The Power of Advisory Boards
In recent years, the concept of having an "advisory board" has grown in popularity. Should your business have one and, if so, how do you get one set up?
An advisory board is similar to a board of directors in some respects, but there are some important differences. An advisory board is a small group of hand-picked professsionals offering advice to a privately held business in areas the owners may feel they lack skills or experience. It differs from a board of directors because members of a board of directors make decisions on behalf of the company while an advisory board simply offers suggestions and ideas which may or may not be acted upon. In addition, those serving on a board of directors have fiduciary duties to all of the company's owners, and in some cases to creditors and other third parties.
Usefulness of Advisory Boards. Advisory boards may be particularly useful for more recently formed companies or companies in transitioning to a larger presence in the marketplace, but more established companies can also benefit. For small businesses with only one or two owners, advisory boards can be a useful resource giving more structure to decisionmaking. Among the ways an advisory board can be useful are:
- Strategic Planning. For companies in transition, having advisory board members who may have "been there, done that" can be helpful in mapping out where a company may want to go next and in providing a reality check as to what may be needed to get there.
- Practical Advice and Evaluation. Advisory board members can fill gaps in business knowledge and be a good sounding board in making ordinary business decisions about personnel policies, prospective business partners and opportunities, marketing and pricing strategy and tactics, etc.
- Leverage and Influence. The knowledge, contacts and experience of advisory board members can sometimes lend credibility and clout to the company in its marketplace.
Putting an Adviosry Board Together. So how do you get an advisory board put together? Various nonprofit groups offer advisory board programs. For example, the Womens Presidents' Organization offers peer advisory boards for its chapter members In addition, in Columbus, the Advisory Board Exchange - an initative of Business First - offers an ongoing program open to applicants averaging at least $3 million in revenue annually over the past three years and which are headquartered in Central Ohio.
Another possible organized advisory board alternative is the Athena PowerLink program sponsored by the Columbus National Association of Women Business Owners (NAWBO) chapter. One woman-owned business is selected as a recipient each year and provided a custom-tailored group of advisors for a year. Applicants must have been in business for at least two years, have at least two employees, and generate annual revenues of at least $250,000 for manfacturing concerns or $100,000 for service companies.
Business owners can also put together an advisory board on their own, perhaps starting by asking an attorney, CPA, or financial advisor to serve on the advisory board. Retired executives may also be good prospects. In addition to having a genuine desire to help a business grow and mature, these professionals enjoy the opportunity to meet and become acquainted with other like-minded professionals.
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