When applied well, advisory boards can help your business a great deal. From helping your business scale, expand, and give you the connections you need to succeed, advisory boards can be the key to taking your enterprise to the next level. In this article, read how a well-structured advisory board can help your business, especially when your business works in conjunction with a renowned business consultant like William Smith of Double Iron Consulting.
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What is an advisory board?
In their most basic form, Advisory boards are groups of subject-matter experts. An advisory board’s role is to advise a company’s leadership team on the company’s mission, innovative thinking, risk assessment, and revenue growth. Despite advising management, they do not have the mandate to cast a ballot on corporate issues. Advisory boards serve as a sounding board for a company’s owners, executives, or stockholders.
Take the case of William Smith, for example, who is on the board of Royal Cup Coffee. In this role, William Smith uses his experience from working in the family coffee business of Royal Cup Coffee to advise the non-family leadership on strategic issues. Advisory boards go by various names, depending on their intent, scope, or even part of the world. Common synonyms include think tank, steering committee, business advisory panel, and advisory committee, among many other names.
Advisory board composition
Members of the advisory board are typically outside professional people who are handpicked by a business (rather than by its shareholders) because of their skills or expertise in the company’s business and industry. Advisory boards can take different forms, but the following people are typically on them:
- Representatives from the company or organization
- A Chair who is unaffiliated with management
- A group of carefully picked Advisors
The advisory board members offer honest and unbiased advice and mentorship to the company representatives. With guidance from the chair, the extent of this wise counsel is typically defined before the first meeting.
Advisory boards can help small businesses grow as well as larger organizations such as emerging corporations, multinational corporations, non-profits, academia, and government. A well-structured advisory board based on best practices principles enable people in the organization to put their business acumen to the test and gain access to knowledge or associations that would otherwise not be readily available.
What are the roles of an advisory board?
Most advisory boards exist to assist organizations in gaining additional insights and advice in an attempt to solve real-world business challenges or help businesses gain an edge by arousing rigorous, high-quality discussions. An advisory board’s function is not to make these decisions but to provide current understanding, critical reasoning, and evaluation to enhance the confidence of the company’s decision-makers. Note that a governance board or board of directors is not the same as an advisory board.
Due to the versatility of advisory boards, their terms of reference are designed to satisfy the company’s needs. The role and responsibilities, reach, and expectations are typically outlined in the advisory board charter, as well as in the policies and procedures that guide the advisory board structure.
In discharging their responsibilities, advisory boards typically meet four to six times per year. These boards can be helpful for family businesses, businesses in transition, or corporatized entities seeking support to augment their current Executive team and board members.
Benefits of having an advisory board on board
One significant advantage of having an advisory board is that it compels business owners to take a step back and regularly look at the broader picture of their business.
An advisory board is also likely to reassure lenders and other capital providers, such as angel investors and venture capitalists, that a business owner is not making solo decisions. Typically, financiers look at the quality of the management and organizational structure. Having an advisory board can certainly do no harm to a business’s financing prospects and may be the key differentiator.
The payoffs are well worth the effort.
Why aren’t there more advisory boards in businesses? Some business owners believe it is too time-consuming to establish one or are not conscious of its benefits. Others believe the cost of maintaining one is not worth the value and return.
Nothing could be farther from the truth. An advisory board is a powerful resource for pushing the entrepreneur to think more about the company’s objectives, long-term aspirations, and how to attain them.
In the end, the payoffs are most often well worth the time, hassle, and cost. Some advisory board members don’t require compensation besides an honorarium, lunch, or dinner expenses during meeting days.
Need help in setting up an advisory board?
Do you feel your business is in need of an advisory board? Are you wondering how to kick-start the process? Get in touch with William Smith, founder of Double Iron Consulting and former CEO of Royal Cup Coffee. With decades of hands-on business leadership, William Smith has all that it takes to help your business establish advisory board mechanisms.
William Smith was for many years working and leading the family business Royal Cup Coffee. After exiting the beverage company, William Smith founded Double Iron Consulting to help businesses scale. In going to William Smith, your business is in safe hands. Get in touch today and give your business a much-needed shot in the arm.