Why Every Growing Business Should Form a Board of Advisors

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Interior-design-828545Advisory boards provide isolated small business owners with an affordable outside perspective.  They replace trial and error with experience and knowledge.  They function as sounding boards and boards of inquiry.  Advisory boards open needed doors and close unnecessary ones while giving management an inside look at the outside world.

An advisory board is not a board of directors.  Directors are responsible for running a company and can be sued.  Advisory boards serve at the pleasure of management and have no authority or liability.

How does an advisory board help a business?  An effective advisory board helps in three ways:

1)    Direct assistance by providing:

  • Answers to specific questions about the full range of operating issues based on its members’ own operating experience.  Help is often given by phone on an as-needed basis.
  • Introductions to banks and access to investors.
  • Interview-checking for high-level hires and personnel referrals.

2)     Operating oversight with:

  • Ongoing review of financial statements and other measures of company performance.
  • Strategic audits of major areas such as marketing, financial management, outsourcing, salaries and benefits, and so on.

3)     A high-level overview of:

  • Ongoing evaluation of company opportunities.
  • Ongoing critique of company effectiveness in addressing them.