Marissa Levin more than doubled her revenues at Information Experts the past three years, and she’s the first to tell you she couldn’t have done it alone.
Her secret sauce: A great advisory board.
About three years ago, the founder and CEO of the 18-year-old strategic communications consultancy turned to a mentor for help in growing Information Experts.
“My company was stuck at $5 million,” she said. “I couldn’t get past certain road blocks.”
Her mentor advised her to form the board of advisers.
“He said it’s a group of people you hand select that can help you get over your problem,” she said. “That conversation sparked a light bulb for me.”
Last year, the firm, based in Reston, Va., brought in $11 million in sales.
If you don’t have a board of advisers in place, now is a good time to start putting one together. As Levin has found, a great board of advisers can become a vital sounding board and source of strategic insights for a CEO, helping you to grow your company while others in your niche falter.
Given global uncertainty, growth companies can’t afford not to have one.
Levin invested nine months in recruiting the right board members — experts to help her strengthen the company in key areas.
Her six-member board now includes an entrepreneur who sold a $55 million company, who has helped with project management, and the former head of one of the government agencies her firm works with, who has sparked business development.
“He’s been instrumental in making introductions for me and leading me to millions of dollars in work,” she said.
One of the big mistakes growth companies make in choosing an advisory board is that they’re too relaxed in terms of the role of the board.
That won’t get you very far.
Ask John DeHart, CEO of Nurse Next Door, a 60-unit franchise chain based in Vancouver. Five years ago, the home health care company, which he founded with Ken Sim, brought on three advisers. Meetings were held every two months, and though the company would send the advisers a report two weeks before the meetings, everything was pretty informal.
“We ran it like two entrepreneurs running it,” DeHart said. While the advisers were paid, “it wasn’t the right amount,” he said.
Result: “It just ended up stopping,” he said. “Advisers wouldn’t show up to meetings.”
But DeHart didn’t give up.
“Our next target is $100 million in sales,” he said. “We’re at a little over $30 million right now. We simply realized if we are going to become a $100 million company, we better start acting like one.”
About a year ago, the company formed a new board and brought in three new advisers to help with matters such as the transition from two CEOs to one (Sim, originally co-CEO, has shifted his role into strategic projects).
Two advisers are past CEOs of large companies, and the third is a successful entrepreneur with strong corporate governance experience.
They meet every month for four to eight hours and hold a two-day annual retreat. The company makes it worth their while financially.
The new board has required Nurse Next Door’s team to stay on top of key information — from financial metrics to risk factors — on a constant basis.
“Every single month, I and my entire team have to do formal reporting to the board,” DeHart said. “It’s made us so much more disciplined in our actions and thought.”
The board has the power to hire and fire the CEO “which is me,” DeHart noted.
That accountability has made him a better CEO.
“I … get challenged at every board meeting,” he said.
When Mike Ferranti started his New York City company, Endai Worldwide, in 1999, during the dotcom era, he set up a six-person board of advisers from well-known firms. But it was hard to get the advice he needed.
“They were big company guys,” he said. “They could not relate to an entrepreneur.”
Important lesson learned – make sure the board member has been on the journey where you want to go. It’s the experience you want to tap into.
The Web analytics company, which now manufactures its own email marketing software, tried again, setting up what Ferranti calls “Advisory Board 2.0” in 2008. The three-person board, made up of marketing professionals with experience in important niches, is much more hands-on.
Ferranti pays them to attend meetings and sometimes to tackle consulting projects.
The “intellectually challenging debates” he has had about strategy with his board led to decisions that have helped the company grow. Endai, which has about 23 employees, is “very, very profitable” and saw triple digit sales growth last year, he said.
“It’s all part of a brutally honest dialogue,” he said.
If you want to keep growing your company, you need to have advisers who will challenge you the same way.