By working with an advisory board, executives or owners of small or family businesses can get complimentary skills and strategic advice that they need to drive exponential growth in their business.
What Is an Advisory Board?
An advisory board comprises a chosen group of independent individuals who support an enterprise’s directors, owners, and shareholders. Advisory boards offer nonbinding strategic counsel to enterprises and thus are, by nature, informal.
Because of this, advisory boards are generally more adaptable in management and structure, particularly when compared to formal boards of directors. More specifically, boards of directors are bound by clearly defined legal responsibilities, whereas advisory boards aren’t regulated and don’t make decisions like formal boards of directors. The sole function of an advisory board is to provide advice.
Why Establish an Advisory Board?
An advisory board gives business owners or executives a safe space to discuss important business issues and access independent, objective, and expert views.
The responsibilities of an advisory board evolve, but business owners should clearly define what they expect from board members. In today’s fast-changing business environment, business leaders must learn quickly and access a broad knowledge base. Establishing an advisory board allows one to access external wisdom and learn quickly about their business challenges and needs.
The Role of an Advisory Board
Advisory boards serve as an independent source of advice and information to the executives or owners on the organization’s risks and strategic issues.
Advisory boards are not decision-making bodies. Each business, therefore, will have to define the role that its advisory board will play based on the business’s unique needs and circumstances. Here are some of the roles and responsibilities that advisory boards take in organizations:
- Help business executives and owners understand the business, industry, and market trends.
- Provide advice on concerns raised by management or owners.
- Provide ideas and insights that one can only get when they’ve maintained a distance from the business’s daily operation.
- Provide encouragement and advice as a company explores new business ideas.
- Serve as a learning resource for executives.
- Encourage business owners to develop a governance structure that fosters continued growth without strangling the vision and spirit of the founders.
- Monitor business performance and challenge the management and directors to explore other options that can help improve the business.
When Does a Business Need an Advisory Board?
An advisory board can be a vital resource in multiple scenarios, including:
- When a business is experiencing rapid growth
- When a business intends to raise capital
- When a business requires strategic partnerships
- When a business faces significant changes in direction
- When an enterprise is establishing formal structures that entail bringing on professional board managers
- When a business is dealing with succession challenges
- When a business is dealing with issues with other shareholders
- When a company wants to shift strategic conversations in all aspects of the business
- When an organization is facing functional and technical issues
Advisory boards consist of an informal body of experts from outside the organization that helps business owners or executives expand their contacts and expertise and weigh the merit of various business ideas.
William Smith of Double Iron Consulting only understands the need for advisory boards too well. Bill Smith is a visionary leader with tremendous experience rising through the ranks and leading a family business.
Until the late 2010s, Bill Smith of Royal Cup Coffee and Tea was the CEO and President. This company has been in Bill Smith’s family since the 1950s, and Bill had worked in it from the 1980s when he was in high school to 2020 when the board and family collectively agreed to bring a professional and non-family executive team on board.
The team is charged with leading the family business through its next level of growth and success. Although Bill Smith still serves on Royal Cup’s board, his primary goal now is to help other family business executives and owners, through his consulting firm, Double Iron Consulting, to attain meaningful goals for their companies.
Benefits of Having an Advisory Board
Gain Fresh Perspectives on Your Business
One of the most significant benefits of advisory boards is that they force business owners to look at their enterprise from new angles and reevaluate their growth strategies. Additionally, an advisory board assures financial institutions which evaluate the quality of a business’s team when considering a loan application.
The Benefits Are Worth the Effort
Some business owners don’t establish advisory boards because they think creating one is too time-consuming. However, the benefits of having an advisory board are worth the cost and effort. Advisory boards are excellent tools that force business owners to reevaluate business vision and goals and how to attain them.
How to Set Up an Advisory Board
The process of establishing an advisory board is pretty straightforward. Influential members of an advisory board are usually veteran business people who’ve accumulated experience and expertise that a business owner may lack. Ideally, they should be independent of the business instead of being the company’s lawyer or accountant.
How Double Iron Consulting Can Help
Since 2021, Bill has been supporting family and small business executives to clarify and attain their business goals through his firm, Double Iron Consulting. With his decades of experience working for and leading a successful family business, Bill Smith helps businesses improve internal systems to bolster operations and navigate family leadership transition.
