Every leader—and therefore every business—benefits from outside advice, whether you’re a thirty-year veteran CEO at a FortuAnd the great news is that with an advisory board, you don’t have to have all the answers. Establishing an advisory board allows you to surround yourself with a talented, knowledgeable team prepared to weigh in on the challenges you face at different stages of your business.
Differences between Advisory Boards and Boards of Directors
Before you establish your own advisory board, it’s important to understand the differences between advisory boards and corporate boards of directors. While both serve your business in invaluable ways, they have distinct operational structures and different responsibilities.
Any organization or individual can have an advisory board, while corporate boards of directors tend to serve public companies, nonprofit organizations, and organizations with significant outside capital investments. Corporate boards are required to follow additional regulations. Advisory boards generally operate informally and can evolve with your company, while boards of directors tend to have formal structure and processes along with greater public visibility.
Advisory boards focus on people and details, while corporate boards serve companies at a higher level and usually limit their interactions to just the CEO and select other executives. Meanwhile, your advisory board usually offers mentorship and coaching. In fact, I like to think of an advisory board as your personal band of coaches. They offer industry knowledge and business expertise in areas such as technology, recruitment, or fundraising. They’re also your accountability partners, and they want to help you avoid the mistakes they’ve made. Corporate boards also provide accountability but do so more through governance power and fiduciary responsibilities instead of personal coaching.
Goals for Your Advisory Board
Before establishing your advisory board, think about why you need an advisory board in the first place. I recommend aligning the goals you set for your advisory board with your business goals. After all, your advisory board is there to help you reach your business goals.
Whether you’re setting goals for your advisory board or examining your greater business goals, be sure to set realistic goals. Lay out clear expectations so everyone understands the capacity in which they will serve your organization.
When You Need an Advisory Board
Advisory boards are appropriate for companies of all sizes, leaders of all levels, and businesses at all stages. There are certain business situations, however, when input from an advisory board proves invaluable in steering your business toward success:
- Early startup phase and first year of business
- Significant growth jump and growth plateaus or declines
- Challenges with particular departments or employee turnover
- Preparation for acquisitions, exits, or mergers.
Your advisory board provides you with outside perspectives, diverse viewpoints, and personal experience on top of expertise, but above all, your advisory board is there to hold you accountable. If you feel stuck or lost, turn to your advisory board. If you’re hesitant to reach out to your advisory board, take it from me and do it. I’ve found that you need your advisory board the most when you’re uncomfortable.
How to Assemble an Advisory Board
Once you’ve established why you need an advisory board, it’s time to assemble your advisory board. This group should consist of no more than five people. It may include people you already know and new contacts.
Begin by building a board matrix. Analyze the skills and experience you have and the skills and experience you lack. What do you need help with? Do you need a particular skill set? Diverse perspectives on a specific issue? Expertise and support to reach a fundraising goal? Maybe you’d benefit from encouragement from people who challenge you and push you out of your comfort zone.
From there, start networking. If you find the right initial board member, many times they can help you fill the other roles. Keep in mind that you may choose to add certain people to your advisory board because they bank credibility. The right names can go a long way in growing your business.
Establish Your Own Advisory Board
No matter what stage your business is in, consider establishing an advisory board. We all get blinders on in our own organizations from time to time, and we all can benefit from accountability. Support from an advisory board—your own team of coaches—is helpful during good times and imperative during challenging times.
Questions to Consider
- How would an advisory board help your organization?
- What skills and expertise do you need from an advisory board?
- How might an advisory board hold you and your organization accountable?
If you’d like to discuss how an advisory board can help your business, contact me. I’d love to help you set up your board for success.
