A business owner might decide to recruit some experts and form a group called board of advisors to get guidance on important business operations, management, and expansion plans. However, the group members usually can’t have any share of the company. They will have no controlling power over the company or right to make any decision for the company. Also, the members will not bear any legal responsibility for the company’s actions. Their main role will be helping the owner with their expert consultation.
Several questions come into the mind. What type of business needs a board of advisors? Why having an advisory board is important? How to make the advisory board work in the best interest of the company? So we will now talk about all these aspects one by one.
What type of business needs a board of advisors?
In most of the cases, a small business owner, who comes with a limited business knowledge and industry exposure, forms a board of advisors to get help with critical business issues and expansion plans. Board of Advisors is comprised of people who possess a vast industry knowledge, experience, and exceptional performance track record. Although any business can form an advisory board, the owners of the small startups and medium scale business has to rely more on the expertise of these talented group members.
Why having an advisory board is important?
No owner can grow his/her business alone. If a business owner wants to expand without making any drastic mistake, it has to get expert recommendations. A company founder, who has started a small company, might need expert advice regarding business policies, company structure, and strategy making.
Creating a board of advisors is important because the members can help the company owners in financial analysis, market feasibility analysis, marketing, sales, and other important issues.
With the help of the advisory group, a business owner can avoid the old mistakes. There can be many growth challenges. However, if there are people who have already experienced and handled those challenges, an owner of a small business can avoid many of the blunders with expert advices of the experienced group members.
Having an advisory board is important because the experts can help in solving problems. Experts can suggest multiple ways to solve a problem to reduce loss and maximize return.
How to Ensure The Board of Advisors Works In The Best Interest For The Company?
The first thing a company owner has to do is wisely create the board. Select members very carefully. Decide whether to make a person a part of the board based on his/her merit, not the brand name.
Make sure the board of advisors is clear about the company goal. All members should have a clear idea of their respective roles and mission.
Although the advisory board will carry out most of the work informally, through email and phone, the company owner and the advisors must meet in person quarterly or at least twice in a year to prepare a formal structure of the work and ensure the boards follow that.
To keep things simple, an organization should make clear who in the favor of the company will contact the advisors and on what occasions they will be contacted.
By choosing the right board members and creating a firm board structure, a business owner can survive the economic uncertainties, global competition, and regulatory changes.