One common challenge faced by entrepreneurs as they grow is the need for strategic advice. In larger organizations, a Board of Directors serves this function. However, many newer enterprises have not reached this point. As a result, they miss out on the benefits of additional experience and knowledge. A common solution to this problem is for smaller companies to establish an Advisory Board.
What Does An Advisory Board Do?
An Advisory Board provides strategic advice to a business owner or manager. It assists in brainstorming new ideas or assessing current operations. This is a significant benefit. An Advisory Board is generally a much simpler and less expensive method of acquiring a broader range of expertise to supplement the company’s existing talent.
An Advisory Board may or may not require paying compensation to the members.
Typically, a business owner will solicit people that they trust and with whom they have an existing relationship to serve as advisors. Often, these advisors commit to the role out of a sense of loyalty, to bolster their resume or for any number of non-financial reasons.
This is a great advantage to a growing business that doesn’t have the financial resources to pay for the talent brought by the board.
You can structure the board in essentially any fashion that you choose. However, there are a number of questions that you should consider to ensure the best results.
First and foremost, the expectations of the Advisory Board must be clarified. Do the advisors need to meet twice per month, discuss issues and vote on the appropriate solution? Or does the board merely have to be available by phone when needed to offer feedback and advice?
Advisors generally do not have any responsibilities related to the daily operations of the business but this must be clear.
Focus and Purpose
On what will the board focus? Will it focus on any and all issues that merit discussion or will it be limited to marketing and product strategies? The aspects of the business that will be focused on are important for making sure that the right advisors are recruited.
Who will serve on the Advisory Board? What background and expertise do they bring to the table? Will you offer them compensation? If so, how much? For how long will they serve? How many members will there be?
Your advisors need to bring value to your organization. Maybe they have specific experience in your business. Even if they don’t, perhaps they are an honest broker that you know will give you unbiased advice.
No matter the reason, make sure that you know why you want them on your team.
What will the meeting requirements be? Where, how often and for how long will they meet? Will the meetings have a formal, structured agenda or will they be informal sessions?
These are all questions that must be considered prior to setting up your board. When you make the decision to proceed, the decisions are ultimately up to you as the organizer.
In order to make sure that your board is as effective as possible, there are a number of best practices that dramatically influence the results.
Don’t Go Overboard
You don’t want to bring in too many people. You want to start off small, then grow your board as necessary. While opinions vary, most consider 6-8 people as the point where your Advisory Board will start becoming difficult to manage and less effective.
You can always add more people if necessary.
Monthly meetings are generally sufficient for most organizations. However, feel free to have them more or less frequently as required for your needs. The important thing is that the Advisory Board meets on a relatively consistent schedule.
You don’t want to fall into the trap of having meetings for the sake of having meetings, but you need to stay engaged with your advisors. You also need them to stay engaged with you.
If you have no new business to discuss, then so be it. Plan for a shorter meeting and use the time to update your team on current activity.
Have An Agenda
The fastest way to get off track and waste everyone’s time is to go into a meeting without a plan.
Prepare and circulate your agenda in advance so that everyone has the opportunity to know what will be discussed and prepare accordingly. Don’t forget to also provide any supplemental information that may be required.
Keep A Record
Have someone take notes of the meeting and circulate it to the members after the fact. It doesn’t have to be any more complicated than a quick email.
Hit the highlights of the discussion without beating the details to death. This makes sure that the important action items don’t fall through the cracks.
Setting Up Your Advisory Board
Ultimately, how you decide to set up your Advisory Board is up to you. That flexibility is one of the advantages, as formality is not required unless you so choose.
The most important thing is to recruit advisors that have something to offer.
While you certainly benefit from advisors that understand your particular industry, diversity of experience is also critical to providing you with different perspectives so you are best prepared to make sound decisions.