Best Practice - Business Advisory Board
Business Advisory Board
Business advisory boards are most helpful to young and growing companies.
Purpose and benefits
Business advisory boards provide advice to the business on key business decisions such as business plans, finances and large business deals. Advisors have no fiduciary, goverance responsibility or liability, as does a board of directors. Advisors function in more of a mentorship role.
For some companies a business advisory board and who the advisors are is important also for its credibility with customers, employees and investors.
Business Advisory Board Best Practices
Who to recruit: Three to Five individuals that have relevant expertise and skills the business management does not have. Lawyers, bankers, accountants, business owners and SCORE mentors that you know are examples of who to recruit. Recruit a variety of expertise, skills and viewpoints that will provide both objective and broad advice. Recruit people that will challenge you; a rubber stamp will defeat the purpose.
Role: Provide objective advice, bring a breadth of other experiences and a network to management. Have a specific mission for your advisors for a defined timespan. Having a written agreement on the role, mission and time committments will help align expectations.
Written agreements: A nondisclosure agreement may be a good idea depending on size and type of company. An indemnification agreement may be helpful in recruiting some adviors to assure them of their liability status.
Compensation: 20% of small businesses provide some type of compensation, coverage of expenses or other benefits. Compensation is more common the larger the company.
Related Best Practices
Other Resources
Creating an Advisory Board to Help Your Struggling Business, by NOLO author Beth Laurence, J.D.
Author
The author of this article is Terry Gardiner.
Terry Gardiner is the founder and President of Silver Lining Seafoods and NorQuest Seafoods - a medium-size Alaska seafood processing company; and currently a Board member of the Anvil Corporation, an employee-owned company specializing in oil and gas engineering.
His co-operative experiences include member director of the Commercial Fishermen Co-operative association; creation of legislation for the Alaska Commercial Fishing and Agriculture Bank; and advisor to the US Dept of Health and Social Services for the state Health CO-OPs.
Terry served ten years as a member of the Alaska House of Representatives -several legislative committee chairmanships, Speaker of the House, Chairman of the Alaska Criminal Code Commission and board member on various state and federal boards and commissions.
His non-profit experiences include National Policy Director for the Small Business Majority in Washington DC; working with the Herndon Alliance and ForTerra.
Terry authored the leadership book, "Six-Word Lessons to Build Effective Leaders: 100 Lessons to Equip Your People to Create Winning Organizations".
For more check: Terry Gardiner Long bio