Could your business benefit from an informal advisory board?

If you are wondering what the difference is between a board of directors and an advisory board, you are not alone. This is a common question among business owners and entrepreneurs.

While a board of directors is elected to the role and governed by a particular set of legal responsibilities, an advisory board is an informal panel of experts who provide strategic advice to a company’s management executives or to its board of directors. However, they are not financially liable to that company or shareholders.

Who should be on an advisory board, and what will they do for me?

This will vary depending on your business, but an advisory board typically comprises several professionals with expertise in operations, technology, and sales and marketing. They provide objective feedback as well as support from the perspective of a fellow business owner. 

At their best, the advisory board comprises subject matter experts who can fill knowledge gaps. As they do not serve in a governing capacity, their role is to provide guidance to the business owner to help them meet their goals. They can call on their own experiences to help you with issues such as long-term planning and brainstorming. This is usually accomplished through periodic meetings with the owner and business leaders. 

The right members

The goal is to find members that will be objective and will push you out of your comfort zone with a fresh perspective, as well as members who will give you a diverse array of opinions. What you don’t want is a group who will go along with everything you say. 

Advisors may be selected for their ability to expertly address concerns unique to your industry. The advisory board should be viewed as an independent, safe forum where strategy is discussed, and ideas are tested.

Ready to form an advisory board? Follow these 5 steps:

1. Formally establish your business’ mission, vision and values. You will need to share this information with prospective advisory board members, so this must be done in advance.

1. Approach a small group of advisors, perhaps three to start, who have achieved what you aspire to achieve. This will allow you to learn from their failures and successes. You do not want to choose members whose business is in a similar stage as yours.

1. Aim for a one-year commitment from advisors to incorporate flexibility if a member is not the correct fit for the board. 

1. Decide in advance what your expectations are from the board, then share those goals with them. Operate in a spirit of continuing communication throughout the period, for example by checking in with them monthly.

1. Recognize board of advisor members’ efforts. Although it is presumed to be a voluntary role, you must find ways to thoughtfully show your gratitude, such as with a meal or by covering for their travel costs, for example.

Recap:

Forming and sustaining an advisory board will entail an investment in terms of your time and energy.  The payoff, however, may be more than worth your efforts. You stand to gain advice and insights from seasoned professionals who also offer the objectivity you need to help advance your business goals.