An advisory board is a group of independent industry executives and professionals that is retained by a company for the purpose of offering advice and support on a wide range of issues that are relevant to the organization.

The issues are likely to include areas such as business development, industry trends, information technology, human capital, corporate partnerships, political agendas, international matters and more.

The role of a board of advisors is different from a board of directors.  A board of advisors operates at the discretion of the company and has no fiduciary responsibilities.  

Your advisory board is an extension of the management team.  In today's increasingly complex and competitive marketplace, the introduction of independent advisors and advisory boards is helping companies create and execute crisp strategies with clear and effective value propositions in order to deliver a sustainable competitive advantage. 

CHIEF EXECUTIVE

Robert M. Donnelly  "It’s Lonely at the Top"

Don’t outsmart yourself by having no one to talk to … but yourself.

The simple rule of thumb is that any entrepreneurial CEO of a growing firm needs to form an advisory board or “advice squad” during the evolution of their business made up of executives with experience in areas of business management where they are lacking. The advisory board members skills should complement their own.

Experienced business executives, with finance, banking, strategic planning, technology, legal, human resource, or operating experience usually make for excellent advice squad members. These are experts that you have to deal with in the evolution of your business anyway so why not have them function in an ongoing advisory capacity instead of just for a fee when needed.  If these experts that you deal with professionally cannot become involved because of an ethical issue or conflict of interest, ask them to recommend a trusted colleague.

Obviously, there is no sense forming an advisory board without a plan for how you are going to use their individual and collective expertise.  Likewise, you need to have some form of an incentive, or stipend per meeting, and annual fee for their participation with you and for their advice in growing the business. Then you need to meet regularly with them individually on specific day-to-day issues and collectively on a scheduled basis to review actual results against plan, as well as progress in terms of the strategic milestones in the business plan.

Having an unbiased expert to meet with periodically who is not wrapped up in the day-to-day aspects of your business is invaluable. Their objective evaluation of a situation can save you from making an embarrassing and expensive mistake. Even just offering up other options that you didn’t think of can be very helpful.

At meetings just having an advisory board member ask “why do you want to do that” often sets in motion some additional analysis that can be extremely rewarding. These meetings have an uncanny way of injecting sound business sense into decisions that have evolved often without the right level of common sense. 

Seriously, think about it and if you don’t already have an advice squad get started setting up an advisory board of experienced professionals with skills you are missing, or just for their objectivity.