What is an Advisory Board?
An advisory board is a group of experts who offer advice to companies about their operations and business practices. Advisory Boards typically contain professionals who are experts in their industries and can help a company with specific areas of business and create strategies for general improvement.
A company can decide who they want on their advisory board based on the purpose for establishing the board and the types of expertise they want input on.
Many companies choose their board members based on the expertise they have in specific areas.
Advisory Board vs. Board of Directors
A Board of Directors is an elected group of individuals to represent shareholders and are governed by legal responsibilities. The executive team or the board of directors selects an Advisory Board – an informal group of experts.
An Advisory board provides valuable assistance to a company but is not financially liable to the company or its shareholders.
Larger companies often have both a Board of Directors and an Advisory board that provides business advisory services. Advisory services can help a company grow beyond its competitors and increase shareholder value. Both types of boards are key but serve different purposes.
Why can Advisory Boards be important to your strategy?
Advisory Boards are important because they can help a company develop and improve its current operations as well as make recommendations for new procedures that might increase a company’s efficiency overall. An Advisory Board can be especially valuable to a small or new company, as having a group of experts to contribute to business decisions can contribute to a company’s productivity by helping it grow.
Advisory Boards are also important because they can be easily adapted based on a company’s needs. This means it’s typically always possible to add new members with specialized expertise when necessary, which can ensure that a company stays informed and up to date with business processes and trends in different areas of their industry.
Creating an Advisory Board………
Here are five steps to help you create a successful advisory board:
- Identify what you want to achieve
Consider your company’s mission, define what you want to achieve, and make it clear by drafting a board strategy. This can help you determine your specific reasoning for creating an advisory board by identifying your company’s goals. After deciding what your company’s strategy is, you can use the strategy to organize your intentions and present them to potential advisory board members. Knowing why you want to create an advisory board for a company can be beneficial when looking for members, as you can understand what types of experts you might need to gain the insight you’re looking for.
Refer to your professional network when choosing members for an advisory board. By using your network, you can reach out to professionals you already know in specific areas of business and ask about recommendations for experts to add to your advisory board. You might also ask experts who are currently in your network to join your advisory board, which can allow you to place your trust in people you’re familiar with. It might not be a good idea to choose clients or suppliers, or close third-party partners as often confidential or sensitive information will be shared as part of the strategy.
- Hire advisors with different expertise
Choose advisors with varying areas and levels of expertise. Because an advisory board exists to help a company with its business decisions and operations, it can be helpful to have a wide variety of experts on your board to ensure all aspects of business are covered. Advisors are preferably already board experienced and can specialize in many areas of business, like finance, marketing, business strategy, and M&A, so having a combination of experts with different expertise can give you greater insight into specific elements of your company that might need improvement. If you establish an Advisory Board to respond to specific challenges, you can look for experts in the areas that you want to give special attention to within your company.
- Keep it small
Control the size of your Advisory Board and try to make it as intimate as possible. This can be important because a board with fewer members who are strong experts in their fields can work together effectively by offering advice in their areas and contributing different information to discussions. Smaller boards can have a greater chance of staying on task and streamlining their advisory processes.
- Stay organized
Remain organized when creating and implementing your Advisory Board. As an advisory board can have multiple members and several functions, having a standard agenda or system for staying organized can help make sure that the advisory board accomplishes the goals you create it for. You can stay organized by keeping written records of information from Advisory Board members, maintaining a regular schedule for advisory board meetings, and facilitating frequent communication between board members and the managers they work with.
In the end, the specifics of setting up an advisory board are up to you. We hope these ideas help, feel free to leave comments or if there are topics you would like me to discuss in the future, please let me know!