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Building An “A” Team

BD_1

Today, we’re looking to our friends to the north — taking a closer look at the results of a study conducted by the Business Development Bank of Canada (BDC), showing that advisory boards have a significant impact on a business’s growth and financial performance.  Makes sense, right?  Here, at Polus Capital, we certainly subscribe to that school of thought — we have an extensive member advisory team.   In the startup world, having good-quality, independent advice from experienced individuals is an invaluable asset.  It may require a significant amount of networking and communication, but it is worth the investment.

A few data points to share from the findings:

  • Sales grew 67% on average in the three years after companies created an advisory board—almost triple the 23% rate of the previous three years.
  • Productivity rose 6% in the three years after—double the 3% rate in the previous three years.
  • The most commonly cited impacts from advisory boards were on company vision, innovation, risk management and profitability.

The study also found advisory boards can add value, regardless the company’s size — as the company grows, the challenges they face evolve.

Prevalence of advisory boards by company size

And finally, here’s where the rubber meets the road.   Those companies who had a strong advisory board were more profitable.

Average annual growth by sales or total revenue over the last three years*