Advisory boards are tailor-made to the unique and specific situations of each business or company and they will differ from a public company and a private company. The board is set up with different members who bring their experience, skill and business knowledge to offer their expertise and support to the business owner, senior management, the CEO and other board members. They are best used for start-ups, private companies and fast-growth companies.
A business should have an advisory board so that they can provide a range of resources, not available via a consultant to a company at a cost that is far more affordable. It is best used to fill in the talent, resources and skill that the founder, business owner/s, CEO or senior management team would not have.
Neville Christie, (the chairman of six companies and currently serving on two advisory boards) recommends, that if the business owner goes back to his/her purpose in business and then analyse what they have now, which is what he calls their “present story”, to where they want to be “future story” and look at the gap in between, the advisory board should help fill in the gap for them.
For practical reasons, an Advisory Board usually has between 3 to 5 members and is made up of the CEO, the CEO’s coach, senior executives and other members who are able to provide advice, expertise and experience that fill the gap where the business is requiring support in. Over time as the business changes and grows the members may also change to reflect this change.
To determine who is a best fit for your Advisory Board, look at it the same way you would in the recruitment of a key employee; it all comes back to the personality and the needs of the business owner/s/founder/CEO, but over time very much to the culture of the business or organisation. If the advisors’ values and interests are different and contradictory to the values, goals, strategies and culture of the business then obviously they are a bad fit.
For any Board and business owner/s relationship to be successful it needs to be open and honest, ‘warts and all’. Over time once all parties ‘settle in’ and know their various roles, the Advisory Board will deliver benefits such as extra talent, experience, networks, contacts and of course most importantly extra resources that typically the business could not afford or attract. Essentially, the advisory board is usually at a much higher level than the company’s experience or maturity would warrant.
Having an Advisory Board can also help by opening doors, bringing in new contracts, opening access to more funds, adding to the bottom line by introducing new products or services and the overall power of a multiple mind.
There can also be disadvantages to the Advisory Board, such as if the wrong people are chosen; it takes up time to manage and typically the business owner/s/CEO/Founder is busy and very time-scarce; and there will be a cost. But again, the cost of an advisory board is far less than what people can imagine.
Remuneration is just as important, as with any business relationship and Neville Christie suggests, “…that equity should not be exchanged early on; like anything sweet equity should be gained on the basis of adding tangible value to the company. Just putting in time, that in itself should not be rewarded with equity. On a number of boards I share, we have a yearly retainer agreed on and that is paid and reviewed quarterly. And like I said before, sometimes a simple lunch is enough”.
If you like the idea of setting up an Advisory Board, the quickest and best way is to find someone who knows how to do it and the best time is from day one. The entrepreneur should start with an advisor who has experience setting up an advisory board.
Consider the advantages of having an experienced Advisory Board. The business owner/s/CEO/Founder have a “team” to help grow their business, the company will therefore, grow faster than it would have otherwise and you’re not going to pay dearly for a number of mistakes which you definitely will make by yourself.
With thanks: ‘My Business’, interview with Neville Christie with Simon Sharwood, September 28, 2011.
