Entrepreneurs should use directors, other means to get outside views


September 17, 1990|By Blair S. Walker

The proud, independent streak that drives entrepreneurs to create new companies can also make them loath to seek advice.

In fact, asking for help is something that owners of small businesses "hardly ever do," said Harsha Desai, chairman of Loyola College's management and law department. "Because they're entrepreneurs, they know that they can solve the problems themselves. They have a can-do attitude.

"Usually, it's too late when they call the consultants," said Mr. Desai, who has a consulting business that works with small businesses.

Entrepreneurs tend to be big-picture people and sometimes concentrate on attacking markets, to the exclusion of minding the nuts-and-bolts operational details of running a company.

Mr. Desai cited a firm that could have doubled its business by installing an information system to monitor inventory control and accounts receivable but failed to do so.

As a business grows and matures, difficulties can crop up for which the business person has no point of reference. When that happens, it's time to put pride aside and solicit help, Mr. Desai said.

What's the trick to finding someone capable of dispensing solid business advice, particularly when the options can range from a Dutch uncle to a consulting firm charging thousands of dollars?

Patrick Rosello, who runs the Business Consulting Group and also writes a business column for The Evening Sun, suggests canvassing family members, friends and business associates.

If their recommendations lead to a decision to solicit professional advice, it's necessary to determine "what size organization would serve you best -- which may be a factor of money," said Mr. Rosello, whose firm has offices in Baltimore and Towson.

Many times, the selection of a professional adviser depends largely on the business person's financial situation. A start-up company, for example, might have to make do with a Chamber of Commerce session where business people gather to discuss their problems for free.

Something else to consider when looking for an adviser is the business person's level of sophistication and skills.

"In order to really go forward with a new business, or even an established business, it's almost as though one were applying for a new job," Mr. Rosello said. "Anybody that has gone through a full process of being a job-seeker would have a goal in mind, as well as certain actions that are necessary to attain that goal. And they would perform a skills analysis on themselves."

When the owner of a small business does rely on a consultant, the consultant often must deal with hostility from the business' employees, Mr. Desai said.

"The boss may have called you in, but you are going to wind up working with the subordinates, and they may resent it," he said. "The employees have to have an understanding that the consultant being brought in is there to help and not hinder."

One way to establish continuity among outside advisers is to set up a formal board of directors, which would meet three to four times a year to discuss strategic matters, approaches to the marketplace as well as how to spot impending crises.

Mr. Desai said that a business generating as little as $1 million a year in sales revenues is large enough to have a board. Though "it is a formal board of directors, this does not imply ownership, because the owner still owns the company," he said.

Remuneration for board members can range from picking up the cost of a breakfast to thousands of dollars per meeting. Accountants, lawyers, executives from non-competing businesses and knowledgeable friends make good board members, Mr. Desai said, adding that the panel ideally should have about five people.

A board of directors can dispense excellent advice, but there is a potential downside. "You can get conflicting advice, and you wouldn't know where to turn," Mr. Desai said. "The reasons for this could be multiple -- you may have a gung-ho lawyer and a very conservative accountant, and you wouldn't know who to turn to."

For many business owners, even the relatively modest cost in time and money of establishing a formal board may be prohibitive. For these entrepreneurs, there are options besides Dutch uncles and Chamber of Commerce groups.

There are some places to get free advice, such as the Small Business Development Center of Central Maryland. Another is through the universities, some of which make available programs. The University of Baltimore and the University of Maryland, for example, have programs for specific areas of the marketplace.

Another option is meetings held by business groups. Accountants and lawyers often attend those meetings to dispense advice to entrepreneurs, as well as generate future business.

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