Quick question: When you hear the phrase “Board of Directors” do you think of Fortune 500, Mega-Sized, enormous conference table companies?

Show of hands?

It sounds impressive to have a Board supporting you. To provide direction, guidance and support to you and your business. But that’s just for the big guys, right?

What if you - small business entrepreneur - could have your own Board of Directors, AND stay the size you are?  Receive all the support and benefits the big guys do without the “bigness” of the big guys?

Enter the “Virtual” Board of Directors.

Any business can have a Board of Directors - a set of respected professionals who serve in an advisory capacity for your business. Yep, even you.

Why should you have a Board of Directors?

1. Reality Checks - Board members can bring your feet back to the ground wen you are flailing, unfocused or scattered (it happens to the best of us). They’ll keep you on track so you don’t lose traction.
2. New Insights - When Board members from different backgrounds, have different experiences.  They’ve seen different successes and failures, and have different ideas you can use in your business.
3. Provides Stability - Financial folks like when small businesses have support from seasoned professionals. It gives them confidence knowing you’re not out there on your own.

You may be wondering “why would somebody do that for me? Who am I to ask that of another professional?”

First things first….who are you not to ask that of another professional? You’re no less important than any other entrepreneur.

So, why would they agree to be on your Board?

1. Networking - being on a Board allows fellow members networking opportunities with other professionals. Make your Board appealing to other members so they’ll want to join you, and they will also benefit from the experience.
2. Leadership Experience - Professionals are continutally seeking leadership opportunities. Boards are great ways to do that.
3. Honor - What an honor to be asked to be on a Board, particularly by a business owner who is taking the initiative to take their business to the next level!

What types of industries should the professionals on your board represent? The usual suspects are industries like finance, law and human resources. Don’t forget about asking other successful entrepreneurs who have navigated the waters and make it (in non competing industries, of course). They have great insights on how to make it through the tough times, how to grow, and how to make the most of the high times.

How can a Board serve your business?

Here are the 5 most important aspects of the business that investors want to read about in your business plan:

1) That The Company Has Focus

The company has clearly defined its business and can state it in a single strong sentence that says it all. Yes, your plan probably will have a more expansive description in its executive summary but you need to open your plan with that one simple declaration to show the clarity of your vision for the business.

2) That The Market Has Potential

The company has a large existing market for its products and services. If your company does not have significant growth potential then it is probably not going to be of interest to many equity investors. If you are shooting for debt based capital that may not matter most to them (market stability would be though so keep that in mind if your plan is geared towards raising debt based capital); but to an equity investor growth is of paramount importance and the size of the market signifies the opportunity potential.

3) That The Company Has Specific Solutions For Their Market

The company has identified what its customers most need and has created a value proposition for them to make it a simple “buy” decision. If there is nothing unique or distinct about your company’s products/services then you do not have a defensible position in your market. Defensibility of your market position is of key importance to investors and funding sources.

4) That Customer’s Show A Readiness & Willingness To Buy From The Company

In an ideal situation, the company’s customers have a recurring need for their products and/or services, with a reasonable sales-cycle and opportunities for premium up sell of additional products & services.

If you don’t have customers ready and willing to buy now … then that does not bode well for interest from most investors and funding sources. If your market is a long-term development type of proposition then your company will need to prove that it is truly a disruptive business model that will have people flock to it once it is functional. Its not so much “if you build it will they come” but rather “if you build it will they buy?”

5) That The Company’s Main Dynamics Are Strong

What are the main dynamics of a company? Simply put it is two components: a sellable product/service and a management team that can run the business well. Investors and funding sources want to know that the company has created unique solutions superior to their competition. And that the management team consists of smart people able to deliver products/services to their customers, control expenses and make a profit … repeatedly.

* * *

If you create your business plan to address the above; then you are ahead of what most people end up with in their business plan. Weaknesses (dilution) caused by putting too much of the wrong content and not enough of what mattes most, kills interest in a company’s plan. It’s the answers to these 5 important aspects that investors and funding sources find most interesting. How well you answer them will affect the outcome of your search for capital.

In my next post I will get into how to use these 5 as your guide for creating (or revising) your business plan to make it an optimal document that says what it should. Be sure to watch for:

How To Really Get Your Business Plan Read (by investors & funding sources)! Learn how to create the type of business plan that investors and funding sources will enjoy reading and will take action on.

Dennis Lowery
Adducent, Inc.