What we cover in this episode:
- 01:24 – What is a business advisor?
- 03:02 – 6 characteristics of a good business advisor
- 04:34 – #1: Asking difficult questions
- 08:41 – #2: Analysis
- 12:26 – #3: Teamwork
- 14:29 – #4: Collaboration
- 17:03 – #5: Getting an outside perspective
- 20:01 – #6: Encouragement
- 23:56 – So, what should you get out of advisory services?
What is a business advisor?
Advisory services have been done in many different ways, and depend largely on the business itself and the needs of the owner. So at their core, advisory services are customizable, which can lead to some confusion about what you may be getting when you work with an “advisor.” But, as we were preparing for this podcast, there are certain things that should run through any advisory relationship. We felt the need to share the characteristics that are really important in the success of working with our clients.
So, another question may be, why would I work with a business advisor? Ultimately, you’re not getting a business advisor to just go with the flow, and tell you to keep up the great work. The purpose of working with a business advisor is to get that constructive criticism to improve things in your business. Each of these characteristics contribute to the improvement of not only your business, but yourself as a leader.
As the leader of your company, your management team may be hesitant to challenge you. Even good business owners who strive to be open with their team and communicate that they are open to ideas, and conversations will struggle to get honest feedback because of the nature of the owner/employee relationship. Some people are very willing to step up and take that “risk” of maybe losing their job while others are not. This is why it is good to have somebody that’s on the outside, who also has your permission to come in and challenge you. Again, that advisor’s interest should always be to better the business and to be focused on holding you accountable. As the owner of your own business, you may not be accountable to anybody but yourself and an advisor can help you set up that accountability structure, which really spurs things forward.
6 Characteristics of a Good Business Advisor
To get more clarity on what you should be getting, we have boiled down six general characteristics you should seek to get the best value out of working with a business advisor. These six items are packed with a ton of meaning behind them, so we will go through each one individually to discuss what we mean and the benefits to each one.
- Asking difficult questions: You want an advisor who’s going to ask you questions. They will not always be easy and will likely challenge you to look at your business in a different way.
- Analysis: You want an advisor that is analyzing your company from multiple facets with you, and walking through that analysis with you on a regular basis.
- Teamwork: You want someone who is good at teamwork. This person should work well with you and your team.
- Collaboration: Collaborating with your external team of professionals is going to be pivotal in some situations. This external team may include attorneys, financial advisors, and accountants.
- Getting an outside perspective: You are looking for that outside perspective, which is highly valuable.
- Encouragement: You need that encouragement and training component when working with an advisor.
#1: Asking difficult questions
A good business advisor is someone who will come alongside you, and work with you as a partner in your business. Your advisor should be highly focused and dedicated to working with you and your business, helping you along every step of the way. In doing that, they’re going to come in, initially especially, with many questions. Usually, these questions are focused on where you’re coming from, where you’re headed, goals, etc., and these questions should continue from an advisor. They should always be questioning next steps and your plans to get there, in addition to helping you formulate that plan if needed and constantly look at the why and how.
Any new advisor is coming in with a fresh set of eyes. You want them to challenge your traditional way of doing things so you can take a fresh look at your business yourself. That doesn’t mean that the traditional way is necessarily going to change, but you want to make sure that you have someone who is willing to challenge you for the best interests of your company. The advisor’s goal in asking tough questions is to help make sure you’re not getting tunnel vision, ensure you’re looking up and seeing what’s going on around you externally, and to help you avoid getting outdated. Those challenges and questions about what you’re doing allow you to either explain why and it makes sense, or question it yourself. This can allow you to see that there may be a better way to do things in your business.
Again, the questions are going to continue throughout your working relationship with any advisor. The initial questions, obviously, are going to be more heavy, and more in-depth, with the goal of gathering information, but you should expect an ongoing process of questioning.
Your business advisor should be helping you to analyze your business. When we say analysis, we mean looking at your company and reviewing the numbers, financial statements, KPIs, SWOT analysis, and any roadblocks you might be facing. In addition, they should be analyzing your marketing structure and internal processes. They should then be going through these items with you to help you get a better handle on what you have in place initially. If those items are not well documented, the first step would be getting that documentation in place. Then, the focus shifts toward working through those things to continually make improvements and adjustments with markets as needed.
Analysis should be happening on a regular basis as a business owner, but typically, your business advisor should be working with you and talking through this analysis so that they’re staying up-to-date on what’s going on in your business. An advisor’s involvement will also make sure things are coming to your attention, and you’re not missing important signs in your business that could otherwise slip through the cracks. Having regular meetings with your business advisor where this type of analysis is built into the meeting, provides that accountability aspect and structure so that these things are done very consistently. You can then make good management decisions based on that analysis.
The advisor brings their expertise and understanding to the table, making sure that you as the business owner understand what this analysis means and what the implications are to your business. They can also help you adjust those numbers and plan what a trajectory might mean for your business. They can present possible solutions with projections like, “If we make this change, here’s what could probably happen, this is our probabilities, etc.” So you can analyze, if you should make a change or not, when considering multiple options. Having that analysis, and someone who can speak to it from a place of experience to help get you to the next level as a business owner is really where the value comes out.
You definitely want to find an advisor who you can connect well with and establish a good working relationship. Communication is key in an advisor role. A teamwork approach is necessary to ensure they’re communicating well with yourself and your management team when needed. In order to work closely with an advisor, you need a certain level of comfort and trust.
When you work with an advisor, you should be expecting change, first of all, because that’s what an advisor should do – change your business for the better. As you’re going through those changes, you need someone who you can coordinate well with, who’s organized in their approach, and who helps you with how to implement changes. It helps in setting goals, so that everyone on your team is pulling the business in the right direction. Having a solid business structure and good business practices helps the flow from top to bottom, and bottom to top as well. The bottom line is, you want to have that cohesiveness and teamwork at every level, including your advisor.
Any advisor should recognize the need for your outside team of professionals or advisory board and help you through the process of establishing those relationships if you don’t have them in place. It is also necessary to work collaboratively with that team because, again, you should have a team of great advisors coming together, and aligning efforts will enable everyone to move in the same direction with purpose.
For example, your financial advisor should be able to collaborate with your attorney when legal issues arise, whether that’s structuring the business, or putting contracts together for the business. Your attorney and financial advisor can come together and speak differently to one another as professionals to reach the best solution, collaboratively.
#5: Getting an outside perspective
It’s easy to get hung up in the details of the day-to-day, so having someone who can come in, step back, and give an outside perspective can be game changing. The old saying goes, you can’t see the forest for the trees. When you’re running your business and you’re stuck in the daily grind of checking items off your to-do list, it’s easy to lose sight of the big picture. Even when you take the time to stop, back up, and look at your business with the intention to perform strategic planning, you don’t always see things that somebody who’s on the outside would see.
An advisor brings a completely unique and different perspective and can look at the business from a place of detachment. This can be helpful because feelings and emotions can get in the way when it comes to making business decisions. Feelings are normal, and they’re a good thing, but we want to make sure that we are not making decisions based solely on those feelings. You may also be avoiding certain aspects of your business that aren’t working because it’s frustrating or upsetting to think about. That outside perspective can come in, and really help you step back from things and take a more logical approach.
Your advisor will be able to analyze certain situations in a way you may not have thought about and offer a different perspective that will come uniquely from their specific experience and skills. You have the experience in your business, in your profession, in what you do day by day, and you’re definitely not going to have the same experience that this advisor’s going to have, because they will be looking at your business through the lens of their own background, education and experience. Outside perspective is huge, and that can really change the trajectory of a business. It can stop something from going down the wrong path, or it can completely alter the path altogether. You may realize, this isn’t really the path you wanted to be on at all and you simply ended up here. So, having somebody come in, and look at things a little differently can make a big difference in the future of your business as you navigate changes.
We acknowledge that in order to make positive changes in your business, an advisor can’t be a constant cheerleader, but encouragement is important. We don’t want somebody just cheering us on for going in the wrong direction. Business advisors should be encouraging you in the right directions and holding you accountable as they push you toward your goals.
In working with business leaders, owners, and partners, etc., they don’t get many “atta boys.” Unfortunately, as human beings, we typically tend to be much harder on ourselves, and are not our own cheerleaders. Having that voice of encouragement can help you push through difficult situations. Again, your advisor can bring a different perspective that offers insight about what may have happened, what you’ve learned out of this, what can be changed, and where you can go. The ability to bounce ideas off of an expert can help you take more from learning opportunities and avoid missteps that they may have encountered in the past.
An advisor can offer confirmation outside of the business as well. Owning your own business can bring a level of uncertainty. You may think something is going well, but having somebody else to analyze the situation and confirm that things are running as well as you thought can be very helpful to ease anxiety about the direction of your business. As a business owner, it can feel as if you’re on a little island at times so getting encouragement and somebody to bring alongside and help make decisions is really helpful.
So, what should you get out of advisory services?
Ultimately, finding an advisor should give you more control over your business and reduce your overall stress. An advisor should be able to help put a structure in place and establish accountability. You will gain more control as your advisor empowers you with new information and new ways to look at your business. It really helps the owners of the business feel less stressed out about things knowing they have plans in place, they know where they’re going, and have someone to lean on and talk to when challenges arise.
This is all a recurring cycle as your plans change, you grow, become more profitable, and you have goals in your life that you want to achieve. Advisory services are, by nature, customizable, so every business is different and every owner situation is different. The specific services will conform to what your needs are, and what your business looks like, but it should have these six components involved in it, in order to make a successful relationship, in our experiences.
Today, we are answering the question, what does a business advisor do? We have broken this general term down into 6 characteristics we feel should be a part of any advisory relationship in order to see success.
Asking questions, analysis, teamwork, collaboration, getting an outside perspective and encouragement are the six components we discuss in detail throughout this episode. We explain why each one is important and what can be achieved by incorporating advisors into your team.
The ultimate goal is to gain more control over your business with less stress. Having a clear plan in place and an experienced expert who can help guide you through tough business decisions is a great way to accomplish this.