in revenue turnover, they're around that 10 million.
00:11:17
There's a lot of businesses that start advisory boards at that 10 million because their risk profile is changing. Family businesses are really good example of that. Businesses in regional areas, partnerships, where their risk profile of one partner says, you know what, I really want to go for what's next? And the others are going, you know what, I'm out. I don't want to do this anymore.
00:11:36
I'm working too hard. I don't want to risk what we've built. So that navigating that piece around partnerships and supporting them in those decisions, that's a really important part of the Australian market in particular. Then you get so you get between that 10 million to 30 million where it's around the founder and really wanting to really scale a business $30 to $50 million is when a lot of founders want to exit and maximize the value of their asset on their exit. And the 50 to 100 is all around mergers and acquisitions and scaling to becoming a corporatized environment.
00:12:10
The business market, professional services, tech businesses, SaaS businesses, food and agriculture, health and life sciences, emerging industries like energy. They're all really good examples of where the market is today. Yeah. So that is quite broad and really pleasing to hear at that small, small level of 1.5 million turnover, which I think you hinted at in Australia. We've got an awful lot of those smaller businesses.
00:12:39
And that's the kind of thinking, that progressive, forward thinking that is needed to grow out of because there's a lot of businesses of a similar size. So if the owner's aspiration is to grow and to stabilize or there's a natural cap on a lot of businesses, which is the owner's network, the owner's skills, the owner's energy. So recognizing that you need to bring in some external help absolutely. The risk appetite for themselves, the ability to control something that once it gets a bit bigger, it gets out of your control. It's a tricky part of scaling and it's not easy to do.
00:13:18
So ambition can really hurt you if you don't resource it the right way and have the right mindset to do that. And so we call it surviving your own ambition. And I'm one of those that are included. It's a scary pathway. Yeah.
00:13:32
Understanding and accepting that you're on that pathway or not takes a lot of reflection and a lot of thinking. And I'm not sure that all owners have the time and space they need it, but that find the time and space to reflect on this because it can be very easy to just hit the Go button because that's what we're expected to do. And it doesn't always have to be that way. No, what I found in one of the research pieces I did early on in the piece, Michael, I was actually just talking about this at a workshop that I was running for the New South Wales government yesterday. This research was based on 5000 businesses and why some businesses achieve scale and others don't.
00:14:12
One of the key factors and people can find that research, it's called the Strategic Action Model. But what we found in that research is that low performing organizations and businesses, this is the business sector, are addicted to making decisions, making decisions on the run. And businesses that have the opportunity to really achieve scale focus on problem solving, not on decision making. Now, that research first started in 2002, when I finished in 2004. I then did a secondary research piece on this from 2008 to 2016.
00:14:50
And we're now constantly researching it now. Since 2017, those dynamics really haven't changed. So we've still got this mindset of speed and I've got to be busy and I'm probably one of the worst offenders of that, right? It's got to be now. Right.
00:15:07
And I'm going to make a decision because a decision, making a decision on the run is addictive, right? It's so addictive because I need to do it. It needs me. Right. And then it just fulfills this busyness that we have where advisory that was my first hint, where advisory boards really had a role to play before I actually even knew what they were, is that we've got to create this space to if we want to grow, we have to make different decisions.
00:15:35
Right. So to grow means that the business needs to be different, which means that the way that we make decisions on day to day things means that that also needs to be different. So where do we put the time to think this through? Now, an advisory board, when they meet generally once a quarter, it means that it's a series of 90 day plans, right? A quarter is a 90 day period.
00:15:56
So you think about, this is not 90 day planning, this is 90 day thinking. And so we put the time into thinking and problem solving. The decision reveals itself because it's not just one option. Right. And this gives us the confidence then to think about what's the consequence of that decision if it's different.
00:16:17
And this then changes it from being a working capital discussion into being an investment conversation. How do I invest in my business for the what's next, whether it's to exit, whether it's to grow, whether it's just to build the asset value of the business or to have a business that's around the quality of the customer experience. And I'm really proud of it and it sustains my lifestyle and my family. Yeah, that sort of busyness. It is addictive.
00:16:45
You can feel like you're getting on with it. But as you just said, it's about concentrating on the real, the top two or three strategic issues that really going to change the way the business operates for you and how it performs. So you mentioned early one of the sparks for starting the advisory board center was your own experience and you took another business, global. At what point during that did you accept or see that you yourself needed some counsel or some guidance outside and leading to putting in place an advisory board? Well, it was a series of things and it's not a pretty story, actually.
00:17:27
The year before, we developed a software package that we took to market. And this is pre SaaS days. Remember the CDs and you load the CD?
00:17:41
Exactly right. So we developed this software which was downloadable, which is like the zero for human resources and it was for the SME market. And we did the research on it and it was a fantastic product. Took it to market. And I misjudged the time it would take for the market to pick up on HR because at that time, back in 2004, a lot of small businesses needed support around they were managing their people, but had no idea about what HR was or processes that would support them in doing that.
00:18:14
So it took longer than I thought. We ended up with thousands of businesses using that software, by the way, but not in the beginning. And so I misjudged how long it would take and I had to sell everything that I owned to keep that business going. And a year later, I had the opportunity to really scale that business. And there were two things that happened.
00:18:35
One was that I had nothing left to sell. Sorry, if I did it badly, it would end up badly as well as I didn't want to mess it up, there was an opportunity to do something really good. And I personally was making decisions in my business and going, is that a good decision? I don't know. I think it might be, but I'm going to do it anyway.
00:18:58
And I just thought, we've got this incredible opportunity with this business to do good work. That's not good enough for me. I felt like I'm not proud of the way that I'm making these decisions. When I was in a corporate environment, I had all the constructs around me to feel confident and I was swimming in my lane. But when you are running your own business, that running, there's that activity again.
00:19:19
When you're running your own business, you are in your head making decisions. And not always. You can invite other people around you inside the business to support you in those more strategic ones. So that's when I thought, I need good people around me, I'm going to create an advisory board. Didn't really know what one was, but it was just for me, giving me the confidence.
00:19:44
It wasn't that certainly I had gaps, like we all have gaps and it wasn't because I wasn't competent. I wanted to be confident. And I think there's a big difference in that. Yeah, that experience of going through selling everything, it is deeply fascinating how many I don't even like the term entrepreneur all that much. I prefer that people are in business and they do the hard things and many of them don't call themselves an entrepreneur.
00:20:14
So anyway, that's by the by. But being so brave is also you feel like when you're running your business, you've got to be brave and you've got to make these hard calls as well as being busy. And you were right at a point where you had to sell everything. That's incredibly gutsy. But there's a point where I think you've got to recognize that being brave and gutsy is also that you need more than that as well.
00:20:39
And so this led to a recognition that you, whilst confident, were competent and knew everything about that marketplace. Probably you still needed some outside perspective. It's a hell of a way to start another business, right. Which came along x years later, but it's grounded in real gritty experience. Yeah.
00:21:04
It never leaves you, Michael, when you have an experience like know, you look back at it, you go, first of all, you think you idiot and you don't feel brave at all. You're embarrassed that you misjudged it. But then you've got to get on with it and you've got to make a choice and are you committed or not? And so whatever choice I'd made at that time, committed to do that or to let it go and then do something else, whatever it would have been, it kind of doesn't matter as long. As you're committed to the choice at the time.
00:21:35
There's probably many things you could have spent money on, but to go to engage an advisory board on whatever terms, I can imagine. There's the temptation to do all sorts of things with any available working capital, to Hoyk up marketing or to put on another person or enter. So that in itself is interesting move, but again, a foundation stone for the business you've got. Now, part of the reason for catching up again was this project advisory boards as a board to help an owner think through their exit from the business is a topic I wanted to chat to you about as I do a lot of work with owners contemplating selling their business or contemplating getting out of their business. The default, broadly speaking, is that you run your business and then you sell your business and then there's this.
00:22:38
What I see as some of the wonderful advantages of an advisory board more broadly are to get external perspective on your business, make it more robust, make it more profitable, make it more sustainable, more scalable, all those good things. And I can't but help think that there's a good intersection there between a pop up exit planning kind of board using that advisory board structure. Is that something you're seeing as sort of the kernel of a pop up advisory board? Yeah. Look, I see a few different constructs.
00:23:17
One is making the decision, do I sell or not? And so we see these short term project advisory boards around the 90 day sort of time frame to evaluate what's the choice that I'm going to make. Then you get these project advisory boards that are like 18 month advisory boards to help a business prepare for exit. Now, it's interesting about what you choose your advisory board to focus on. So you get those that focus on the transaction, getting the business ready for sale.
00:23:46
You get other ones that say, look, we're going to focus on the exit side as a business, we want the advisory board to help us maximize the asset value of the business. So we want the business to be focused on growth. So even though the business owner is focusing on exit, the advisory board is actually focusing on that growth piece. So it's really interesting about in that way, how you get your advisory board sort of involved. The other model that I see, Michael, is that there's a case that I referred to yesterday within your South Wales government, which was a business that wanted to sell.
00:24:23
They shifted their own personal roles as owners from the management team into the advisory board, which enabled them to step back to enable their management team to step up. And so they were able to demonstrate to potential buyers that they weren't involved in day to day operations, which actually helped them to improve their multiple in their exit. So smart. That's a really smart strategy. The other great thing about that is that it's given them purpose because they built their own bench strengths around their own advisory board, which gave them something to do when they sold the business.
00:24:58
To then sit on advisory boards for other business owners to be able to share their expertise. That giving and receiving piece is just such a great thing. As you mentioned earlier, when you sell your business, what are you going to do? Go play golf and do those other things? Having that hard stop is a tricky thing to do.
00:25:17
And I think retirement just generally is an old concept. I don't know how much longer it's going to be around for anyway. So what are you going to do with your time? And that incredible knowledge that you've built in business to be able to share with other people and work in a different capacity. So it gives people a sense of purpose.
00:25:35
When you're leaving something, you're actually not just leaving something, you're actually going to something as well. Yeah, look, it's vitally important. And this is why I was so attracted to the idea of, I mean, if you're going to do exit planning, however you define it, but as long as it's kind of what's the business worth today? And can I sell it, can I sell it for more if I stay in it for three years, that's all good stuff. The flaw, I think, and this is a flaw in thinking from both advisors and owners that okay, I'm ready to sell.
00:26:10
It's very binary. I own it today, I'm going to plan to sell it in three years time or twelve months time, whatever. And you do those things that you get an assessment of what it's worth today and is it sellable and fix all the problems and that's all good, but there is an opportunity to have an outcome that's very worthwhile and lucrative and successful, and that doesn't necessarily involve a sale. It could be, as you described, those people that moved out of management into being directors of their own business. I mean, presumably all that good work also meant that they could possibly hold the business ongoing with less day to day involvement as an employee.
00:26:57
And that's an outcome. And if you get offered a really great price and you want to go do something else, by all means. But the logic of that work to get the business ready to sell can also have an outcome that is, I'm going to put in place a manager and I'm going to keep it. So exit planning doesn't contemplate anything other than 100% sale of the business in a future time frame of whatever it might be. That's one of the things.
00:27:28
So if you get the right external counsel and advice, your business improves. But rather than just doing that for a potential buyer, whoever that might be, you're actually doing it because you can potentially hold the business. And that's what I like about these project or pop up boards. Yeah. And it could be a staged exit, too.
00:27:50
Michael so you sell down your shareholding slowly and become a minority shareholder over time and maintain that know, when you're looking at things like ESOP and employee buyouts or employee shareholding or bringing on other shareholders as operating partners, there's so many different ways to look at it. Do you find many Michael really open to having that conversation about the other alternatives? Yes, when there's a level, what I think happens for a lot of small businesses is that it's, again, a binary thing. I'm ready to sell, I want to sell. And they talk to a broker, some good brokers.
00:28:36
Their incentive is, and the way they make money is to sell the business. So what else are they going to suggest other than a sale? So if you can get back a year or two or sometime before the owner's cooked in the vernacular, it can't go on. Then there's time. I do a lot of work.
00:28:57
It's a diagnostic. If you had to sell today, what's it worth? What are the things that are going to get in the way of selling? But also, what are the other options? Which comes back to what do you, as an owner want to actually do?
00:29:14
If the business wasn't causing you so much, if you weren't spending 60 hours a week or whatever it is, if there was a pathway to putting in a good manager or bringing in the team as a part shareholder, might that change things? It becomes a business and a personal discussion. You're the owner, what do you want to do? Yeah, and this is the conversation around succession planning that I find needs to go deeper in the market. So we talk about succession planning.
00:29:44
There's two different types of succession, right? So there's external. What is it that we do to sell the asset and the other one is internal succession. So how is it that you build. Capability and capacity planning inside the business behind you, whether you step up, step back, or step out, any of those things.
00:30:04
It's about what is the engine room of that business in developing the capability and capacity for the business to be able to operate without you, to increase your asset value for your exit, for your external succession. So I think it's really important when we look at it from an advisory board point of view about what is it succession actually means for that business owner at that time. Yeah. And look, it is deeply personal. I think there are some owners that are far better to stay in their business, reduce the complexity, reduce the stresses, do something to change the way the business operates.
00:30:42
But I think they're better with a business than without. I have seen some hollow owners. They kind of got to a point where they're tired and they sell, and then Golf doesn't quite cut it, or walking the dog or whatever it is. Doesn't quite I think that it was a reaction to say, I need to sell, or they were encouraged by family who haven't really probed about why that individual's in business and if they've been in there 2030 years, it can also be extremely healthy to move on and do something else. But either way, you have to have a clear plan and some ideas about what you would do.
00:31:24
Is it a shortcoming of exit planning? Right. What do I do afterwards? Yes, you get some money. So you do the calcs with your financial planner.
00:31:34
But who do you talk to about what do I really want to do? The example you mentioned of them, those owners going onto their own advisory board and then in turn contemplating helping other owners, that's a really purposeful, beneficial use of their experience and gives them a Philip. They feel they can add value. I think owners talking to other owners who have been through the experience is about as good as potentially as good as you're going to get. Yeah.
00:32:10
Because there isn't, without a doubt, an identity crisis happens when you've left it. I'll give you two examples, too, of other ways. So I was chairing an advisory board for a business that says, we want you to set up the advisory board so we can get it ready for sale. So we built an advisory board for the 18 months. At the end of the 18 months, he called me and said, I've fallen back in love with the business.
00:32:32
I don't want to sell it anymore.
00:32:37
That can happen. Yeah. And the other one is that a business where you say you want to maintain it, but you don't want to be a large business anymore. But I really enjoyed it when it was small or actually reducing the size of the business. So instead of thinking about revenue, you're thinking about income.
00:32:55
You're probably potentially for businesses, especially when they're in the business, of selling time, they could potentially get a greater return on their investment by scaling it back and simplifying what they're doing and giving themselves an income rather than selling it at a price when they've lost control of that and they can't do it anymore. There are so many alternatives, aren't there? There are and credit to some accountants. I remember probably going back 20 years ago, the model applies equally today. And I've met some of these and they went through a pathway of growing their accounting practice and they just got to the point that they felt like they're feeding 20 staff, 40 staff, whatever it was, missing out on time spending with the clients that they really cared about.
00:33:46
And their model was I'm done with this, I still want to work. I have a core set of clients that I can service, give them lots of attention. I don't need any staff, I need maybe some assistance. But 40 staff firm becomes three or four and the principal might have four or five key clients. And what often happened is they became the true trusted advisor where, yes, they took care of their compliance stuff, but they're also a sounding board for what do I do here?
00:34:21
Because they have that the ear of the owner. So yeah, there's a range of different ways that they don't get considered because the owner is tired, wants to sell. And what they hear when they go ask for advice on selling is just sell. And it makes sense because that's how you can earn money as a broker. That's a transaction, it's pure and simple and that's okay.
00:34:43
But there is more. So we're saying here to get in that external counsel, the pop up advisory boards as an exit planning board, you're still going to need to engage the right experts, tax, legal. So whether they come on the board. I'm not sure, but they better not. You don't want those ones providing advices in the business of advice, sitting on that advisory board because then they're playing two roles and it undermines the trust on that advisory board structure.
00:35:18
Generally, I was keen to just expand generally on the advantages high level that an advisory board can bring. I had things like and sometimes you want to go out, you got a particular problem to solve and you go look for an expert in that. A good advisory board member can bring a network. They can bring direct ownership experience or industry experience as you talked about, could be a past seller of a business, which is golden advice. They can be just less emotional if they're really effective, they can take the owner on board and say, look, counsel them about what life before and after business.
00:36:03
So bring out them what they really want to do personally, unemotional detachment. They can use that to say, well, this is how your business might look to particular buyers. So I've had so many owners that are so caught up in their business, and it turns out it's a lot different to a buyer than it is to the owner. They just know external stuff is so critical. So are they the kinds of broad, high level advantages a good advisory board member can bring?
00:36:34
Yeah. And look, everybody's different, Michael, about what they're looking for specifically in the business market, being able to get out of your own head and put some objective frameworks around the conversation so that you actually create form, you create structure, you create priorities and get the noise, remove the noise, and the advisory board becomes a really good mirror to that. And also it holds you to account. So if an employee does a bad job, they lose their job. If you do a bad job as a business owner, you got no one to tell you or to hold you to account to that, or someone to expect you to step up and be better.
00:37:21
And so it forces you to be on your A game. That's for me. I want to be on my A game. I want to be the best I could possibly be, and it forces me to know my business. And so you go, oh, well, got prepared for the advisory board meeting.
00:37:36
I get so much value. And don't tell my advisory board members this, but I get more value in preparing for my advisory board meetings because I go, what is important? What actually gets on the agenda? There are so many things that you could talk about. This is part of the problem worldwide, about boards in general.
00:37:54
But what is it that we do choose to talk about and focus our energy on? The things that matter. And that's incredibly valuable. It's accountability. It's some vulnerability.
00:38:04
And I think what we're saying is, owners, this sort of dogged determination, I'm going to do it all. I'm going to make it happen. I'm totally responsible. I'm going to have to sell everything. And there's a lot of people that have been in that spot.
00:38:19
We're just encouraging owners to consider some outside counsel. And as I said in that first episode we did, we stepped through, I think, four or five layers of support, ranging from a low investment of dollars through to more structured and formal advice. But any which way, I think we both have seen owners that get to a point and the next step is not just all about them. It's actually about getting somebody, some people involved that can help them to get the business to its next stage, which might be scaling, and it might be scaling back, it might be selling it. It's getting some external counsel.
00:38:57
Louise, I think that's probably a nice place to finish. So could you just give us just a little bit about how people and if there are potential advisors listening in or owners thinking about getting an advisory board, where do they go to to get information about that. Yeah. So the advisoryboardcenter.com is our website. So for those that are interested in being on advisory board to give to actually sit on an advisory board, have a look at that information, connect in with the team, we take them on a discovery process.
00:39:34
We select less than 10% of those that apply. So we want to make sure it's a really good fit for an individual because sitting on an advisory board is not a job, it's a vocation. You have to have the intellectual honesty to be able to say you need help, but I'm not right for you. So we go through that process to make sure it's a really good fit for an individual to go down that pathway. Then they've got the credentials and be part of an incredible global community.
00:39:59
As you said, advisory board members have to be handy people to know and have a really deep network. For those that are interested in exploring having an advisory board for themselves, there's many things to consider. So we've got a free service. It's called the advisor concierge. We're not a recruitment agency, we're not a broker.
00:40:18
So we help you to evaluate what are the priorities for your business that you're wanting to achieve, what are the different options you could have for an advisory structure, and how could you start now? If they want to start with either an informal or a formal advisory board structure, we then connect them into the advisory board community, and then they choose themselves who they want, and then they can use that expression of interest that they create to connect with the advisory board community. They can use that to connect in with their own advisors around them as well. So they don't have to choose someone from the advisory board centre because it's got to be fit for where they're at. It's got to be their choice.
00:40:57
But the Advisor Concierge, we support thousands of business in that as a free service, so really happy to do that. We'll put the link to the website. What struck me there is that and we've got to, as owners, look beyond our core of existing professional advisors. So we do have some have very effective working relationships beyond compliance with their accountant, and that's great. And you have a lawyer on hand if you need.
00:41:30
What we're saying here is there's a much broader pool of people that with experience beyond one industry or deep within your industry who have out of their own business and can add a lot of value. There's a lot of people around looking to add value back as various reasons. So we want to try and tap into some of that. Louise, thank you so much again for your time. It's incredible to have you come in and talk about what you're doing at the advisory board centre and to understand a little bit more about where it came from.
00:42:05
Going back a few years and the journey, as they say. It puts it into context. Yeah. Thank you. No, we really appreciate, you know, the succession planning piece and exit planning for businesses.
00:42:18
It's the second biggest reason for people to have an advisory board, so the work that you're doing is really important, Michael. So thank you for having me along. Excellent. All right, Louise, until next time. You take care.
00:42:29
Care and go. Well, thank you.