Having an advisory board can help your company achieve its goals and develop long-term strategies. Effective advisory board members are highly experienced who can contribute their knowledge to your company and provide the leadership. These individuals are well-versed in your industry and possess the experience of professionals in fields such as law, finance or marketing. Advisory boards are usually comprised of volunteers who want to help you. They can be members of the board or recruiters from outside. They meet regularly or semi-regularly, typically six to eight times per year and can also serve as mentors for the CEO and leadership team.
The majority of the members of an advisory board aren’t compensated for their time, however they are reimbursed for expenses related to meetings. Furthermore the size of an advisory board is dependant on, which makes it easier to establish and expand based on the needs of the company. A regular board of directors is more formal than an advisory board which helps reduce risks of liability.
However, it’s important that companies establish clear guidelines for their advisory board so members don’t begin acting like a board of directors and assume all the associated obligations. This can be done by writing a formal explanation of the advisory board’s duties, such as through an executive resolution or in their bylaws. This will help to keep them accountable and eliminate confusion. As a business expands, it’s common for advisory roles to be formalized and then transform into an entire board of directors. This usually happens with acquiring investors or reaching a certain amount in operations.
