Have you ever wondered what limitations exist in your operation or what would happen if the leader of your business were not available?
Part of the answer to the first question lies in the ability and knowledge of the leader, yet the more important question is how much knowledge and wisdom can one person possess?
Most of us with a little gray hair have learned that if we are around people who think differently than we do and who have different experiences, they can cause us to think outside of the box.
Advisory boards can be of great benefit because they bring you that outside wisdom and yet are focused on your business.
I have been fortunate to have worked with some great advisors. Advisory board members could include people who you work with such as a banker, major supplier, Bureau of Land Management (BLM) range conservationist or accountant. If they understand more about your vision, they will be much more helpful to you when they provide professional services for you.
This brings us to the purpose of your advisory board. Such boards should focus on strategic direction and questions such as these:
- Where do you want/need to be 10 years from now?
- What trends do you see in the marketplace that you need to adjust to?
- Are your costs of production in line with what you expect prices will be and your return on investment goals?
- Are you waging a war on costs?
There are other advantages to an advisory board. Accountability is one that may not sound attractive but has some real benefits. We all have had times when we wanted to work on the business or do some business planning, but it never got done because there were fences to be fixed, cows to tend or weeds to spray.
On the other hand, if you know that you have an advisory board meeting on a certain date, peer pressure will cause you to prepare. Your business will benefit simply because you have taken the time to formally plan.
Advisory boards can also aid in management transition and/or provide risk management if something happens to key leaders. By that, I mean that most ranch businesses have one primary leader. If there is an advisory board which understands the leader’s vision, the board can advise those who are managing in an interim period.
How many and who should be on your advisory board?
I have found that six or seven members function well. My preference is to think strategically with regard to “whom.” What kind of expertise would benefit the company the most? You don’t need seven “grass” guys. With that kind of board makeup you might have a fun discussion, but a lot of strategic areas will be left out. If the leader’s expertise is cattle, maybe someone who is good at raising hay would be a good addition. If you have a few employees, maybe an advisor who has been successful with many employees would add a lot to your business.
Another important question is, where should you meet?
I have found it best and I encourage my clients to meet “off ranch.” Accountants, banks and hotels usually have rooms that will accommodate meetings like this. Many times these rooms can be used at no cost. By meeting off ranch, you and your team will be more focused. The kitchen table is fine for some discussions, but there may be too many distractions in such a familiar location. Meeting off ranch also will bring a sense of importance or urgency to your meeting.
The first time I tried this approach, I invited our feed supplier, BLM manager and county agent, along with three of us from the ranch. I was amazed at the results after a couple of years. We began to understand each other and the different perspectives which added value to our ranch.
This kind of board might only meet once per year and serve mainly to make sure we all know what the year might hold. Later, my boards contained people good at finance, ranching and marketing.
For families, boards offer a great opportunity to include off-farm family members in the discussions. If they live somewhere else and have different occupations, it is hard to be connected and to feel involved. A family member/future heir will not be surprised by business performance if there are formal board meetings where business performance is discussed.
The bottom line is that your business can grow and prosper only as much as the knowledge level which the leader has attained. Multiple heads/ideas, experiences and perspectives multiply strategic thinking. The result is our business and our lives are enhanced. In addition, family unity can improve by having regular board meetings focused on a common vision.
Fahsholtz is president of AgWin advisory group and past president, Padlock Ranch. He can be reached at email@example.com. He also is on the Drovers CattleNetwork editorial advisory board.