A small business advisory board can be an important resource for a business owner or CEO.
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Unlike a board of directors, an advisory board has no fiduciary responsibilities to the company. Instead, its sole purpose is to advise the senior leader on a variety of business-related issues.
From product development to client acquisition, an effective advisory board provides the impetus and third-party accountability you need to achieve key business targets.
Creating An Advisory Board
Unless you decide to outsource it to an advisory board consultant, the task of forming the advisory board will fall on your shoulders. Ideally your advisory board should be comprised of friends who are willing to tell you the truth, even if it isn't what you want to hear.
Many business owners have found it helpful to recruit advisory board members who have a history of success in a diverse range of fields and industries. You should also consider populating your board with people who have strategic connections in fields that can benefit your business (e.g. banking or marketing).
Although there is no set rule about the size of your advisory board, the best advisory boards are capable of offering multiple perspectives. At the same time, you don't want your advisory board to be so large that it is unable to produce meaningful results. Small business advisory boards are typically comprised of three to five people, while the advisory boards of slightly larger companies often fall into the five to seven range.
Managing Your Advisory Board
Most small business advisory boards meet on a quarterly basis, giving the owner enough time to implement the board's suggestions between meetings, As the company's senior leader, you will need to drive the agenda for advisory board meetings. Make sure the agenda shines a spotlight on the most important issues your company is facing and encourages lively discussion among advisory board members.
It's also your responsibility to give the advisory board regular progress reports, even if you have failed to successfully follow through on board recommendations. Unlike your staff or board of directors, the advisory board is not engaged in the management or decision-making functions of your business. However, they are motivated by a strong desire to help your company succeed. By being completely transparent, you give them the tools and information they need to give you their best.
Advisory Board Compensation
Small business advisory board members deserve to be compensated for their time and expertise. At a minimum, advisory board members should be reimbursed for expenses like mileage, food and lodging. Some small businesses also choose to offer cash compensation to advisory board members (usually in the $300-$500 per meeting range), while others compensate their members with networking connections or other non-cash methods.