CHICAGO (Reuters.com) - Elizabeth Calhoun intended to launch a new product that would boost sales at her management consulting firm, but she lacked the necessary IT expertise. With no money to hire outside help, Calhoun recruited a group of experts to guide her - free of charge - through the process.
Calhoun's Glen Ellyn, Illinois-based company, Signuum, specializes in strategic planning, executive coaching and related services for small to mid-sized businesses.
Still in the formative stage, her new product is targeted at helping private equity firms improve the development of the management teams in their portfolio companies.
"I've got a certain set of skills," Calhoun said. "I also recognize that I don't know how to do a bunch of other things that will make this take off."
A former principal with private equity firm Sterling Capital Partners, Calhoun managed to find some executives willing to give freely of their time and expertise in exchange for little more than the satisfaction of helping a fellow small business owner.
"I'm going out to people I know who are extremely well connected," she said.
Entrepreneurs at all stages of development recognize going it alone can be a risky bet, especially in a tough business climate. Some rely on CEO peer groups to vet their companies' growing pains, but many are going deeper, creating hand-picked groups of outsiders who provide insights on everything from new product development to marketing and distribution. These specialists, often seasoned entrepreneurs with extensive knowledge of specific industries, also serve as valuable connectors, opening doors to new customers, financing, and suppliers.
Unlike corporate governance boards, which are formed once companies gain outside investors, these corporate advisory boards are loosely structured teams of individuals with no fiduciary responsibly to the venture they assist. They frequently provide their services on a gratis basis or for a nominal fee, sharing lessons learned through their own experience on a take-it-or-leave-it basis.
"I definitely see people looking for more input and advice," said Gaye van den Hombergh, president of Winning Workplaces, an Evanston, Illinois-based non-profit group that helps small companies advance by providing consulting, training and other resources. "More (advisory boards) are springing up."
Van den Hombergh, who formerly ran her own multi-million-dollar financial consulting firm, is one of Calhoun's personal friends. It was a natural, then that she agreed to help run point on the creation of Signuum's advisory board, where she will take a seat.
LEVERAGING A NETWORK
Bruce Nims, who advises fledgling companies on the formation of advisory boards, said Calhoun's strategy of looking first to executives she knows and trusts is one of the best ways to get the ball rolling. Companies are never too small or early stage to start the process.
"The biggest mistake a business owner could make is that he or she knows everything he needs to know," said Nims, entrepreneur-in-residence at Millikin University in Decatur, Illinois. "There's always value in having knowledgeable, interested, professional advisors keep an eye on what you're doing."
Identifying advisors in industries related to the business is less important than finding those who have tackled similar issues. If, for instance, a company is set to push beyond the $1 million dollar mark in sales, then securing advisors who have taken companies from early stage to beyond the $10 million mark would be beneficial, he said.
Nims suggests three to five representatives, with expertise in areas the company lacks, is a manageable size for an advisory board. It should meet quarterly for a set period of time, helping to create accountability for the business owner and to ensure the board members stay apprised of key developments.
"You want to pick someone who is enthused about your mission and eager to see you succeed," said Nims, who noted that companies should attempt to provide some monetary compensation to advisory board members, if possible. "Ideally, you want to find someone who has been through what you're trying to do."
Outside Chicago, Elizabeth Calhoun is banking on finding a team that embodies those attributes - and then some.
"I'm looking for people with specific technical knowledge that I have a personal relationship with who are willing to give up their time," she said.