“No man is an island; entire of himself…” This famous line written in 1624 by English poet John Donne is still sage advice for anyone, especially an entrepreneur. If you’re satisfied being an independent contractor compensated directly in proportion to your services rendered, you won’t need a board. But if you want to build a company that will still have market value when you are no longer in the picture, you’ll need the advice and help of seasoned business experts with skills and knowledge you lack. No one is competent in every area of expertise needed to succeed in business. The most successful entrepreneurs recognize their limitations and bring in people with complementary strengths to counter their weaknesses.
Start-up companies often have trouble attracting private investors and the high caliber board of directors needed to ensure their success. “Angels” know they are prime targets for unscrupulous people who would like to reach into their deep pockets. They are also adverse to unnecessary risk and usually prefer to minimize their exposure through syndication with other “angels” and professionals whose judgement they respect. Signing onto the formal board of directors of an unproven company about which they know little is just not prudent. So how can you as a struggling entrepreneur get these key people to buy into your company? Your solution may be an executive advisory board, it proved to be the answer for our CEO, Chuck McCabe.
After courting numerous prospective sources of debt and equity financing without positive results, Chuck was running out of ideas. His attempt at an initial private placement (which he even presented at a major venture capital forum) not only failed, but it cost $25,000 that Chuck didn’t have and a great deal of valuable time. Then a good friend and advisor, Matt Alexander, sent him an article from the April, 1990 issue of Inc. magazine titled “Unlimited Partners: How three company builders turn to their boards for answers.” The brilliance of creating a formal advisory board to solve his problems became crystal clear. Chuck had already identified several key people who had the resources, contacts and expertise to ensure the success of Peoples Income Tax (The Income Tax School’s sister company). Creating Peoples Tax Executive Advisory Board was the hook needed to get there and other important players aboard; this decision proved a pivotal point in the company’s success.
Chuck’s first step was to develop a description for prospective advisory board members. He searched for board members who had knowledge and experience in several topics such as marketing, sales and promotion, commercial and investment banking, IT and more, as well as those who could act as team players. Initially, the board consisted of six people. This highly accomplished group of six professionals and entrepreneurs collectively provide the expertise and experience needed to complement Chuck as President and CEO.
About one year after the board was formed, all seven advisors plus a friend of each of the two senior advisors participated in Peoples’ first successful private stock offering. As the insiders, the advisors, without exception, were confident enough to invest even though Peoples had not yet turned a profit. That equity capital made Peoples’ continued expansion possible.
Funding, however, is by no means the most significant contribution of the Peoples Executive Advisory Board. Far more valuable than money is the expert guidance this elite group has provided to help develop the strategies and tactics to achieve People’s impressive growth. Especially now, innovative and diverse thought is essential in creating a thriving business. The limitations set by the pandemic require new, virtual processes that can be developed with the assistance of the board.
The board’s assistance will be even more crucial as Peoples continues to expand. The board’s confidence, even in 1992 when it all began, makes a powerful statement to the business community. The doors that can be opened by such high profile advocates provides Peoples with an invaluable competitive advantage.