“The most inexpensive and value adding decision I have ever taken in my business career.” This is how one entrepreneurial CEO explained her decision to build an Advisory Board. What, you’ve not heard of an Advisory Board? You’re not alone.
Put simply, an Advisory Board is an informal body of experts from outside of a company that an entrepreneur can use as a sounding board (or to fill in gaps in expertise and contacts). They are not to be mistaken for non-executives or even executive board members as they have no legal responsibility for the company’s governance.
Michael Jameson runs a business in the creative space and gives this portrayal of his experience of building an Advisory Board: “Imagine a group of experts who pretty much have the contacts, insight and expertise to challenge and question you. It is different to having a formal executive board, because my Advisory Board is not concerned with the day-to-day mechanics of how the business operates.
They hold me to account on longer term strategy and one by one they have either brought potential clients to my business or they have connected me with advisors who each have added some value.”
Despite the obvious value-add that an Advisory Board brings, they are often perceived to be expensive and/or time consuming. This could not be further from the truth. In most cases, an Advisory Board can have little or zero cost. In terms of actually finding and hiring an Advisory Board, it can be done in the space of a few weeks (and sometimes even a few hours!)
I have personally seen the value of Advisory Boards in my professional career and the first business I sold (to private equity, back in 2012), the advice I took from outside directors was, I would suggest, the reason the business achieved the multiples it achieved.
But how do I set up an Advisory Board?
The first port of call can often be to those professional advisors around your business. Accountants, lawyers and banks are often well connected with hundreds if not thousands of experts that they have first-hand experience, dealing with.
Virtualnonexecs.com is an obvious place to post and hire for free.
Advisory Board members are often seasoned business people, not necessarily entrepreneurs in their own right. They are individuals who are completely independent so whilst it is a great idea to ask your accountant or lawyer for suggestions, it would be foolish to appoint them. Always think “Who will give me the true story?”
Incentivising Advisory Boards
When I suggested the Advisory Board can be found for free, I meant it. But some experts will require some nominal form of income whereas many will be happy to attend a monthly or quarterly session for the cost of a nice restaurant meal or weekend retreat.
Ian Wright is the CEO and Founder of Virtualnonexecs.com; the largest peer-2-peer non-executive director community of its kind.