When Jim Lett started A.B.E. Door & Window, in Allentown, Pa., in 1974, the “board of directors” required to form a corporation in Pennsylvania, consisted of Lett and his wife, Janet. It still does. “Being a small business,” Lett says, “[the board] is more of a legal formality.”
But having owned the business for more than 35 years, Lett says he is also keenly aware of how important it is to have input and feedback from knowledgeable colleagues. He meets monthly with his eight-person management team, which he describes as the “driving force” behind changes at the company.
SEEKING ADVICE California author and business consultant Leslie Shiner says many company owners elect to form an outside board of advisers “to bounce ideas off.” That board may consist of five or six people, all volunteers. Shiner suggests enlisting noncompeting business owners and the company's CPA or lawyer.
When Chris Ripley, owner of Lifetyme Exteriors, in Boston, decided to form an advisory board, he asked vendor representatives to participate. Ideal advisers, Ripley says, have “an aligned interest” in helping his business succeed — such as his radio advertising rep who became an important source of excellent advice.
The advantage of an advisory board, Ripley points out, is that the owner can meet with members all together or one-on-one. Discussions are not made public, and the owner can take or leave the advisers' recommendations.
PEER OF THE REALM Like Lett, Bob Kulp, owner of Wisconsin roofing company Kulp's of Stratford, draws on the advice and expertise of his “operational management team” and has done so for 10 years. Kulp's team meets for an hour and a half every Tuesday. The team's input helps “reign me in,” Kulp says. He believes that decisions — such as whether or not to enter the solar business — need to be tossed around among many minds.
What Kulp, Lett, and others have found is that peer groups of noncompeting businesses are useful when it comes to maintaining management discipline. But the businesses should be of a similar size to your own. Kulp says that he once lost interest in a peer group whose members were huge companies outside the roofing industry. “I was dealing with guys infinitely larger than I was,” he says, “and they couldn't get into the head of a guy who had a $4 million company.”