It doesn’t take long for most new entrepreneurs to realise that the world of business can be complex, time-consuming, and at times, viciously competitive. Facing these substantial obstacles alone can be a challenge for a solo operator. For almost any business, and especially for smaller companies and start-ups, an advisory board can mean the difference between success and failure. In the following overview, you’ll find out how to put together an advisory board and why a group of more experienced and knowledgeable mentors is critical to business success.
What is an Advisory Board?
An advisory board is a group of mentors, confidantes, and advisors that can offer business owners and entrepreneurs business insight, professional advice, and lessons learned from their own experiences. A business owner can benefit from the cumulative wisdom of the board members and can ask questions and resolve issues in a trusting, nurturing, and confidential environment.
Advisory boards typically consist of other business owners, financial advisors, subject matter experts and trusted colleagues from the business and professional world. The members of the board are usually more experienced than the business owner who asks for their support, and will have specialised knowledge or other characteristics that make them valuable sources of insight and advice.
Assembling an Advisory Board
In most cases, business owners assemble an advisory board by asking trusted associates, friends, family members, or colleagues to serve as members of the board. In most cases, people who are asked to be on an advisory board will consider it an honour and perhaps even part of their obligation to “pay it forward” in their industry.
Remember, however, that not everyone will be willing or able to serve on an advisory board, so have several potential candidates in mind when assembling your board. If you know of someone who you might want on your advisory board, be confident enough to ask. If they decline, sincerely thank them for their consideration and move on to your next candidate.
Members of an advisory board can come from other local business owners, Chambers of Commerce, business and industry trade groups, local service or social organisations, and from an entrepreneur’s own professional and social circles.
Business owners commonly meet with their advisory board on a specified schedule, depending on need and availability. In the earlier stages of planning, starting, and growing a business, meetings may be more frequent. Members of the board often make themselves available individually if the entrepreneur needs to ask questions or seek advice outside of scheduled meeting times. Always be courteous and respectful of your advisors’ time, effort, and expertise.
Benefits of an Advisory Board
The benefits of an advisory board cannot be overstated. Here are just a few of the positive elements of having a trusted and knowledgeable group of advisors.
- Knowledge: An advisory board made up of a diverse selection of financial advisors, business owners, and other professionals can provide the nuts-and-bolts knowledge you need to operate and grow a successful business. Need to solve a difficult manufacturing problem? Someone on your board might know how. Need referrals to new wholesalers? One of your advisors might have a long list of potential suppliers. Need to understand a law, regulation, or element of employee management? It’s possible one of your board members has the knowledge you need.
- Real-world experience: In addition to technical knowledge, advisory board members also bring with them years of practical, real-world experience. Your board members will be able to tell you how the industry you’re in actually works, what you can truly expect to happen every day as you operate your business, and what customers, suppliers, regulators, and others are going to expect from you. Probably most beneficial for you as a business owner, an experienced advisory board can help you avoid committing the same old mistakes that others in your position have encountered.
- Accountability: One of the most important functions of an advisory board is to hold you accountable. When you have several individuals expecting you to take a particular action, you are much less likely to let that action slip. Advisory boards are not there to punish you for not living up to your responsibilities, but they are there to encourage you, and sometimes sternly urge you, to do what is necessary. You’ll be more likely to act on their advice when you know they are expecting action from you.
- Potential partnerships: Not only are your advisory board members sources of information and insight, they could also be potential business partners. If you demonstrate your determination and resolve, act on good advice (or have a credible reason to reject it), and work hard to grow your company, the more successful members of your board might be willing to enter into a lucrative partnership with you.