The answer is every business, from a start-up to a multi-million dollar organization. Let’s first define an “advisory board”. Unlike corporate boards, advisory boards have no fiduciary responsibility. Its main purpose is to bring networking opportunities and advice as well as an outside perspective.
A quote I heard summarizes the advisory board goal: “to create tomorrow’s company out of today’s “.
A better name for an advisory board may be a Consulting Advisory Board. A well-formed Consulting Advisory Board is able to assist in all aspects of business planning, strategies, as well as to provide advice on almost all business matters.
The selection process in the creation of an Advisory Board is most important as it creates the building block for company growth. The members have the expertise that will help the company achieve its vision statement. They have to have good communication skills, diverse experience, an open mind and are problem solvers. The selection process is best handled by a professional advisory formation company or your business consultant. A danger with the selection being handled internally by an owner is the “in-breeding”, selecting members that the owner knows and feels comfortable with instead of bringing in expertise from the business community at large. Your advisory board is also a help with new business generation. The board contacts may provide new customers and also their names, if they are well known in the community, gives the company credability.
The responsibility of the advisory board members is defined prior to an invitation. The rules include such topics as term of office and meeting times. A confidentiality agreement should be signed by all members as they will be given complete company information.
Advisory boards are compensated in a variety of ways: stock options, cash payments, meals at meetings and travel expenses if applicable. Any of these compensation methods or a combination of them can be used.
Advisory meetings are planned in advance with each member receiving a copy of the agenda. The president of the advisory council or the advisory/consultant company member provides the agenda and conducts the meeting.
This is a brief overview of how an advisory board functions. Every business, no matter how small should look into establishing this business growth tool. The businesses for which we have provided the advisory/consultant board service have enjoyed the added support and are on their way to achieving their goals.
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Nick J. Petra CFP www.straategicuck.com