Creating an advisory board is the best decision an entrepreneur can make, but many entrepreneurs fail to create an advisory board. I speak to entrepreneurs daily about creating an advisory board and hear many excuses about why they don’t have a board. Most common excuses:
- Ego: What do they know that I do not?
- They don’t have the time.
- Do not understand role of advisory board.
- Do not want to pay for advice.
- Do not know how to setup.
- Do not know what type of advisors to solicit.
- Do not see value proposition.
- Using Vistage or another organization.
- Had a bad experience.
- I can do it all myself.
- Afraid of being fired: Advisory boards cannot fire a CEO.
- Believe they must take advice.
Advisory boards are setup to provide business advice. They are informal. Advice given is non-binding. With an advisory board, you do not need to chart unfamiliar waters alone. Advisory boards give you objective advice. Advisory board uses:
- Marketing advice.
- Gauging future trends.
- Seeking introductions.
- Finding investors.
- Sounding boards.
- Helping enter new businesses.
- Provide a set of “fresh eyes” for the organization.
9 tips for creating an advisory board:
- Determine the objectives of the advisory board: Boards can be targeted or general. Determine your needs and set your objectives.
- Create a board that complements existing management: Look for people who bring new expertise to your company. Have members with diverse skills, expertise and experience.
- Set expectations: Tell prospective members what you expect of them.
- Compensate your Advisory Board: Compensation can be in cash or stock.
- Keep board size manageable: The smaller your board, the more efficiently it will operate. Start with 3 or 4 board members and add, as different skill sets are needed.
- Get the most out of your board meetings: Prepare to get the most out of your meetings. You need to set goals, prepare an agenda, and take minutes.
- Ask for and expect honesty: You may not like what you hear, but accept that there are other ways to look at a situation.
- Respect your board’s contribution: You do not have to do everything that is suggested, but you should evaluate the advice before making decisions.
- Fire bad board members: If you have made a bad decision replace the board member.
An advisory board will make a company successful and a successful company more successful. Having an advisory board is an opportunity you cannot afford to miss. In 13 Ways a Board of Advisors Can Help Your Company, I explain ways a company can successfully use a board of advisors. How has a board of advisors helped your company? What unique advantage did it give you?
P.S. – Do you need an Outside Director, Advisory Board Member, Trusted Advisor, or Interim CEO? Someone who can help you see your business and your goals through “Fresh Eyes.” Contact me and I will work with you to look at where you want to go and help you find the best way to get there. Sometimes all it takes is someone with a fresh viewpoint, unencumbered by company politics or culture to help find the right solution.
Image Credit: dreamstime
Larry: Your article shows a depth of understanding much needed in an entrepreneurial environment.
The typical entrepreneur is too busy charging ahead or defending his/her prior decisions to take the time or have an interest in building an effective advisory board. The AB, after all, might question the wisdom of his/her actions.
The astute company founder will find the AB’s objectivity refreshing, enlightening and economically more feasible than hiring outside consultants. The advisory board might also become a ‘feedlot’ for future board directors, thereby building bench depth.
Thanks for addressing this valuable topic.
Harvey…objectivity refreshing, enlightening…These are great words for describing the benefits of advisory boards. Thanks for your comments.
I have recently successfully achieved ‘Certified Corporate Directorship’ from IOD.
Your article is just amazing and has given me more insight on the subject. I shall definitely follow and implement the valuable tips in my recent and future projects. You have a great weekend ahead.