Episode 015: Onboarding Your Board (Building an Advisory Board)


Some of the most valuable insight about your organization comes from outside of it. Businesses seeking to be as efficient and effective as possible need a strong team of advisors in order to identify both opportunities and blind spots.

But when it comes to actually assembling that council of advisors for your company, it can be difficult to know where to begin.

Paul and Kim invite you to their discussion with Dorothy Tucker, CPA and Jake Driggers, CPA as they outline what spots businesses should fill on their advisory boards, where to find the right professionals who can add value to your business and how to vet them.

At the end of this podcast episode, you’ll be able to:

  • Select a lawyer, banker or other advisor based on a few key areas that will matter most to your business in the long term
  • Outline a basic roster of the four main spots to fill on your business’s board of advisors
  • Identify opportunities to connect and network with potential advisors
  • Evaluate if your investment in an advisor’s services is worth what you’re getting in return

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  1. How do you find the right team?
  2. What is something you advise when business owners are looking to choose their group of advisors?
  3. Who should be on your team of advisors
  4. What are the long term benefits of the team of advisors?
  5. What else can you do to enhance your team?
  6. What should business owners ask when choosing their advisors?
  7. Discuss past experience/example (Hurricane example)

Intro (00:00) Welcome to The Wrap, a Warren Avery podcast for business leaders designed to help you access vital business information and trends when you need it so you can listen, learn, and then get on with your day. Time is tight, that’s why our advisors have wrapped up today’s most timely topics into a podcast with actionable advice. Now let’s get down to business.Kim (00:23) Hey, Paul.

Paul (00:24) Hey, Kim.

Kim (00:25) How are you today?

Paul (00:26) I am doing great. How are you doing?

Kim (00:28) Excellent.

Paul (00:29) Glad to be back for another podcast.

Kim (00:30) I know, this is a really cool one. So, you know, business owners, a lot of them don’t have a board of directors. So they have to put together a team of professionals to become their board of advisors, and we have two of our experts here today to talk about that.

Paul (00:47) Absolutely. With us today, are Dorothy Tucker and Jake Driggers. Welcome.

Dorothy (00:51) Thank you for having us.

Jake (00:53) Thank you. Excited to be here.

Kim (00:54) So, Jake, how do you find the right team of advisors?

Jake (00:56) A lot of times, I feel like somebody meets a banker, somebody meets a lawyer, and they kind of think, “Well, okay. This is my option here, so I’m going with it.” I kind of told the joke in planning for this that, you probably didn’t meet your significant other going on one date and they’re like, “Well, I’m with this person now.” I think it’s a lot of trial on error and a lot of meeting, then kind of kissing a lot of frogs before you find your prince, so to speak. I think it’s just through trial and error, and once you find that one person, kind of in this network we’re going to discuss today, who maybe knows a lot about your business or your industry, they can help you be a great resource to find others in different fields and different expertise that aren’t theirs.

Dorothy (01:39) I agree. I also I feel like, particularly with small businesses, it’s a struggle. Sometimes you wear so many hats that you don’t even really have time to find your advisors. So you have to make your highest and best use. I find that getting involved in your industry or being around people that are like-minded, that that you can lean on and then you can start to feel out like what works for them and what doesn’t work with him. And you have to have a good rapport. You have to feel good about the relationship. You know, like he said, you can’t just, “Hey, can you be my banker?” You have to make sure that they work well with you and understand your industry.

Paul (02:17) And have your interests probably forefront, right?

Dorothy (02:20) Right, right. You have to be like-minded. Especially when you’re finding your accountants, there’s many, many accountants out there. You know, you’ve got to find your accountant that has the same risk threshold as you do. So there’s black, there’s white and there’s gray. You want to make sure you have a good rapport with them and that their risk is in the same bucket as yours.

Kim (02:40) That’s a really good point. So who should be on your team of advisors?

Jake (02:45) Well, when we talk with our clients, the main four we like to sort of recommend to them would be bankers, lawyers, accountants and risk management or insurance professionals.

Dorothy (02:54) Yeah, so for a banker, I feel like it’s really necessary to have someone that understands your industry, particularly it just helps with underwriting, covenants, and a lot of clients are seasonal, and there are certain covenants that cause challenges to get through the bank, particularly government contractors. They’re very specific on what their needs are and having a banker understand the terminology and the life cycle of their contracts certainly helps with the lending process.

Kim (03:25) So understand the nuances, specifically with government contractors, that they’re receivables can’t be collateral. A lot of bankers who don’t work with government contractors, they find that out and it scares them, right?

Dorothy (03:36) Right. I found that I do have a lot of government contractors that their biggest complaint is. “Every time I go to my banker have to explain that we won this contract and we have to order these things.” And a bank that is typical with that, they completely understand it and are able to modify and structure the agreement. To have less heartache and less stress trying to get through, because it’s very stressful getting through the contract. You have a lot of things to go in. The last thing you want to deal with this, trying to explain to the banker why you need the money and for how long and the timing and the collectibility and all of those things.

Jake (04:10) Something similar I’ve seen, I’ve done a lot of agricultural work, and it’s very similar in that if you think about the life cycle of a farmer, you know their crop, they might be flush with cash at certain points of the year and just kind of very slow at other times. Where traditionally banks kind of want their payments evenly throughout the year, your cash flow might not necessarily facilitate that. So it’s good to have somebody that really understands your industry and can kind of structure your loans around them.

Kim (04:37) Sure, and with insurance, you know, with contractors, general contractors and understanding things like bonding.

Dorothy (04:46) And what is working capital? How does that work?

Kim (04:47) That’s right.

Paul (04:48) And then lawyers. I’m assuming lawyers, from just knowing that every scenario that you might need a lawyer is different, right? So if you’ve got a general counsel that handles your day to day and you have a fraud come up or a breach come up – that’s probably a different lawyer that you need on that team.

Jake (05:05) Well, just special rules and regulations within your industry that might be typical – they can kind of help you navigate those land mines. They’ve seen it with other clients of theirs and kind of give you the road map to how to avoid other circumstances that maybe some of the other clients got themselves into.

Kim (05:21) And with CPAs, it’s the way that we are set up as a firm, is to really specialize in an industry because the world is changing so fast and every industry is different. Understanding what’s happening in that industry means you’re able to be a proactive advisor to the client, to be able to tell them how they need to prepare, as opposed to giving them advice on how to respond to something that’s already happened.

Dorothy (05:50) Right. Like for us as accountants, since you have your own industry, and I try to participate in any groups that are in my industry niche, like government contracting, so I’m around people all the time and hear what their experiences are so that I can sort of be more of a resource to them and create value outside of just preparing financial statements or tax returns or things like that because, you know, they look at you for so many questions of staffing and recruiting. And who’s hiring? Who’s laying off? Who’s this? So if you’re in that industry group that you can really be much more of a resource for them.

Jake (06:24) And I think we do. Dorothy and I worked together on government contractors quite a bit, and we’ve spent a lot of time facilitating and developing those relationships of other professionals in the industry. That kind of goes back with what we said earlier that it’s kind of cool because we can be a resource for our clients because we do have this specialty knowledge and know a lot of people in the field, that when they do come to us and say, “Hey, I really need a new attorney. I need a insurance person.” We can kind of be that resource to say, “I know two or three really good ones that know your industry, know kind of what your challenges are. I would be happy to set up…” So It’s kind of like once you find that key one or two people, that can really help facilitate finding the others.

Dorothy (07:03) Jake and I were very mindful. We actually set up a matrix of who we know, what they’re good at, so that we have a go to list of people in particular areas or insurance, lawyers, if you have a protest of this and this. I build relationships and then we were very mindful about it to make sure that we had it so that we could be a resource.

Kim (07:28) And that’s a huge value to your clients, who they don’t have the time to go research. And you know, the book of lists of all the attorneys that are out there and find out and vet them. You already know who’s a player in the in the field and who’s good at specific things that come up within that field. So you’re able to quickly refer them to somebody that you know is an expert in that in that area.

Paul (07:55) So what are some of the other benefits, kind of long term, really, as it relates to having this team of advisers as your company changes?

Jake (08:05) To me, it really helps with if you as a business owner know a big picture of where you want to go with your business. If you have this team of advisors around you, they can help you kind of navigate to get where you want to go. It’s a much, much less painful process to get there, and it’s also a lot less timely to get where they want to go versus those who maybe don’t have that infrastructure set up. There’s a lot more time and effort and heartache involved in that.

Dorothy (08:31) And that usually can’t sell their business for as much. So you’ll make more money in a transaction if you have all of these things lined up ahead of time. So you spend less money. I think there’s value, added that you have all your ducks in order and that you have doing the right things, right policies, right procedures, so that when you come to that exit, if that’s where you choose to go, you can maximize on your exit.

Paul (08:58) Or if that exit comes early and you weren’t expecting it, you’re not scrambling at the last minute. You’re always prepared, even though you may say I want to do my business for 10 years at the beginning of that year one or year two, you need to be ready for 10 years and scalable to some degree. But, hey, if it comes early, I need to be ready to go.

Jake (09:19) There’s a lot of folks, and I – obviously being an auditor, I see it a lot more in the accounting phase in my day to day, but you know that maybe they don’t want to or think they don’t need to invest in accounting infrastructure within their own company. But when you’re looking at someone that’s looking to possibly acquire their company, they’re going to need accurate and timely financial information, and if you aren’t set up to provide them that in a timely manner, it’s going to slow and potentially kill any deal out there in an offer to buy your company.

Paul (09:48) And they’re looking at you from the risk and the control perspective, they’re looking at you in an are you a good enough set up shop that I can come in, plug and play and we can keep moving on and or am I buying a bunch of risk and issues that I don’t know about? So that kind of structure is helpful.

Dorothy (10:02) Which I think that’s where the insurance risk management comes in. You really need to make sure that, because if someone’s going to come in and buy you, they need to know that you’ve been fully covered, so they’re not buying any risk, or there’s potential liability out there that they don’t even know what’s going on.

Intermission (10:20) Like what you hear so far? Make sure you never miss a show by clicking the subscribe button now. This podcast is made possible by listeners like you. Thank you for your support. Now back to the show.

Kim (10:33) So we talked about, at the beginning, Jake, you referenced that it’s a little like dating. You have to meet some people and you got to see who you connect with and where there is synergy and do you have the same tolerance of risk and all those things. What else can you do to try to assemble this team to be able to have a strong board of advisors?

Jake (10:54) There’s plenty of local groups you can probably join, such as local maybe CEO counsels, that’s one of the ones we participate in as our firm to get to know other professionals in the area.

Kim (11:03) Vistage is a good one. C12, there’s a couple other ones.

Jake (11:06) There’s CFO Exchange. There’s also a lot of inner industry networks. Dorothy and I participate here in Women in Defense.

Kim (11:19) They let you into that, Jake?

Jake (11:20) I’ve never been in defense and haven’t been a woman for years, and they still let me participate within it.

Dorothy (11:26) And he’s the treasurer.

Jake (11:27) I’m a board member, yeah. And there are three gentlemen on the board with me.

Kim (11:33) They’re looking to diversify.

Jake (11:34) They absolutely are. That’s been a great resource for us as far as we’ve met both potential and existing clients there, but we’ve also met other professionals through that organization, and if they’re attending those meetings and participating and on the board, generally, it’s because they have a significant business interests in that specific industry.

Kim (11:55) There’s some like, CFMA, for construction, there’s women in technology, there’s construction real estate for women.

Dorothy (12:04) Manufacturing. You know, Bama, I think, is one of the ones around here that they do.

Kim (12:09) ABC, Association of Builders and Contractors. Yeah, I think every industry has some sort of association or group that you could be affiliated with.

Dorothy (12:18) I found that that’s where I’ve learned most of my resources. If they’re passionate enough to go to these and spend their own time on there, they really have invested interest in that group.

Kim (12:27) And then there’s some that are a little bit more generic that you could probably go to, like the Chamber of Commerce or the Rotary, and then you’ve got ACG and things like that.

Jake (12:38) If you’re looking for somebody specialized, the challenge with that is, I think you kind of alluded to it with what you were saying is, a lot of times, and this goes along with you have to meet a lot of people before you probably find that a lot of people will probably tell you like, “Yes, we do that.” or “Yes, we know about government contracting or we know about agriculture.” It’s like, yeah, but how much time do you realistically spend in that industry? Just because you’re a banker and you have one agriculture client?

Kim (13:03) That’s a better question to ask, right? So instead of saying, do you have experience with nonprofits, you can say, “How much time do you spend in the nonprofit industry?” you know, “What’s a percentage of your time that you’re dealing with the nonprofit industry?”

Dorothy (13:17) Well, I think there’s things, particularly in the AG industry, that from a tax perspective, there’s so many. I feel like, you know, the IRS gives a lot of benefits toe farmers and, fisherman. I think knowing that we’ve picked up a lot that from smaller firms that may not realize your there’s certain credits out there for farmers, and you can  do cash bases even though you have that, like so they have certain special rules with that, I think that is important to have somebody that knows those rules.

Jake (13:46) Yeah. One of my agricultural clients recently reached out to us. They had an insurance agent, that reached out to them and said, “Hey, you know, we had a hurricane hit the state of Florida two or three years ago. Hurricane Irma and it devastated one of their crops.” And, you know, at the time I believe there were rules and regulations in place that you could only collect up to, I believe it was something like $150,000, which clearly there was more damage done to their field than that. Well, they’re insurance Agent reached out to them recently and said, there’s some sort of special credit out there that if 95% of your revenues derived from agriculture, you can exceed that $150,000 limit. I believe it was up to $900,000.

Kim (14:32) That’s a pretty big swing.

Jake (14:34) Correct. So they reached out to us and the government forms need to be signed by CPA, basically verifying that you know, indeed, 95% of your revenue is coming from agriculture. But the point to all of that, and this is a small family owned farms so we’re not talking some big national conglomerate, that additional funds went huge. I mean, it was a game changer for them. In my mind, if you had been dealing with just a general run of the mill type insurance agent, they probably wouldn’t have known to even be looking for that or known of this special program going on, wouldn’t have known to reach out to them and say, “You guys need to apply for this.” And that would have been ultimately $750,000 they lost.

Kim (15:15) That’s significant.

Dorothy (15:16) And so when I look at that, it’s like, Wow, we need to go talk to our clients to go talk to their insurance guys. It was nice that they reached out to us to let us know so that we can let all of our other AG clients know that this is an opportunity out there that they should probably reach out and see if they qualify for.

Kim (15:33) And you bring up a really good point that there’s a benefit to the client to put this board of advisors together so that they are getting all of the industry expertise and knowledge. There’s an advantage to us as an advisor to build that team around us as well and meet regularly and talk, because the insurance agent is going to be getting information that’s different than what we as CPAs are going to be getting. And vice versa, right? So if that group is continually talking than you’re getting updates from the banker, from the attorney, from the insurance agent, all sharing that knowledge and there’s a benefit to the advisor as well.

Jake (16:15) Yeah, we take a lot of pride, Dorothy and I, when we started really trying to build our expertise in being that resource for our clients. It kind of gets back to some of our earlier conversation where we had to meet with a lot of people here locally who kind of said, quote unquote, yeah, we do this type of work, and we would kind of vet them, using a lot of these questions and kind of what Dorothy alluded to earlier, “Do your interests kind of align with ours?” and do you really have an expertise in this field versus “Yeah, we’ve got a client who’s in this industry.” I think that creates a lot of value for our clients, in that I feel like Dorothy spends probably half her time most days talking with her clients and advising them and a lot of times and feels that has nothing to do with accounting.

Paul (16:59) As a business owner, this all sounds really good, and it’s helpful to grow the business, but it’s going to come at a cost to have these advisors. What is your conversation with clients related to that cost?

Jake (17:10) I mean, in theory, in any kind of good business relationship in my opinion, the advisor should more than pay for their own services. Now does that mean a direct cash return of you know what you’re paying or investing or more, no sometimes it can be in savings, right? If you’re talking about a lawyer, in potential litigation or other matters that they could save you money on, hopefully would far outweigh what you’re investing to retain them. Same thing with accountants. I mean, you would hope that they would be able to offer you some sort of maybe tax savings in different credits. The example we used earlier with the insurance agent helping you find, I don’t want to say loopholes, but helping you kind of realize what is out there that maybe you’re entitled to.

Dorothy (17:54) Well, I think in particular with bankers, that if you have a good banker and accountant, it will help facilitate cash flows to make you grow your business as efficiently as possible.

Kim (18:05) And then you mentioned earlier around, you know, advising you, when is the right time to sell your business and the potential that you have for increasing the amount that you’re able to get for your business, because of all the advice and that you’ve been able to take into your company throughout that whole time.

Jake (18:24) And we see a lot of times with business owners that, you know, come across multiple, I mean, none of us ever know what the future holds. So, you know, maybe in their mind, in a perfect world, their children will take over the business one day. But then we get to that point they’re getting ready to retire, and maybe the kids just aren’t interested. “Well, I don’t want to keep doing this for another 10 years, so I want to get out. What can we do?” Well, if you’ve got a team of advisors kind of working with you, hopefully before you reach that point of I want out tomorrow, then you can help kind of facilitate the steps that will help make that exit a lot easier and a lot more lucrative for you.

Paul (19:00) What is the one thing you want listeners to take away from this conversation about building a team of advisors?

Jake (19:06) Any good team advisors are going to help add value to your business is the bottom line. I think it’s up to you as a business owner to sort of do your due diligence and make sure you find the right advisors to surround yourself with, but if you do that, they should add a lot of value and a lot of return on investment to your business.

Dorothy (19:26) My advice is, as business owners to actually lean on these advisors. I often see that they want the advice, but they don’t know how to ask for it. So just take regular meetings to talk about nothing. I think that just helps with rapport, and you’d be surprised how many things come out and how you can help. I mean, just because I’m an accountant doesn’t mean that it can’t be a resource for various other things.

Paul (19:49) It’s really good, really good conversation. Really good stuff for business owners to think about. Dorothy, Jake, thank you all very much for being here and being with us.

Jake (19:57) Absolutely. Thank you for having us.

Dorothy (19:58) Thank you for having us.

Close (19:59) And that’s a wrap. If you’re enjoying the podcast, please leave a review on your streaming platform. To check out more episodes, subscribe to our podcast series or make a suggestion for other topics to cover. Visit us at WarrenAverett.com/TheWrap

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