Consider

An advisory board is a committee of people selected by a business (or a board in the case of larger companies) to provide defined advice and information in an informal and flexible manner.

Be realistic. If you are not committed to the process it will end in disappointment for all involved.

Advisory board members are not directors, have no powers and owe no duties as directors of the company. The key differentiator is that an advisory board advises only. It has no power of decision making and cannot instruct the company to act.

Effective advisory boards provide strategic and compliance guidance and know-how that is contextualised to the needs of a business in a range of business settings.

Support and guidance from an advisory board may:

  • accelerate growth
  • improve financial performance
  • manage risk
  • enhance operational performance.

Why have an advisory board?

There are a number of reasons why you might have an advisory board.

  1. Others can help your success by providing valuable business insight and oversight.
  2. A specific area of interest, eg entry into new market requires specialist advice.
  3. You are looking for early stage market validation.
  4. The flexibility of engagement appeals to you.
  5. You need help with succession planning and/or to become investment ready.
  6. You want your business to become more professional.

Small-to-medium enterprises (SMEs) can particularly benefit from the guidance of an advisory board which can be used as a business development tool and adjunct to strategic planning.

Larger companies that already have a board of directors may also set up advisory boards for a number of reasons – whether it’s to work on a particular project or deal, bring a fresh perspective to an issue, or provide particular expertise in a specific field relevant to the company.


Estefania Gallinanes-Garcia, Managing Director of Productspec.net talks about the value of an advisory board.


Are you advisory board ready?

While establishing the area of concentration for your advisory board, you need to determine if you are ready to engage in and receive feedback. This can be a daunting exercise, but it has the opportunity for major gains.

Be realistic. If you are not committed to the process it will end in disappointment for all involved.

  • An advisory board is different because it:
  • doesn’t represent shareholders
  • isn’t bound by fiduciary responsibility
  • provides advice and support
  • is less formal than a statutory board of directors
  • is more flexible
  • isn’t a substitute for a formal board of directors
  • has no power to veto, instruct or direct
  • doesn’t focus on governance
  • deals primarily with strategic aspects of the business
  • is a source of valuable business insight and oversight.

Tom Reidy of Catalyst90 explains why you should have an advisory board.

Questions

Ask yourself the following questions to help you determine if you and your business are advisory board ready.

  • Do you have a reasonable idea of what you want to achieve?
  • Can you easily share information that portrays your situation?
  • Are you open to new ideas and insightful questions?
  • Do you enjoy others contributing to your success?