Common qualities of many (not all) family manufacturing business:
- Start up by a strong process expert: could be machining, fabrication, industrial service or sales
- Growth includes pulling family members or friends from a similar background into the business.
Frequently, 10 or so years later the company has hit a growth plateau or worse, is losing market share. Top positions are filled with people who are often motivated and great at doing but limited in their experience breadth and/or struggle to bring new ideas into the company to grow on.
One Solution: Advisory Board Use
|Grow a Diverse Board: creativity, experience, age, varied & applicable skills, education, background, connections||All same family members or employees in company used on Board.|
|President plus 2-4 advisors||Competition on Board with you or between member companies.|
|Coach and train your Board to become a team: set the roles and expectations.||Board members get intimate with day to day activities and execution|
|Delegate with focus on the strategic and an outline on tactical||Member homogeneity like: all are Owners or Accountants or Engineers or Retirees or ex-service buddies or ….|
|Swap: their time on your Board for your time on their Board||Members with huge egos.|
|Board reviews annual planning: strategies, marketing, financial, capital investment, staff development||Conflict of interest.|
|Yes, do NDA and noncompete on each.||Lifetime positions for all.|
|Compensation: pick a fair blend of perks and pay.||Skin in the game is good but do not guarantee an Advisor position in exchange for a minority equity purchase.|
|Ask them to commit for a couple years.||Giving up control of the company or Board.|
|Retain contributors, replace those that cannot help improve the company for whatever reason.||Advisors from outside having legal authority inside the company.|
|Define the schedule of: when, where, what & who for the year.||Candidates with little to contribute.|
|Suitable family members as an Advisor candidate successfully employed outside of the company.|
|Expect to adapt.|
An Advisory Board may not fit all companies, timing is very relevant. Consideration of starting an advisory group can become more appropriate as companies pass $3M in sales, a better idea as they approach $10M. Alternatives include:
- Membership in a small business executives’ group or round-table – some of the COSE Strategic Planning offshoots come to mind.
- Use of consultants, coaches, advisor(s); individually or a blend
The above is an opinion by Ty Haines, President of Manufacturer Solutions, LLC. It is not based on any company in particular but observations of many companies in general. Ty has some qualifications including the rare blends of:
- Education: business and engineering degrees, extensive supplemental work
- Over 30 years’ successful management of areas including: Product Development, Quality, Engineering, Automation, Purchasing, Finance and Sales functions in companies that have ranged from a $.9M turnaround to over more than two with $100M+ in Sales.