An advisory board is a select group of “independent” people who provide advice and support to the owners of a business. They provide nonbinding strategic advice and hence they can be informal in nature. This gives greater flexibility in how they are structured and managed, when compared to a board of directors.
Why establish an “AB”?
An advisory board enables you, as owner, to have access to independent views, extra skill sets and a “safe” place to discuss issues of major significance. The role of the advisory board often evolves over time so it is useful to document some initial objectives to provide some direction for its members.
When would a small or medium business need an AB?
Every Business will be in a different stage of their ‘SME growth journey’. So at what point might an AB be a powerful resource for you?
- You are experiencing rapid growth
- You are needing to raise funds
- You are facing major decisions and/or changes in direction, including entering new markets, products or geography
- You are dealing with succession issues
- You are managing the development stages in the business and assisting with staff development
- You are facing challenges with other shareholders
- You wish to build strategic partnerships
- You wish to establish more formal structures involving professional managers
- You wish to raise the level of strategic conversation in every aspect of the business
How do you select an AB member?
Selecting advisory board members is a very important task – and a number of questions emerge from the process. Perhaps the three key questions are:
- Why am I doing this?
- What input do I need?
- How can this person supplement/complement my existing skills?
Some other elements of a suitable AB member include:
- Does the person know or understand my business and the environment I operate in?
- Does this person have the skill set(s) I need? Strategy, accounting, human resources, marketing, legal, technology or finance?
- Would this person fit in and understand the culture within my organisation?
- Is there a mutual respect and trust – Advisory board members need to be able to “say it as it is” and both you and them, need to feel comfortable in the event that opinions may differ. It’s your business after all.
Ultimately, an Advisory Board, can be an incredibly powerful resource. So, why not consider an Advisory Board for your business? Used wisely, they are a cost effective way to increase skills, improve decisions, fix problems and find solutions. And that’s what business is all about!